Revisiting five noteworthy expropriation cases from 2024

[AUDIO LOGO] JOHN DOHERTY: Welcome to this video summary of Gowling WLG's top cases in expropriation law 2024, a year in review. This presentation is a video summary of our annual paper, "A Year in Review," featuring the top expropriation cases in the past year. The summary presentation will highlight a number of important issues and key takeaways for those involved in the expropriation process.

My name is John Doherty, and I'm the leader of Gowling's National Expropriation Law Group. Our National Expropriation Law Group represents both claimant landowners and government authorities across the country. Our group of more than 20 practitioners is a multidisciplinary team of lawyers, land-use planners, and clerks from across all of our Canadian offices and our UK offices.

We are presenting today on five of the most notable cases on both substantive and procedural issues from different jurisdictions across Canada. Our five speakers today include, first, Christina Piccinin, who will discuss the Supreme Court's decision in St. John's versus Lynch. Christina is an associate in the firm's Waterloo Region office where she practices in the area of commercial litigation.

Our second speaker is Mila Badran, who will present the Quebec case, Saint-Antoine Developments. Mila is a partner in our Montreal office, where she works primarily in the areas of civil and commercial litigation. Our third speaker is Emily McCartney, a partner in the advocacy group in the firm's Calgary office, who will discuss the Geiger versus Saskatchewan Power Corp decision. In addition to expropriation and municipal law cases, Emily practices commercial litigation and professional liability.

Our fourth speaker is Naomi Austin, who will present the Altius Royalty Corporation versus Alberta case. Naomi is an associate in the firm's Calgary office. Her practice focuses on commercial litigation, and she is a member of our firm's National Expropriation Law Group. Finally, our fifth speaker is Caitlin Milne, an associate in our firm's Calgary office, who will discuss the Chen versus Langley Township decision from British Columbia. Caitlin's practice focuses on commercial litigation. Christina, please start us off, and tell us about the Supreme Court's St. John's versus Lynch decision.

CHRISTINA PICCININ: St. John's city versus Lynch deals with the concept of constructive expropriation, and how compensation for such takings should be assessed. The case revolves around the Lynch family land located in the Broad Cove River Watershed, which borders the city of St. John's and the town of Paradise.

Since the 1990s, the Lynch family sought development approvals for various uses. However, the city of St. John's refused to grant these permits, citing the land's designation as part of a watershed zone, which was established in the mid 1990s to protect the city's water supply. The Newfoundland and Labrador Court of Appeal found that the Lynch's property had been constructively expropriated by the city as of 2013 when the city rejected the family's application for a 10-lot subdivision. The Court of Appeal found that the city's regulatory actions effectively deprived the Lynch's of all reasonable uses of their property.

The Court of Appeal's reasoning was guided by the longstanding point guard principle, which provides that increases or decreases in land value due to a public authority's scheme cannot be considered when determining compensation. The city appealed to the Supreme Court of Canada to determine the proper framework for calculating compensation in cases of constructive expropriation. The key issue before the Supreme Court was how zoning regulations and land-use restrictions impact compensation when a property is considered constructively expropriated.

In a unanimous decision, the Supreme Court rejected the Court of Appeal's application of the point guard principle, explaining that the Court of Appeal's use of causation to screen out the scheme was too broad and ran afoul of jurisprudence that confirmed zoning regulations have a bearing on market-value compensation. The court found that the watershed zoning was not part of a scheme to expropriate the land, but rather an independent regulation enacted for broader environmental and public policy purposes. Therefore, the court held that compensation should be assessed based on the value of the land under the existing zoning restrictions, not based on a hypothetical unrestricted use.

This ruling underscores an important principle in expropriation law, that zoning regulations that are part of an independent regulatory scheme must be factored into compensation calculations. Furthermore, the decision clarifies how courts should focus on the regulatory intent and the practical effects of the intent on the property when assessing whether or not a regulatory act forms part of a scheme to expropriate.

In summary, the St. John's versus Lynch case reaffirms that compensation for constructive expropriation should consider not just the effects of regulatory actions on a property's value, but whether the regulatory enactment in question was made with a view to expropriation.

MILA BADRAN: In this case, the Court of Quebec is an appeal from a decision of the Administrative Tribunal of Quebec that allowed the landowner, Saint-Antoine, to receive an indemnity for the loss of the property's appreciation. First, the tribunal granted Saint-Antoine an indemnity for the value of the property being expropriated at the time of the notice of expropriation. Since the expropriating party had issued a notice of reserve initially, the main indemnity was evaluated on that date.

Secondly, Saint-Antoine received an accessory indemnity representing the increase of the value of the property between the notice of expropriation, which was March 2017, and the date of taking possession of the property, which was July 2020. The Court of Quebec confirmed that the loss of appreciation value can be granted to a landowner when a lengthy period of time elapsed between the notice and the transfer of the property.

The Court also mentioned that the expropriating party must act with equity and diligence in expropriation proceedings and has the obligation to minimize the damages a landowner can suffer. The decision also addresses other elements, such as loss of profits. This matter is of interest as it is currently under judicial review before the Superior Court of Quebec. It is therefore a file to watch in 2025. You must also note that this matter is subject to the previous expropriation law in Quebec.

EMILY MCCARTNEY: I am presenting on the Saskatchewan Court of King's bench decision in Geiger and Saskatchewan Power Corp. In that case, the plaintiff's owned land that was partially expropriated by Saskatchewan Power Corporation for the construction of a transmission line. The power corporation applied to strike portions of the plaintiff's claim, including the allegations of nuisance, disturbance damages, and injurious affection.

The Saskatchewan Power Corporation Act bars landowners from seeking damages for nuisance related to transmission lines. However, in this case, the plaintiff's presented evidence suggesting alternative routes for the transmission line were available. The court determined that it was therefore a live issue whether the power corporation's legislative mandate could have been fulfilled without infringing on the plaintiff's private rights.

Relying on its prior decision in Mcllwaine and Saskatchewan, the Court held that if a legislative mandate can be carried out without impinging on private rights, the expropriating authority is not immune to a nuisance claim. The power corporation further argued that compensation for expropriation is governed exclusively by statute, and that the Expropriation Procedures Act, or EPA, does not allow for disturbance damages.

Historically, disturbance costs were compensable only when revenue-generating activities were forced to relocate due to the expropriation. However, the court also declined to strike this claim, citing its earlier decision in Ratner Realty and Saskatchewan Telecommunications, which held that development-related expenses could be recoverable if they were reasonably incurred in the context of a practical undertaking.

The court found that whether disturbance damages are available should not be resolved at the preliminary stage. Although the EPA clearly excludes injurious affection as a compensable category, the court also refused to strike this claim. It noted that the damages alleged under injurious affection might be recoverable in nuisance. Given the preliminary nature of the application, the court held that it was inappropriate to dismiss the claim outright.

The decision in Geiger underscores the Saskatchewan Court's reluctance to strike claims in expropriation disputes at an early stage, even when those claims challenge established legislative limits. The case illustrates a cautious judicial approach, ensuring claims are fully considered before being dismissed.

NAOMI AUSTIN: The importance of the Altius Realty case is rooted in the Alberta Court of Appeal's interpretation of the Annapolis Test, which seemingly narrows the Supreme Court of Canada's articulation of what may be deemed an advantage sufficient to satisfy the beneficial interest branch of the test to determine whether a constructive taking has occurred. The Court of Appeal's interpretation links contemporary constructive expropriation law, as articulated in Annapolis, back to the older CPR test, and restricts the recognition of beneficial interests to one that is inherently tied to the property interest being expropriated.

In setting up these guardrails, the Court of Appeal limits the scope of what may be considered an advantage acquired by the Crown in a constructive taking. In this case, Altius had a royalty interest in the Genesee Coal Mine, which had initially been scheduled to operate until 2055. Since the time they had acquired the royalty interest, the Trudeau government had committed to phase out coal by 2030. Alberta contracted with the owner of the Genesee Coal Mine to make transition payments to ceasefire operations at the plant, but Altius was not party to this off-coal agreement.

Altius argued that the off-coal agreement constituted a constructive expropriation or taking that resulted in a sterilization of the royalty interests, and were thus owed compensation. The applications judge found that Altius had not met the two-part test in CPR, which was the relevant test at the time of the lower court's decision. The Court of Appeal held that the first branch of the Annapolis Test, which requires the government to acquire a beneficial interest in the property or flowing from it, must be understood as acquiring a beneficial interest in respect of private property.

Altius argued that the Crown's advantage flowing from the off-coal agreement was that it avoided healthcare and environmental expenses resulting from the continuing operation of the coal mine. However, the Court of Appeal deemed this insufficient and held that the beneficial interest cannot be an advantage unrelated to the expropriated interest or property itself. Mere public benefit, even if it is quantifiable, does not constitute a beneficial interest as required by Annapolis as it was not proprietary in nature.

In addition, the Court of Appeal also noted concerns in broadening the interpretation of an advantage to include a reduction in government expenditure as this could result in a proliferation of expropriation claims. Ultimately, the interpretation of the Annapolis Test by the Alberta Court of Appeal reiterates that the advantage gained by the Crown must be one linked to the property or property interest to constitute expropriation.

CAITLIN MILNE: This British Columbia Supreme Court decision addresses the assessment of fair market value for an expropriated property in the context of zoning restrictions. The decision affirms the expropriating authority's duty to disclose all relevant information to its appraiser. The property at the heart of this dispute was located in the Township of Langley in BC within what is called an Agricultural Land Reserve, or ALR. As the property was designated as being within an ALR, that restricted the use and development of the land.

In November 2017, Langley paid $7,645,000 in expropriation compensation for the property. The owners asserted a significantly higher fair market value of $26,550,000, which was based on an assumption that the property could be excluded from the ALR. Just prior to the expropriation, the property had been listed for sale, and a developer had made an offer of $20 million. The developer ultimately did not complete the sale as it concluded that the property was unlikely to be excluded from the ALR.

When the dispute with respect to the appropriate amount of compensation arose, the Township of Langley did not disclose the existence of the developer's offer to its appraiser. The court held that a broad and proposive application of the Expropriation Act requires that the expropriating authority, in this case, the Township of Langley, disclose all relevant information to its appraiser for the purpose of ensuring that the owner receives full compensation for the expropriated property. In this case, Langley did not meet that obligation by failing to disclose the developer's offer. 

The Court ultimately concluded however, that the owners could not have had a reasonable expectation that the property would be excluded from the ALR and valued the property at $10,550,000.

JOHN DOHERTY: In conclusion on behalf of my colleagues, I want to thank you for taking the time today to view our summary presentation on five of the expropriation cases in 2024 from across Canada. Our speakers have addressed some of the complex issues currently arising in Expropriation Law. These cases show how this area of law intersects with a number of other practice areas such as land use planning, environmental concerns and procedural issues that may impact the right to, and the extent of, property compensation and business law's valuation. If we can assist you in the future with any of these issues please contact any one of us. Have a good day.