John S. Doherty
Partner
Leader – National Expropriation Law Group
Video
22
[MUSIC PLAYING] JOHN DOHERTY: Welcome to this video summary of Gowling's top cases and expropriation law 2023, 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.
We are presenting today on five of the most notable cases on both substantive and procedural issues from jurisdictions across Canada. An interesting trend is emerging again this year, as two of the five cases we have selected are constructive expropriation cases flowing from the 2022 Supreme Court of Canada case in Annapolis versus Halifax that expanded the application of this doctrine.
Our five speakers today include the following-- first, Caitlin Milne. Caitlin will speak about recent case law from Alberta, illustrating how factors impacting the land's development potential may be considered when determining the land's highest and best use. Caitlin is an associate in the advocacy group in the firm's Calgary office.
In addition to expropriation and municipal law cases, Caitlin practices commercial litigation, including shareholder disputes and matters involving director and officer liability.
Second will be Jeremy Sapers, an associate from our Vancouver office, who will discuss the Manitoba case involving constructive expropriation in a statutory setting, where artificial flooding occurred in a floodway. Jeremy has a wide-ranging litigation practice, which also includes construction and real estate litigation.
Our third speaker is Jonathan Minnes, a partner in the firm's Waterloo region office, who will address the Ontario land tribunal's decision in a no land taken case. This case makes some interesting comments on the burden of proof on the expropriating authority to establish an illegal land use. Jonathan focuses his practice in municipal expropriation and planning law.
Our fourth speaker is Mila Badran, who will discuss a recent decision from the Quebec Court that also applies the constructive expropriation doctrine, arising in the context of environmental regulations. Mila is a partner in our Montreal office, where she works primarily in the areas of civil and commercial litigation.
Finally, Kathy Jiang, an associate in the firm's Waterloo region office, will discuss the New Brunswick case of the province of New Brunswick versus Fundy Contractors. This case addresses a claim for special economic advantage provided for by the New Brunswick Expropriations Act. In addition to municipal and expropriation law, Kathy also practices construction law.
Caitlin, to start us off, please tell us about this interesting case from Alberta.
CAITLIN MILNE: The decision of the Alberta land and property rights tribunal in Al Klippert Limited and Calgary 2023 ABLBRT 132 illustrates how factors impacting lands development potential may be considered when determining a property's highest and best use and market value compensation in cases where the proposed highest and best use differs from the existing use of the property.
For the purpose of determining compensation and expropriation, a property's market value is appraised based on the land's highest and best use. The highest and best use is defined as the legally permissible, physically possible, financially feasible, and maximally productive use of the land.
With respect to the facts of this case, the property in question was located in the Bow River Valley in Calgary, along the banks of the river, and was used for the sale of landscaping products and the operation of a concrete business, prior to being expropriated by the city of Calgary in 2009.
The landowner in the city presented the tribunal with vastly different valuations, based on divergent views about the property's highest and best use. The landowner advanced at $28 million valuation based on a low-density residential development, while the city advanced a $1.8 million valuation for a single estate style home.
In determining the highest and best use, the tribunal took into consideration significant physical, legal, and financial constraints related to the development of the property, which included issues with compliance with municipal road and emergency access standards, planning issues that would require relaxations or accommodations, challenges related to utility servicing, and environmental contamination issues, and related uncertainties.
Based on these considerations, the tribunal concluded that the landowner's proposed residential development use was not probable, and therefore, not the highest and best use. The highest and best use was instead use as a single residential estate lot, which in the tribunal's view resulted in a market value of $6 million.
In addition to illustrating the factors for consideration with respect to the highest and best use, this decision also illustrates the importance of obtaining appropriate compensation for impacts on the value of the remaining land in instances of partial expropriation.
In this case, the city had previously expropriated a strip of land between the property and a river for use as a pathway. This previous expropriation had limited impact on the use of the property as a concrete business.
But when it came time to value the remainder of the property in 2009, the fact that that property no longer had direct river access lowered its value for residential development.
JOHN DOHERTY: Now let's hear from Jeremy about the application of expropriation principles to the compensation scheme under Manitoba's Red River Floodway act.
JEREMY SAPERS: This case from the Manitoba court of Appeal addresses when owners may be entitled to future business loss compensation as a result of an expropriation. The appellant in this case operated a corn maze, petting zoo, and haunted forest attraction in the area south of Winnipeg. This area is part of what is known as the Red River Floodway.
The floodway dates back all the way to 1962. It was built to divert floodwaters from the Red River away from the city. When the floodway gates are open, water floods properties in the floodway to the south of Winnipeg.
In 2005, Manitoba enacted the Red River Floodway Act, or the RRFA. This is a statutory plan to provide compensation to those who are impacted by flooding caused by the floodway gates. Under the act, parties can apply to the Emergency Measures Organization, or the EMO, for compensation for economic loss.
Fall of 2019, was an unusually rainy season in Winnipeg. Between October and November, the floodway gates were open, causing severe flooding in the floodway, including over the appellant's corn maze property. As a result, the appellant applied to the EMO for compensation.
Its application included claims for interest and professional fees and for business loss and loss of opportunity. The EMO rejected these aspects of the appellants claim. The appellant, then, appealed to the Manitoba Disaster Assistance Appeal Board, which upheld the EMO's decision. The appellant was, then, granted leave to appeal to the Manitoba Court of Appeal.
The primary ground of appeal was that the board erred in its narrow interpretation of economic loss under the RRFA. The appellant argued that economic loss included its claims for future business losses, including brand damage and loss of opportunity.
In first assessing whether the flood qualified as a constructive taking, the board argued that the flood was not a constructive taking because it was for a short duration. The Court of Appeal rejected the distinction between permanent and temporary takings, finding that takings of short duration, like the flood, are subject to the same foundational principles as permanent takings and can be compensable.
The court, then, found, on the basis of earlier decisions like the Annapolis case, that the RRFA should be read broadly with a view to full compensation that makes the claimant economically whole. The court noted that while the right to full compensation can be limited or taken away, such an intent must be clearly expressed in legislation.
The RRFA did not limit compensation. Instead, it set out general governing principles to guide the EMO's determination. The RRFA does not have directions as to the specific types of loss that should be included or that are not eligible. The court said, it was difficult to imagine a wider definition of compensation than what was set out in the RRFA.
In its conclusion, the Court of Appeal found that the act of opening the floodway gates to divert water onto the appellants property and away from the city of Winnipeg was clearly a use of private property for a public purpose that removed all reasonable uses of the property. This artificial flooding was, therefore, a constructive taking.
Given the broad and general definition of economic loss in the RRFA, the court concluded that appellant's claims for economic losses and professional fees were compensable. The matter was returned to the board for redetermination.
The two main takeaways from this case are-- one, that short-term temporary takings can be compensable constructive takings, and two, subject to express restrictions in legislation, full compensation intended to make a complainant economically whole can include compensation for future business losses and loss of opportunity.
JOHN DOHERTY: Next, Jonathan will tell us about an important injurious affection no-land taken decision from the Ontario Land Tribunal.
JONATHAN MINNES: Hello. I Will be discussing the Ontario Land Tribunal decision in 12908 Highway 7 Inc and The Ministry of Transportation. This decision deals with expropriation compensation claim, resulting from the MTO closing one of the access points to a property fronting onto Highway 7 and all details.
Claim was brought for injurious affection where no land is taken, pursuant to sections 11, AEII, and 21 of the Expropriations Act, or alternatively section 6 and 14 of the Public Transportation and Highway Improvement Act.
The MTO argued that the claimant was not entitled to damages because the access they closed was illegal and required vehicles to trespass over the MTO property between the claimant's property and the highway.
MTO also argued that the closure of the access did not result from the construction of its roadworks, instead the MTO had the authority under the Public Transportation and Highway Improvements Act, and the tribunal rejected both the NGO's arguments.
First, the property between the highway and the claimant's land was not a one-foot reserve that could definitively prevent access to the highway. Second, while there is no entrance permit, the MTO had lost its records for the subject property.
The tribunal determined that such gaps in the record must be resolved in favor of the claimant. The tribunal also found that as the access had existed since 1985, the MTO had the onus of establishing the access was illegal.
The tribunal determined that the MTO failed to discharge its onus, that the MTO granted the claimant's predecessor in title the necessary permission and permit, and the access was therefore grandfathered. The tribunal then considered whether the works as constructed if left unused would nevertheless interfere with the claimant's use and enjoyment of the property.
The tribunal found that the closure of the access would interfere with the claimant's use and enjoyment of the property, even if the highway was unused. And thus, that injurious affection arose from the construction and not the use of the works.
The tribunal also found that the removal of the entrance caused substantial and unreasonable interference being the test for establishing injurious affection where no land is taken, set by the Supreme Court of Canada in its Antrim Truck decision. Accordingly, the tribunal awarded compensation to the claimant in connection with the loss of its access.
Claims for injurious affection where no land is taken are uncommon and difficult to prove. It appears that this is the first reported decision with a successful outcome for a claimant in injurious affection no-land taking case in Ontario since 2015, where the Ontario Municipal Board, then, was in Jordan-- are Jordan Greenhouses Limited Grimsby.
The decision also highlights the potential for a dual approach, advancing a claim, pursuant to the Expropriations Act, and the Public Transportation and Highway Improvements Act. Thank you.
JOHN DOHERTY: Like last year, Mila will discuss an interesting Quebec decision about constructive or disguised expropriation.
MILA BARDAN: In 2006, Sommet Prestige purchases a land for almost $2 million in the city of St. Bruno. At the time, the municipal bylaws allowed for residential development projects. Sommet Prestige files in 2011 a subdivision plan for its residential project. Following discussions and agreements with the city, the project comes with several restrictions to preserve nature.
In November 2013, a new mayor, who is against the project is elected. The city then modifies its bylaws accordingly. In this context, Sommet Prestige decides to file a claim, contesting the validity of the bylaws and for constructive expropriation on the basis that it prevents the property's development.
Applying the test set out by the Supreme Court of Canada in the decision Annapolis Group Inc, and as applied by the Quebec Court of Appeal in Dupras versus City of Mascouche, both decisions are actually addressed in Gowling's year-end review of 2022.
The Superior Court of Quebec retains three main principles. Number one, under Quebec law, the doctrine of constructive expropriation is a no-fault liability regime. Number two, if a bylaw suppresses all reasonable uses of a property, it is considered constructive expropriation. Number three, the owner can contest the validity of the bylaw, or he can claim an indemnity.
In the case at hand, the Superior Court concluded that a constructive expropriation had occurred. It was admitted that the property could be used for other purposes, such as maple production. But the profits that would arise from this would be negligible, compared to the cost of the property and the property taxes alone. This was insufficient to constitute a reasonable use of property.
As a result, Sommet Prestige was entitled to compensation. Although this is a great decision for expropriated owners, we will continue monitoring this case as the proceedings are under appeal.
JOHN DOHERTY: For our last case, Kathy will tell us about the New Brunswick Court of Appeals recent handling of compensation for special economic advantage.
KATHY JIANG: The New Brunswick Court of Appeal dismissed an appeal by the Province of New Brunswick of a court of King's bench decision, awarding $1.9 million in compensation for the expropriation of portions of three properties. These properties were owned by Fundy Contractors limited, a heavy civil contractor operating a concrete plant.
The expropriation included the taking of the Dexter pit, an area that supplies aggregate for Fundy's operations, such as stones, gravel, and sand. A key issue on appeal was whether Fundy was entitled to compensation over and above the market value of the land on account of the special value of the Dexter pit to Fundy.
Section 38 sub 1D of New Brunswick's Expropriations Act provides that in addition to compensation for the market value of the land, compensation shall be based upon any special economic advantage arising out of his occupation of the land that is not reflected in the market value of the land.
While the legislation does not define special economic advantage, nor state how to determine its value, the Court of Appeal, nevertheless, agreed that the Dexter pit gave Fundy a special economic advantage.
Fundy clearly derived an advantage from the Dexter pit, as it had the facilities nearby to profitably operate the property, as well the pit's location being adjacent to a highway eliminated certain issues relating to the transportation of the aggregate.
Similarly, the loss of the Dexter pit left a significant hole in Fundy's aggregate inventory, which could not be replaced with aggregate from other local pits. Accordingly, the New Brunswick Court of Appeal upheld the award for the loss of a special economic advantage.
JOHN DOHERTY: On behalf of my colleagues, I want to thank you for taking time today to view our summary presentations on five of the top expropriation cases in 2023 from across Canada.
Our speakers have addressed some of the complex issues currently arising in expropriation law. These cases illustrate 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 on the right to and the extent of expropriation compensation.
If we can assist you in future with any of these issues, please be sure to contact any one of us. Enjoy the rest of your day.
This video explores several significant Canadian expropriation cases from 2023, highlighting important issues and practical takeaways for parties involved in the expropriation process.
The video recap is hosted by John Doherty, partner and leader of the firm's national Expropriation Law Group, and features Gowling WLG professionals Caitlin Milne, Jeremy Sapers, Jonathan Minnes, Mila Badran and Kathy Jiang.
The five cases featured in the video are:
Acting for both expropriated owners and expropriating authorities, Gowling WLG's national Expropriation Law Group applies a creative, practical approach to a range of challenges — from informal negotiations to arbitration proceedings before administrative tribunals, including the Local Planning Appeal Tribunal and the courts.
Members of our team are routinely recognized by leading publications, including Best Lawyers in Canada and the Canadian Legal Lexpert Directory.
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