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JOHN DOHERTY: Welcome to this video summary of Gowling's Topics Expropriation Cases in 2022, A Year End Review. This presentation is a video summary of our annual paper, A Year In Review, featuring the topics expropriation cases in the past year. This 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 all across our Canadian and UK offices. We are presenting today on five of the most notable cases, on both substantive and procedural issues arising in different jurisdictions across Canada. Two of our cases will deal with constructive expropriation, two of the cases will address injurious affection, and our last case will deal with offers.
Our speakers today include the following. First up is Kevin Dias, will be speaking on the Supreme Court of Canada's recent decision in Annapolis Group versus Halifax Regional Municipality. Kevin is an associate in the firm's Waterloo region office where he practices in the area of municipal law and expropriation law. He's a member of the firm's Canadian expropriation law group and municipal law groups.
Secondly will be Mila Badran speaking on the Dupras decision by the Quebec Court of Appeal. Mila is a partner in our Montreal office, where she works primarily in the areas of civil and commercial litigation.
Our third speaker will be Emily McCartney speaking on the case of Sabo versus AltaLink. Emily is an associate in the advocacy group in the firm's Calgary office, in addition to expropriation and municipal law groups. Emily is also a member of the commercial litigation and professional liability group.
Our fourth speaker will be Jessica Chen speaking on the Group III Diversified versus Winnipeg case. Jessica is an associate in our firm's Toronto office. Jessica practices in the municipal law and civil litigation area with a focus on real property disputes, land use planning law, expropriation, and municipal tax assessment.
Our final speaker will be Alice Mihailescu She'll be speaking on the case of CHO versus The Interior Minister of Transportation. Alice is an associate in the firm's Ottawa office. Her practice focuses on municipal law, including land use planning, expropriation, and municipal tax assessment.
Kevin, to start us off, please tell us about this interesting case from the Supreme Court of Canada.
KEVIN DIAS: In late October 2022, the Supreme Court expanded the doctrine of de facto expropriation or constructive taking in the decision Annapolis and Halifax. De facto expropriation occurs where an authority has not taken legal title to land, if it's regulated land, to such an extent that the property is effectively lost. In cases of de facto expropriation, compensation is required at common bond.
In terms of the facts of this case, the Annapolis Group acquired over 900 acres of undeveloped land in Halifax, which it intended to develop and sell. In 2006, the regional municipality of Halifax adopted a planning strategy that included Annapolis' land [INAUDIBLE] a proposed regional park, but the land was actually zoned as future service residential development, not a park.
To trigger the residential zoning for development, Annapolis had to apply for a secondary planner, which it requested, in which Halifax refused. In the meantime, Halifax put up signs on the Annapolis lands that encouraged members of the public to use the lands as parks.
Now, the leading case on de facto expropriation up until Annapolis was a 2006 decision known as CPR. In CPR, the Supreme Court held that the de facto expropriation occurs when two requirements are met-- the government authority must acquire a beneficial interest in the property, or flowing from it, and the property owner must use all reasonable uses of the property.
In Annapolis, the Supreme Court did two important things. First, it did not depart from precedent, but expanded the first part of the CPR test, saying that beneficial interests should be interpreted broadly, meaning an advantage to a government actor. This means that a claimant does not need to establish that an authority has actually acquired the property.
The majority also held that an authority's motive can be used as supporting evidence in making a claim for de facto expropriation. Importantly, the majority noted that not all land regulation will result in constructive taking, which was actually a reason why four of the justices dissented, saying that the majority's broader interpretation dramatically expands the potential liability to municipalities who are land use planning into public interest.
The new approach following the Annapolis decision clarifies that legal analysis should focus on a substance or a practical [INAUDIBLE], rather than the form or nature of acquisition by the authorities.
JOHN DOHERTY: Next, Mila will discuss a similar case arising in Quebec.
MILA BADRAN: Hello. I will be speaking on the decision Dupras versus City of Mascouche rendered by the Quebec Court of Appeal in 2022.
As background, Mrs. Dupras owned the woodlot located in the city of Mascouche in Quebec. The municipal bylaws initially allowed for residential use on about 70% of the land, with the remainder zoned for conservation. In 2006, the city resolved the owners land to 100% conservation, thus prohibiting any construction on the land. The bylaw, however, allowed for forestry and maple syrup production.
The parties engaged in discussions regarding potentially modifying the bylaw or the city acquiring the land. In 2016, the city confirmed that it had no intention to purchase the land. The owner then filed a claim for constructive expropriation, claiming compensation equivalent to the value of the land, valued at little more than 4.5 million in 2015.
The Superior Court of Quebec ruled that the rezoning deprived the owner of any reasonable use, making it a constructive expropriation. The court partly granted the owners claim for $436,000 on the basis notably that the value must be assessed at the time of the rezoning in 2006. The owner appealed the decision regarding the valuation, and the city filed a [INAUDIBLE] appeal, claiming there was no constructive expropriation, and the recourse was prescribed.
The Court of Appeal confirmed the Superior Court's ruling. The court explained that to amount to constructive expropriation, restrictions imposed by a municipality must have the effect of eliminating any reasonable use of the property. In the case at hand, although the rezoning did not remove all uses of the land, the residual use was so limited that it could not constitute a reasonableness.
While the city had the power to put the restrictive conservation zoning in place, it still had the obligation to compensate the owner, whose rights were significantly affected. With respect to the valuation of the land and the prescription argument, the court mentioned that it must be assessed when the owners recourse has been crystallized, namely in 2016. The Court of Appeal remitted the case back to the Superior Court for determination of a fair compensation to the owner. Of note, the city submitted an application for leave to appeal to Supreme Court of Canada, which was denied.
One of the takeaways from this decision is that land owners must be diligent when receiving rezoning notices and assess the uses permitted. As for the municipalities, they should take into consideration the potential impact on the uses of the land. In certain circumstances, it may be a sign of constructive expropriation.
JOHN DOHERTY: Now let's hear from Emily about injurious affection in the context of Alberta's Surface Rights Act.
EMILY MCCARTNEY: I will be speaking on the Alberta Court of King's Bench recent decision in Sabo and AltaLink, citation 2022 ABKB156.
In Sabo, the Court of King's Bench considered the interpretation of injurious affection in section 25 sub 1 sub D of the Alberta Surface Rights Act, in the context of the installation and operation of high voltage transmission lines on towers immediately adjacent to but not directly located on lands that were subject to a right of entry order. The court found that section 25 sub 1 sub D must be interpreted in a way that permits the board to make an award of compensation for injurious affection, even though the steel monopole towers and the transmission lines were located solely within the government road allowance and not within the right of way granted by the right of entry orders.
In reaching this conclusion, the court relied on the purpose of the Surface Rights Act, which is to provide a mechanism for fair compensation where lands are partially taken by a right of entry order. The Surface Rights Act is remedial legislation and must be given a fair, large, and liberal interpretation.
AltaLink, the operator, advocated for an interpretation of section 25 sub 1 sub D that was consistent with the old common law rule that permits compensation for injurious affection only when the loss arises from the operations of the operator on the area taken. However, the Alberta Court of Appeal had long ago found the application of the common law rule would make Alberta's compensation scheme illogical and unfair when it decided Landex Investments Ltd. and Red Deer City in 1991.
The Court of King's Bench drew the line between those who are subject to a right of entry order and those who are not, rather than whether the transmission towers were situated a few feet within the right of way or a few feet outside the right of way. The board had discretion pursuant to section 25 sub 1 sub D to award compensation for injurious affection for the nuisance, inconvenience, and noise arising from the installation and operation of the power transmission lines within the government road allowance, even though neither of the lines nor the steel monopole towers were installed in the area granted by the right of entry order.
JOHN DOHERTY: Next, Jessica will discuss an injurious affection decision from the Manitoba Court of Appeal.
JESSICA CHEN: In Group III Diversified Inc. and the City of Winnipeg, the Manitoba Court of Appeal ordered a rehearing of an order of the Land Value Appraisal Commission assessing compensation for injurious affection on a partial taking. The Court of Appeal found the Commission's decision to be so deficient and replete with errors that it could not conduct its appellate review and required a new hearing in accordance with the guidance provided in its reasons. As such, the Court of Appeal's decision is instructive on the applicable legal principles on injurious affection cases.
The Court of Appeal also considers the relationship between section 27 sub 2 sub D of Manitoba's Expropriation Act on the exclusion of illegal uses from compensation, and section 30 sub 1 of the act on injurious affection.
The city of Winnipeg expropriated part of the subject property for the purpose of realigning and extending a roadway. Previously, there was a median cut in the middle of the public road which permitted vehicles, including trucks, to access the subject property. However, the median cut was not directly aligned with the property's driveway, such that left turns, while possible, had to be done illegally.
As part of the road construction, the median cut was eliminated and a new road and a new median were built, in part on the expropriated land. The claimant advanced an injurious affection claim on the basis that the expropriation and road construction made it less desirable for tenants due to loss of curb appeal, but primarily, because the elimination of the median cut significantly reduced truck access to the property.
The Court of Appeal provided an overview on the general purpose of injurious affection claims, which are meant to compensate an owner for a reduction in the value of its lands and other prescribed damages resulting from the actions of a statutory authority.
In the case of a partial expropriation, compensable injurious affection claims are divided into three categories under section 30 sub 1 of the act. One, compensation for any reduction in market value of the remaining land of the owner caused by the expropriation of the part. Two, compensation for the damages sustained by the owner as a result of the existence and the use, but not the construction of the works upon the part of the land expropriated. And three, compensation for such other damages sustained by the owner as a result of the existence, but not the construction or use of the works as the authority would otherwise be responsible for in law if the existence of the works were not under the authority of the statute.
With respect to the elimination of a left turn into the subject property, the Court of Appeal agreed with the city that the left turn through the previous medium cut was illegal under the Highway Traffic Act. As such, the next step in the analysis is to determine if it is an illegal use only of the medium cut, or if the completion of the left turn into the property resulted in an illegal use of the property as well.
The court noted that if it was an illegal use of the property, in a market value analysis, the ability to make the left turn would be excluded from consideration under section 27 sub 2 sub D of the act, and left the final determination to be made by the Commission on a rehearing. However, section 27 sub 2 sub D of the act does not apply to injurious affection claims, and the Commission should have considered the three possible categories of injurious affection under section 30 sub 1 of the act and whether any apply to the closure of the median cut.
JOHN DOHERTY: For our last case, Alice will tell us about an interesting case dealing with statutory offers under Ontario's Expropriations Act.
ALICE MIHAILESCU: Our next case is a decision from the Ontario Land Tribunal about statutory compensation offers under section 25 of Ontario's Expropriations Act.
In CHO and Ontario, the Ministry of Transportation, a portion of the claimant's property was expropriated as a fee simple interest in March of 2011. On May 31, 2011, Ontario's Ministry of Transportation, the MTO, made an offer under section 21 sub 1(a) of the act, in the amount of $458,000, representing total compensation for all interest in the land. The MTO also made an offer under section 25 sub 1(b) in the amount of $24,400 as immediate payment without prejudice to the expropriated landowners seeking further compensation under the act. These offers were based on an appraisal report obtained by the MTO for the purposes of section 25 offers, which were served on the claimants.
The expropriated landowners accepted the section 25 sub 1(b) offer in 2012, and at no point rejected the section 25 sub 1(a) offer. On December 20, 2013, the MTO purported to withdraw and replace the section 21 sub 1(a) offer with a new offer of $24,400. However, the MTO did not serve a new appraisal report along with the new section 25 sub 1(a) offer.
On December 14, 2021, the expropriated landowner accepted the original section 25 sub 1(a) offer, arguing that the MTO could not rescind the original offer and that it remained open for acceptance once made.
The Ontario Land Tribunal was required to determine whether the MTO withdrew its original section 25 sub 1(a) offer, and similarly, whether doing so was permitted under the Expropriations Act. It also considered whether the delivery of a new section 25 sub 1(a) offer was in accordance with the provisions of the act.
Notably, the motion did not involve a request for determination of the value of the portion of the expropriated lands, or a formal determination of the total compensation payable. Rather, the only issue was whether the original section 25 sub 1(a) offer was properly withdrawn.
In the circumstances of this case, the tribunal found that the MTO did not effectively withdraw the original offer. As such, even though the claimants accepted it 10 years after it was made and eight years after the purported new offer, the acceptance was valid.
The tribunal agreed that the Expropriations Act is intended to provide a complete code governing the expropriation process and compensation. As there was no jurisprudence on point regarding whether a section 25(1)(a) offer remains open for acceptance once delivered, counsel for the claimants argued that other provinces provide for withdrawal or amendment of a section 25 offer, like Manitoba and British Columbia. Ontario's legislation does not contain any language permitting withdrawal of such offer.
Significantly, the MTO's position that the section 25(1)(a) offer was spent once the section 25(1)(b) offer was accepted was not communicated to the claimants when they accepted the section 25(1)(b) offer in December 2021.
Finally, the tribunal considered that even if the MTO could lawfully and unilaterally withdraw an amended section 25(1)(a) offer, they failed to deliver any form of underlying appraisal to explain how it arrived at that value. The offer did not meet the requirements in section 25 sub 2 or in case law.
Tribunal concluded that in this case, the original section 25(1)(a) offer remained in force and available for acceptance, and the offer was indeed accepted by the claimants on December 15, 2021.
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 topics expropriation cases in 2022 from all across Canada.
Our speakers have addressed some of the complex issues currently arising in expropriation law. These cases show how this area of law interacts with a number of other practice areas, such as land use planning, environmental issues, and procedural issues that may impact on the right to and the extent of property compensation and business loss valuation.
If we can assist you in the future with any of these issues please be sure to contact any one of us. Enjoy the rest of your day.
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