The right to own property lies at the core of liberal democracy. Protections for property can be traced back to the Magna Carta of 1215, the English Bill of Rights of 1689, and the United Nations Universal Declaration of Human Rights, of 1948, to which Canada is a signatory.
Based on this, many Canadians may be surprised to learn that we do not have constitutionally protected property rights, particularly since our American neighbours do enjoy these protections.
The absence of property rights from the Canadian Charter of Rights and Freedoms is not for want of trying. The entrenchment of property rights in the Constitution was suggested by Pierre Elliott Trudeau when he proposed a charter in 1968 as justice minister, and again when he was prime minister during the negotiations that led to the Charter. However, ultimately it did not become part of the Charter because of opposition from most of the provinces.
The lack of entrenchment of property rights does not mean Canadians do not have rights related to property. Canadians do have property rights found in common law and statute. Some of these protections are quite good. However, in the area of what’s called de facto expropriation, much work still needs to be done.
A de facto expropriation, also known as a “constructive” or “regulatory” taking, occurs when title to the land does not change but there is in all other senses an expropriation. For example, when government places restrictions on the use of the land without formally taking the property. The Supreme Court is considering this issue in a case called Annapolis Group Inc v Halifax Regional Municipality. The Canadian Constitution Foundation, a legal charity dedicated to defending individual rights and freedoms, is intervening in the case.
The common law, we argue, recognizes that all Canadians have broad rights to own, use and enjoy property and guards against authorized government interference. All taking of property by government must be validly authorized either by the clear terms of a statute, or under the Crown prerogative relating to the defence of the realm. For example, both federal and provincial expropriations legislation require compensation for property expropriated by the government. Think of property expropriated to build new highways, like when Ontario’s 407 was constructed, or to expand hospitals.
But whether authorized by statute or under Crown prerogative, expropriation triggers a presumptive common law right to compensation that can be rebutted only by clear statutory language to the contrary. While it is sometimes suggested that this right to compensation is based only in statute, we argue case law demonstrates otherwise.
For example, in Manitoba Fisheries Ltd. v The Queen the Supreme Court of Canada held that the federal government owed compensation for the goodwill in the appellant company’s business, despite the fact that there were no statutory provisions requiring the federal government to pay such compensation. We argue compensation, based on the common law rather than on powers given to the government, is required even when property is taken under the Crown prerogative.
By statute, governments can regulate property, but at the same time they must also protect property owners. Property rights were recognized in the 1960 Canadian Bill of Rights, although this document is a mere statute, not a part of the Constitution and applies only to the federal government.
However, in de facto expropriation, property interests are currently not well-protected. This is not just because of the absence of constitutional entrenchment, but also by failure of the law.
The current test for de facto expropriation is laid out in a 2006 Supreme Court of Canada case called Canadian Pacific Railway Co. v Vancouver. To prove a de facto expropriation has occurred, the law requires the claimant to show two things.
First, that the government has acquired a beneficial interest in the property or flowing from it.
Second, it must demonstrate the removal of all reasonable uses of the property. This is an extremely high threshold – so high that it is inaccessible in cases even where any casual observer can see an expropriation has occurred. Such is the case in Annapolis.
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In Annapolis, a property developer, Annapolis Group, owns 965 acres of land in Halifax zoned for development. The land is beside a large provincially designated wilderness area. In 2006, Halifax undertook to create a regional park beside this wilderness area. The proposed park includes the Annapolis lands. However, Halifax did not zone the Annapolis lands for a public park. They were zoned for future serviced residential development.
But development cannot begin until it is approved by Halifax through the secondary planning process. If Halifax drags its feet or throws up roadblocks, the land can continue to be used as a public park without needing to pay compensation. This is what Annapolis alleges has happened.
Halifax has arbitrarily refused Annapolis’ requests for secondary planning approval, which has kept the land undeveloped for 15 years. Further, Halifax has promoted the privately owned Annapolis Lands as a public park, including by allowing trail signs to be posted with the Halifax Regional Municipality logo.
It seems quite transparent that Halifax is intentionally refusing to allow development and simultaneously encouraging the use of the Annapolis lands as a park because it means they obtain a park for free.
The Halifax Regional Municipality Charter requires the city to acquire lands it zones for future public use within one year. But a public document about the park development produced by the city stated that “the reason the privately-owned lands were not zoned ‘Regional Park’ at the time of the adoption of the regional plan was because, as mandated by provincial planning legislation, [Halifax Regional Municipality] would have been required to purchase the subject lands within a one year timeframe.”
You’d think this would obviously amount to de facto expropriation. The city has used its powers to obtain the benefit of a park without paying for it and caused the property to languish in a completely undevelopable state for 15 years, purposely refusing Annapolis’ attempts to develop the property.
However, the Nova Scotia Court of Appeal held that Annapolis did not satisfy the current highly restrictive test for de facto expropriation. The court ruled that despite Annapolis’ argument that Halifax encouraged the public to use the property as a public park, the city had not acquired a beneficial interest and that Annapolis’ reasonable uses of the land had not changed. The Supreme Court will now consider whether this highly restrictive test should be reformulated.
The Canadian Constitution Foundation intervened in the appeal, which was heard on Feb. 16. The CCF offered a new proposed test: a de facto expropriation takes place whenever government action results in a fundamental deprivation of the enjoyment of the attributes of ownership.
There are two distinct ways this can happen. First, by denying the owner’s right to exclusive possession. This is when an owner of an exclusive property interest has been permanently or indefinitely denied access to the property or where the government has permanently or indefinitely occupied the property.
The CCF argued that a de facto expropriation can also occur a second way: by denying the owner’s right to the beneficial use of the property. An owner who is left with notional uses of property, none of which have any economic value, would in most cases be denied the right to beneficial use and a de facto appropriation should generally be found.
Adopting this proposed test would change the standard for de facto expropriation, which currently has an exceptionally and impractically high bar. This test would provide greater protections to Canadians’ property rights, which lack the constitutional protections of these rights that many other countries have, and would better preserve the property rights as a foundational principle of liberal democracy.