Canada’s highest court to rule on case that puts municipalities’ power to preserve nature on the line

A Halifax-based case now before the Supreme Court of Canada could have dire implications for the power of municipalities to protect land from development.

The legal battle pits a developer seeking to build a suburb on a parcel of privately owned land against the Halifax Regional Municipality (HRM), explains Randy Christensen, Randy Christensen, an environmental lawyer with Ecojustice, an environmental law charity which intervened on its own behalf in the case.

The municipality has long discussed turning the land into a regional park but has made no formal moves. Its refusal to allow the landholder, development company Annapolis Group Inc., to develop housing on the site prompted the company to mount a de facto expropriation argument in court. It argues the government has so deprived the company of its ability to use the parcel of land five kilometres from downtown Halifax that it has effectively stripped away its title. De facto expropriation differs from expropriation where the government under statute takes private land for a public purpose and pays the owner.

The 965 acres of land just east of the provincially protected Blue Mountain-Birch Cove Lakes Wilderness Reserve and west of Highway 102 has been owned by Annapolis Group for decades. It is currently zoned as an urban reserve, a somewhat ambiguous category that allows for residential development starting in 2031 unless zoning is amended earlier.

The municipality has made some moves in recent years to make the park a reality. Nature enthusiasts and environmentalists have been working to protect the area for decades, citing its ecological and environmental importance. In 2018, the city bought 80 hectares of land from another group, and in 2019, another 130 hectares were purchased with help from a federal grant. Both parcels are adjacent to the 1,767-hectare Blue Mountain-Birch Cove Lakes Wilderness Reserve. The land owned by Annapolis Group is yet to be designated as part of the regional park.

The company has long sought to develop the land into a suburb and has twice been denied zoning requests by the municipality. In 2016, after requests for rezoning, the group’s bid to commence the second phase of planning its development was denied, effectively squashing any current development plans.

Council said it is now considering the land's future — the current HRM regional plan outlines the area as a regional park. If council moves forward with that decision, it will be required to pay Annapolis Group for the land.

However, the group says the HRM has so long denied them of any practical use of their land that they deserve money now — $120 million in damages. The HRM has not formally valued the land, but it’s possible it would mark the land at a lower price point.

In 2019, the provincial court of Nova Scotia initially ruled in favour of the developer, but that was then overturned by the Nova Scotia Court of Appeal. Now, the Supreme Court of Canada has agreed to hear the case.

Christensen said if the court rules in favour of the developer, it could change the test for de facto expropriation and set a precedent for landowners to sue governments for compensation when they deny development permits.

Christensen said government control over zoning and implementing a vision for an urban area should be respected.

“Expanding the interpretation of de facto expropriation would mean governments across Canada could face threats of litigation and be ordered to pay land- or rights-holders when considering actions to protect the environment and otherwise regulate in the public interest,” he said.

“This places an undue financial burden on governments that could threaten conservation goals.”

Canada’s National Observer reached out to Annapolis Group for comment, but it did not respond in time for publication. However, a press release from 2017 announced the company was suing the municipality after a decade of trying to find a compromise.

"Since HRM is not going to allow us to develop our lands, we are simply asking to receive fair compensation from the municipality for the lands that have been effectively expropriated," said Rob Gillis, vice-chair of Annapolis Group in the release.

"We don't want to be in this position, but HRM has given us no other choice."

Canada’s National Observer reached out to the HRM for comment, which said it was not able to provide a statement on the case while it’s before the courts.

Cases like this aren’t common in Canada, said Christensen, adding that could change depending on the verdict, which is expected in the coming months.

“Under Canadian law, ownership of land does not entitle a landowner to do whatever they want with their property,” he said.

“Though Annapolis Group is currently limited in their uses for the land, their rights must be balanced with the right[s] of [the] municipality to take the appropriate time to consider how development of this land adjacent to a provincially designated wilderness area could best serve their community and the environment.”

He points to the last time de facto expropriation went to the Supreme Court — a 2006 case between Canadian Pacific Railway and the City of Vancouver over the land corridor now known as the Arbutus Greenway. CPR has owned the defunct railway running through the area for over a century, and wanted to develop the area for commercial and residential use. CPR lost the case.

There’s another active case of de facto expropriation that’s also worth paying attention to, said Christensen.

Initially dismissed, but now also under appeal, Altius Royalty Corporation is accusing the governments of Alberta and Canada of de facto expropriating its investments in coal produced by the Genesee power plant in Alberta, claiming $190 million in damages.

However, the federal government in 2016 announced plans to move away from coal by 2030 — Altuis said the damages represented future profits it would have made from its royalties, which it purchased before the policy change.

The judge disagreed, but the company has since appealed that decision.

“Surely, and without more, the law cannot be that a regulator purporting to regulate in the interests of public health and environmental preservation must pay the creator of a health or environmental hazard to stop polluting,” read part of the initial judgment.

“That is not to say that there has been a specific finding that there is or is not a health hazard at the emission levels set here. That issue is simply not before the court from an evidentiary point of view, and the regulation has not been challenged as being arbitrary or capricious.”

Christensen said both cases underscore the importance of de facto expropriation and how it connects to environmental protection.

“Under Canadian law, even though these cases are occasionally brought, there hasn't been a lot of success. Particularly in cases where people are challenging environmental regulations or health regulations,” he said.

“And that’s why we want to make sure this law protects that ability. We're not trying to create a situation where municipalities can unfairly treat developers, but we need our governments to have the ability to protect public health and safety. And that's why we got involved in this.”