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An “Advantage” Over Land – Supreme Court Broadens Criteria for Constructive Taking

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Real Estate Bulletin

In its 5-4 decision in an appeal from a motion for summary judgment, the Supreme Court of Canada has arguably strengthened property rights in Canada. 

On October 21, 2022, the Supreme Court clarified the test on constructive taking in the case of Annapolis Group Inc. v. Halifax Regional Municipality[1]. This decision will be of interest to clients dealing with development or other applications before local governments and regulators.

In this case, the developer, Annapolis, had engaged in a land banking exercise. Annapolis amassed a significant landholding, with the intention of developing its property in the future. The Halifax Regional Municipality (“Halifax”) passed a restrictive zoning and planning regime that effectively prevented Annapolis’ development. The ostensible purpose of Halifax’s zoning was to ensure that the land could be used for park purposes. This raised a question about whether the land had effectively been expropriated by the municipality.

The Test for Constructive Taking

In confirming that the matter may proceed to trial, the Supreme Court clarified – and arguably, changed – the test for  “constructive taking” , originally established in Canadian Pacific Railway Co. v. Vancouver (City).[2]

Traditional expropriations require the public authority to acquire legal title to part or all of the subject property. A “constructive taking” refers to an appropriation of private property by a public authority exercising its regulatory powers. Constructive takings have been recognized for decades; however, the CPR test required courts to find that the public authority acquired a beneficial interest in, or flowing from, the property.

Specifically, the CPR test required courts to consider: (1) whether the public authority has acquired a beneficial interest in the property or flowing from it; and (2) whether the state action has removed all reasonable uses of the property.[3] In affirming the CPR test in Annapolis, the Supreme Court clarified that a "beneficial interest" need not require an actual acquisition, but may be more broadly construed as an “advantage” flowing to the state.


The facts of this case may be familiar to developer clients. Annapolis, the developer, began acquiring land for the purpose of developing and reselling it. In 2006, Halifax adopted a regional planning strategy that included Annapolis’ lands. Under Halifax’s 2006 Regional Municipal Planning Strategy, about a third of Annapolis’ lands were designated “Urban Settlement”, which meant they could be developed for serviced residential communities within 25 years. The remaining two‑thirds of Annapolis’ lands were designated “Urban Reserve”, which meant they could be developed after 25 years. Serviced development on Annapolis’ lands could not occur, however, unless Halifax adopted a municipal resolution authorizing a “secondary planning process” and amended its zoning by-law to allow residential development.[4]

Beginning in 2007, Annapolis made several attempts to develop its lands. Annapolis urged Halifax to take legislative measures to permit Annapolis to build residential communities on its lands. Halifax refused to do so, preferring to maintain the status quo. In 2016, Halifax adopted a municipal resolution stating that it would not authorize a secondary planning process on Annapolis lands “at this time”. This refusal led to Annapolis’ suing Halifax over the de facto taking of its lands, among other allegations, such as abuse of public office and unjust enrichment.[5]

Halifax tried to dispose of the constructive taking issue by way of summary dismissal. The motion judge dismissed Halifax’s motion, finding that Annapolis’ constructive taking claim raised genuine issues of material fact requiring a trial. The Nova Scotia Court of Appeal disagreed with the motions judge, concluding that Annapolis’ constructive taking claim had no reasonable chance of success following the CPR test, and granted partial summary dismissal.

Beneficial Interest Expanded to Any Advantage Conferred to State

The Supreme Court disagreed with the Court of Appeal’s analysis, and in doing so, also clarified the test for a constructive taking. In its view, the “beneficial interest” part of the test is “concerned with the effect of the regulatory measure on the landowner, and not with whether a proprietary interest was actually acquired by the government”.[6] In other words, “beneficial interest” need not refer not to an actual acquisition of equity from the beneficial owner of the property, but instead, may be any “advantage” that flows to the state. To require an actual taking would mean it is no longer a “constructive” taking.

The Supreme Court also emphasized that when undertaking this analysis, substance should prevail over form: “A court deciding whether a regulatory measure effects a constructive taking must undertake a realistic appraisal of matters in the context of the specific case…[including] [t]he substance of the alleged advantage”.[7]

The State’s Intention

The Supreme Court also stated that evidence of the state’s intention is not irrelevant to an analysis of constructive taking: “the intention to take constructively, if proven by the claimant, may support a finding that the landowner has lost all reasonable uses of their land (inasmuch as a finding of this effect can be supported by evidence that such an effect was intended).” However, it should also be noted that an absence of this intention does not necessarily preclude a claim.[8] What ultimately matters, irrespective of intent, is whether the state-imposed restrictions on the property conferred an advantage on the state that effectively amounts to a taking.[9]

Application in Annapolis

Ultimately, the Supreme Court concluded that "Annapolis is entitled to adduce evidence at trial to show that, by holding Annapolis' land out as a public park, Halifax has acquired a beneficial interest therein; and that, because Halifax is unlikely to ever lift zoning restrictions constraining the development of Annapolis' land, Annapolis has lost all reasonable uses of its property."[10]

Future Applications

Following Annapolis, the first branch of the CPR test for constructive taking has been expanded to potentially recognize a taking wherever the public authority has acquired an “advantage” with respect to the subject lands. Presumably, this paradigm shift will lower the overall threshold for parties wishing to assert a constructive taking by public authorities.

[3] Ibid. at para. 30.

[4] Supra note 1 at para. 95.

[5] Ibid. at para. 96-97.

[6] Ibid. at para. 38.

[7] Ibid. at para. 45.

[8] Ibid. at para. 53.

[9] Ibid. at para. 57.

[10] Ibid. at para. 4.

Contact the Authors

If you have any questions regarding land planning matters or expropriations, please contact Sarah Turney or Anna Lu.

Contact the Authors




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