De Facto Expropriation: De Facto Expropriation Annapolis Group Inc. v. Halifax Regional Municipality, 2022 SCC 36

August 22, 2023 | By Troy Baril, Jacey Safnuk, and Fatima Ahmed

A summary of the case:

On October 21, 2022, the Supreme Court of Canada (“SCC”) delivered its 5-4 decision in which it overturned the summary dismissal of a constructive taking claim delivered by the Court of Appeal for Nova Scotia. The Appellant, Annapolis Group Inc., alleged the Respondent, Halifax Regional Municipality, had constructively taken its lands without compensation by refusing to allow serviced development on such lands. The Appellant alleged the municipality’s regulatory measures deprived the landowner of all reasonable or economic uses of its land, resulting in constructive taking without compensation. Thus, through this appeal, the SCC addressed whether acquisition of beneficial interest in property under a constructive taking test requires land to actually be taken from an owner and acquired by public authority, and whether the intention of the public authority is relevant to analysis of a constructive taking claim.

De facto expropriation in this context is defined as the constructive taking, which comes from common law and occurs where a public authority, through its regulation of land, in effect causes expropriation. Although the private landowner still holds title to the land, the public authority’s regulation of it leaves the landowner with no reasonable use for the property. Common Law precedent requires governments to pay compensation for land it takes (unless the government is protected by other legislation). It is also important to establish a distinction between de facto expropriation and de jure takings: the latter involves acquisition of legal title, while the former involves the acquisition of a proprietary interest without legal title.

History of the situation as described by the Court:

“Over time, starting in the 1950s, Annapolis acquired 965 acres of land (“Lands”) with the intention of eventually securing enhanced development rights and reselling it. In 2006, Halifax adopted a planning strategy to guide land development in the municipality, including the Lands, over a 25-year period. The strategy reserved a portion of the Lands for possible future inclusion in a regional park. It also zoned the Lands as “Urban Settlement”, which denotes an area which can be developed for serviced residential communities within 25 years; and, as “Urban Reserve”, which identifies land that could be developed beyond the 25-year horizon. These designations contemplate future service development, but for serviced development to occur on the Lands, Halifax must adopt a resolution authorizing it. Beginning in 2007, Annapolis made several attempts to develop the Lands. Ultimately, by resolution in 2016, Halifax refused to initiate the secondary planning process, and consequently, Annapolis sued, alleging a constructive taking, misfeasance in public office, and unjust enrichment.”[1]

“With respect to the constructive taking claim, Annapolis contends that Halifax’s regulatory measures have deprived it of all reasonable or economic uses of the Lands, resulting in a constructive taking without compensation. Halifax sought summary dismissal of Annapolis’ constructive taking claim. The motion judge dismissed Halifax’s motion, finding that Annapolis’ constructive taking claim raised vast genuine issues of material fact requiring a trial. On appeal by Halifax, the Court of Appeal held that Annapolis’ constructive taking claim did not have a reasonable chance of successfully establishing, as required by Canadian Pacific Railway Co. v. Vancouver (City), 2006 SCC 5, [2006] 1 S.C.R. 227 (“CPR”), an acquisition by Halifax of a beneficial interest in the Lands or flowing from the Lands —which necessitated that the Lands actually betaken from Annapolis and acquired by Halifax —and the removal of all reasonable uses of the Lands. It was also of the view that Halifax’s intended use for the Lands was not relevant to the constructive taking analysis. The Court of Appeal struck the claim.”[2]

Common law test for constructive taking:

This case turned on the common law test for constructive taking set out by the SCC in CPR. To find a constructive taking, two elements must be established: (a) that the public authority has acquired a beneficial interest in the property at issue or flowing from it; and, (b) all reasonable uses of the property are removed.

What the Court said:

The majority and the dissent held differing views with respect to the interpretation of the phrase “acquisition of a beneficial interest” and whether a public authority’s intention is a factor courts should consider in deciding a constructive taking claim. The majority held the acquisition of a beneficial interest is not limited to actual taking of lands. Rather, a public authority may acquire a “beneficial interest” by gaining an advantage in respect of the lands. The majority clarified that the focus of a constructive taking claim is on the effects a regulatory measure has on the landowner and advantages flowing to the public authority. The majority further held the public authority’s intention, while not an element of the CPR test, is a relevant factor to be considered in the context of a constructive taking. As the actual acquisition of land is not required to establish a constructive taking claim, and there remains genuine issues of material fact to be determined, the majority allowed the appeal and restored the motion judge’s order allowing Annapolis’ claim to proceed to trial.

As a result of the SCC’s ruling, the common law test for constructive taking has been updated to the following:

  1. The majority made it clear: actual acquisition of a proprietary interest by government is not required to show constructive taking. Rather, the first part of the test refers to an advantage flowing to the state, and not a proprietary interest.
  2. There is a distinction between de facto and de jure acquisition. In de facto expropriation, the interest acquired by the government body can flow from the property. In fact, Justices Côté and Brown wrote, “what must be shown by the property owner can fall short of an actual acquisition by the state”. Thus, the “beneficial interest” defined within CPR can be defined as any advantage in respect to the lands; and
  3. A government body’s inferred intent behind its exercise of regulatory authority may influence the Courts in their assessment of whether a landowner has lost all reasonable uses of its property.

Majority and dissenting opinions

According to the majority decision, very little, if anything, will change as the decision simply sheds light on the existing law of constructive taking, and this case is a very specific set of facts.  Landowners who add to their holdings over time and experience a narrowing of development potential may be able to claim for constructive taking. Similarly, the Court clarified that a municipality’s refusal to up-zone land is not a constructive taking if a single reasonable use of the property remains. The majority also stated a municipality’s intention when regulating land use plays a supporting role in determining whether any reasonable uses remain on the property. Therefore, if a municipality has refused development approval in the past, and is unlikely to do so in the future, this is material to the constructive taking claim. However, provincial legislatures are free to create statutory immunity for municipalities who take private property in the public interest.

According to the dissenting decision, which opinion was shared by Halifax and Attorney General interveners, this updated test will result in a chilling effect on governments charged with regulating land use planning. Thus, the dissenting justices fear the Court may have opened the door for more claims for constructive taking.

Practical Application

The SCC has confirmed demonstrating a municipal by-law removes the reasonable uses a landowner can make of immovable property is sufficient to show disguised expropriation. Even if it does not amount to total confiscation of the property. So long as it is impossible to use the land reasonably, that is enough. Therefore, the SCC has affirmed that actual taking of property is not required. The broadening of the test on constructive taking has significant consequences for municipalities as these bodies now need to ensure the derived results of their decision do not constitute a “beneficial interest”. In addition, municipalities also need to ensure imputed intent of constructive taking cannot be attributed to them during their exercise of regulatory authority.


This publication is provided as an information service and may include items reported from other sources. We do not warrant its accuracy. This information is not meant as legal opinion or advice. Contact Procido LLP ( if you require legal advice on the topic discussed in this article.

[1] Annapolis Group Inc. v. Halifax Regional Municipality, 2022 SCC 36.

[2] Ibid.

%d bloggers like this: