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Expropriation - Compensation. St. John’s (City) v. Lynch
In St. John’s (City) v. Lynch (SCC, 2024) the Supreme Court of Canada considered the compensation valuation of expropriated land, here particularly how zoning status effects compensation:[2] The starting point for assessing compensation for expropriation is determining the property’s market value. It is well established that land use restrictions impact market value and they are normally taken into account when fixing compensation. The jurisprudence reveals an exception: changes in value resulting from the expropriation scheme itself are to be ignored in the compensation assessment (the “Pointe Gourde principle”; see Pointe Gourde Quarrying and Transport Co. v. Sub-Intendent of Crown Lands, [1947] A.C. 565 (P.C.)). This principle has been incorporated into many jurisdictions’ expropriation statutes, including s. 27(1)(a) of Newfoundland and Labrador’s Expropriation Act, R.S.N.L. 1990, c. E-19, which is at the centre of this case. Determining which enactments form part of the expropriation scheme, and are thus ignored for valuation purposes, is the key factual question that decision makers must grapple with.
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V. Analysis
A. Compensation for Expropriation
[27] A “taking” — defined as the “forcible acquisition by the Crown of privately owned property . . . for public purposes” — can occur in two ways (K. Horsman and G. Morley, Government Liability: Law and Practice (loose‑leaf), at § 5:1). Formal expropriation (a de jure taking) occurs where a public authority acquires legal title (typically through the authority’s invocation of a statutory expropriation framework) (Annapolis Group Inc. v. Halifax Regional Municipality, 2022 SCC 36, at paras. 18 and 104). Constructive expropriation (a de facto taking), on the other hand, involves the appropriation of private property by a public authority exercising its regulatory powers (Annapolis, at para. 18). In this case, the Lynch Property was constructively expropriated as the City had acquired a beneficial interest in it and all reasonable uses of the property had been removed. I note that the expropriation decision, which is not under appeal, applied the test from Canadian Pacific Railway Co. v. Vancouver (City), 2006 SCC 5, [2006] 1 S.C.R. 227, but the conclusion with respect to the Lynch Property is consistent with this Court’s more recent articulation of the test for constructive expropriation set out in Annapolis.
[28] A taking of property triggers a presumptive entitlement to compensation absent clear statutory language showing an intention not to compensate (Annapolis, at para. 21; Attorney‑General v. De Keyser’s Royal Hotel, [1920] A.C. 508 (H.L.), at p. 542).
[29] The basic measure of compensation is the same for both formal and constructive expropriation: compensation is based on the property’s market value. Market value is codified as the starting point in several federal and provincial expropriation statutes, including the applicable Newfoundland and Labrador statute (Expropriation Act, s. 27(1)(a); other examples include Expropriation Act, R.S.C. 1985, c. E-21, s. 26(2); Expropriations Act, R.S.O. 1990, c. E.26, ss. 13 and 14).
[30] Compensation based on market value naturally flows from the objective of economic reinstatement. Displaced property owners should be put back in the same economic position that they were in prior to the expropriation: no better and no worse (see E. C. E. Todd, The Law of Expropriation and Compensation in Canada (2nd ed. 1992), at pp. 109-10; Irving Oil Co. v. The King, 1946 CanLII 44 (SCC), [1946] S.C.R. 551, at p. 556; Halliday’s Estate v. Newfoundland Light & Power Co. (1980), 29 Nfld. & P.E.I.R. 212 (Nfld. C.A.), at paras. 21-22). Furthering economic reinstatement accounts for the rights and legitimate expectations of property owners while ensuring that governments can act in the public interest without paying a premium for doing so. As Lord Nicholls of Birkenhead explained in Waters v. Welsh Development Agency, [2004] UKHL 19, [2004] 2 All E.R. 915, at para. 1, powers of expropriation are essential to a modern democratic society, but the “obligation to pay full and fair compensation” goes “[h]and in hand”.
[31] In Diggon-Hibben Ltd. v. The King, 1949 CanLII 50 (SCC), [1949] S.C.R. 712, at p. 715, Rand J. identified the key question for assessing compensation as being what the property owner at the moment of expropriation would “pay for the property rather than be ejected from it”. The relevant market value is the “value to the owner” and not the property’s value in the eyes of the taker (the public authority) (Cedars Rapids Manufacturing and Power Co. v. Lacoste, 1914 CanLII 585 (UK JCPC), [1914] A.C. 569 (P.C.), at p. 576; Irving Oil, at p. 555; Todd, at pp. 109-12).
[32] In the land expropriation context, market value may reflect a higher and better use of the land than its current state — in other words, recognizing the land’s development potential (see, e.g., Lasade Enterprises Ltd. v. Newfoundland (1993), 1993 CanLII 7775 (NL CA), 114 Nfld. & P.E.I.R. 19 (Nfld. C.A.), at para. 26; Miller v. Province of Newfoundland (1977), 14 Nfld. & P.E.I.R. 110 (Nfld. C.A.), at paras. 22-27; Todd, at pp. 134-35). But the jurisprudence leaves no doubt that zoning regulations and other land use restrictions properly bear on a property’s market value (and thus compensation for expropriation). In Musqueam Indian Band v. Glass, 2000 SCC 52, [2000] 2 S.C.R. 633, at para. 47, Gonthier J. explained:Legal restrictions on land use . . . may affect the market value of freehold property. In Revenue Properties [Co. v. Victoria University (1993), 1993 CanLII 9432 (ON SCDC), 101 D.L.R. (4th) 172 (Ont. Div. Ct.)], at p. 182, the court held that “[a]ll applicable statutes and laws relating to use such as zoning by-laws must be considered” when assessing land value. . . . To determine land value, whether as vacant or as improved, the appraiser . . . considers the highest and best use that is “legally permissible, physically possible, financially feasible, and maximally productive”. Compensation is not to be based on speculative or unrealistic expectations about higher-value uses to which a property could be put (Lasade, at para. 27).
[33] That zoning enactments affect the amount of compensation due to an owner is particularly appropriate in the context of constructive expropriation, where it has been repeatedly affirmed that restrictions on land use, on their own, do not constitute a taking. “Ordinarily, in this country, the United States and the United Kingdom, compensation does not follow zoning either up or down” (The Queen in Right of the Province of British Columbia v. Tener, 1985 CanLII 76 (SCC), [1985] 1 S.C.R. 533, at p. 557). More is required for regulation to constitute expropriation than “drastically limiting use or reducing the value of the owner’s property” (Annapolis, at para. 43, quoting Mariner Real Estate Ltd. v. Nova Scotia (Attorney General), 1999 NSCA 98, 177 D.L.R. (4th) 696, at p. 716; see also Urban and Rural Planning Act, 2000, S.N.L. 2000, c. U-8, s. 5). Constructive expropriation only occurs when a beneficial interest accrues to the state and the regulatory measure removes all reasonable uses of the property (Annapolis, at para. 4).
[34] Beyond the starting point of a property’s market value, the compensation for expropriation can be further affected by other statutory and common law factors. For example, this Court’s decision in Toronto Area Transit Operating Authority v. Dell Holdings Ltd., 1997 CanLII 400 (SCC), [1997] 1 S.C.R. 32, considered the extent to which a property owner was entitled to recover disturbance damages as part of their compensation under s. 13(2)(b) of Ontario’s Expropriations Act. Newfoundland and Labrador’s statute prescribes a series of rules applicable to the determination of compensation (s. 27). It is not necessary to examine all of these factors in these reasons. Only one is in issue on this appeal: the direction in s. 27(1)(a) that no account shall be taken of changes in value resulting from the expropriation scheme itself (the “compulsory acquisition of the land”). This is sometimes referred to as the Pointe Gourde principle.
B. The Pointe Gourde Principle
[35] The key principle from Pointe Gourde was articulated by Lord MacDermott: “. . . compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition” (p. 572).
[36] The factual circumstances of Pointe Gourde demonstrate how this principle directly stems from considering the property’s value to the owner, not the taker. The case involved the expropriation of land used as a quarry for the purpose of constructing a naval base in Trinidad. There was no dispute that compensation was to reflect the “value of the quarry as a going concern” (Todd, at p. 159). However, the quarry’s “value was increased by the fact that a base was being established in the vicinity for which a large quantity of stone in a readily accessible situation was required” (Pointe Gourde, at p. 572). The quarry owners sought a higher valuation based on claims they would have been even more profitable because their stone would be used to build the base. The Judicial Committee of the Privy Council held that the increase in value was not compensable as it was entirely due to the scheme underlying the expropriation. The special need for the stone only arose because a naval base was to be constructed, prompting the need for the expropriation in the first place. While the public authority benefitted from the large quantity of stone that was readily accessible (i.e., it was valuable to the taker), it presented no additional value to the owners in the absence of the naval base project and expropriation.
[37] The principle that changes in value resulting from the expropriation scheme are to be ignored in assessing compensation was not created in Pointe Gourde, however. Several early 20th century decisions recognized the principle (see, e.g., Cunard v. The King (1910), 1910 CanLII 46 (SCC), 43 S.C.R. 88, at pp. 99-100, per Duff J., dissenting; Re Gibson and City of Toronto (1913), 1913 CanLII 531 (ON CA), 11 D.L.R. 529 (Ont. S.C. (App. Div.)), at pp. 536-37). Those authorities recognize that compensation is to be assessed without reference to decreases in value caused by the expropriation scheme as well (Cunard, at p. 100; Gibson, at p. 537). In effect, the principle “seeks to remove extrinsic influences associated with the taking” (I.F., Canadian Home Builders’ Association, at para. 4). Ignoring both increases and decreases in market value caused by the expropriation scheme results in neither an economic burden nor a windfall for the owner. As the intervener the Attorney General of British Columbia points out, applying the Pointe Gourde principle facilitates economic reinstatement, allowing the owner to purchase an equivalent replacement property (I.F., at para. 23).
[38] Expropriation statutes have incorporated the Pointe Gourde principle, though the terminology employed varies between them. For example, s. 27(1)(a) of Newfoundland and Labrador’s Expropriation Act provides that “no account shall be taken of the compulsory acquisition of the land” in fixing compensation. In Ontario, “any increase or decrease in the value of the land resulting from the development or the imminence of the development in respect of which the expropriation is made or from any expropriation or imminent prospect of expropriation” is excluded from consideration (Expropriations Act, s. 14(4)(b)). Section 33 of British Columbia’s expropriation statute lists several elements of the expropriation “scheme” that are to be ignored in assessing compensation, including “the anticipated or actual purpose for which the expropriating authority intends to use the land”, increases or decreases in value resulting from the expropriation and related development (or the prospect of either), and the enactment of zoning regulations “made with a view to the development in respect of which the expropriation is made” (Expropriation Act, R.S.B.C. 1996, c. 125). Although they share some principles, the specific terms of the relevant jurisdiction’s statutory provisions must ground any compensation analysis.
C. The Scope of the Scheme to be Ignored
[39] Applying the Pointe Gourde principle requires that changes in value resulting from the expropriation scheme be ignored in assessing compensation. The key question is, therefore: What is the scope of the expropriation scheme?
[40] There are different dimensions to that question. Temporally, the inquiry exposes a tension in expropriation law. On the one hand, property is expropriated by the state at a defined moment in time. In the constructive expropriation context, this happens when a beneficial interest accrues to the state and all reasonable uses of the property are removed (Annapolis, at para. 4). On the other hand, this Court has recognized that expropriation is a process:The courts have long determined that the actual act of expropriation of any property is part of a continuing process. In [City of Montreal v. McAnulty Realty Co., 1922 CanLII 44 (SCC), [1923] S.C.R. 273], at p. 283, Duff J. noted that the term “expropriation” is not used in the restrictive sense of signifying merely the transfer of title but in the sense of the process of taking the property for the purpose for which it is required. [Emphasis in original.]
(Dell Holdings, at para. 37) (1) Compensation Jurisprudence
[41] Both the City and the respondents cite several authorities on this appeal demonstrating that regulatory enactments made with a view to the expropriation are considered to be part of the expropriation scheme and are thus ignored in calculating compensation. Conversely, changes in value caused by enactments determined to be “independent” of the expropriation are taken into account. The parties frame their arguments around this dichotomy (see, e.g., A.F., at paras. 37, 48, 89-90, 95-96, 101, 105, 107-8 and 120; R.F., at paras. 45 and 87). It is instructive to review some of these authorities.
[42] In Gibson, the City of Toronto adopted a by-law preventing the construction of any building on a 17-foot strip of property fronting onto St. Clair Avenue. The property was later expropriated for the purpose of widening the road. Writing for the majority, Hodgins J.A. reasoned that an “authority ought not to be able, by the exercise of its other powers immediately prior to the taking, to reduce the value of what it seeks and intends to acquire and of which it is contemplating expropriation” (p. 536). It was open to the property owner to prove that the by-law freezing development “was not really an independent legislative act . . . but had an intimate connection with, and was really part of, the scheme for widening St. Clair avenue” (p. 538). Gibson illustrates that the enactment of a by-law freezing or limiting development in contemplation of future expropriation cannot be used as a mechanism to reduce the compensation the state authority will have to pay the property owner.
[43] Kramer concerned lands in Regina that had been initially zoned for residential development. City Council then enacted a by-law that repealed the previous zoning and limited the subject lands to “public service use”. Eight months previously, the Wascana Centre Authority — a provincial entity — was created and given the power to expropriate lands by The Wascana Centre Act, 1962, S.S. 1962, c. 46. The Wascana Centre Authority expropriated the appellants’ property for a public interest development project. This Court divided on whether the city’s zoning by-law limiting development to “public service use” should be ignored in assessing the appellants’ compensation. For the majority, Abbott J. endorsed the arbitrator’s conclusion that the zoning by-law was an “independent zoning enactment” even though it was “passed . . . with knowledge of the Wascana Centre Scheme” (p. 239). He noted that the zoning by-law crystallized “an overall city plan” that had been designed over a year prior to its enactment. Compensation was therefore to be assessed in light of the property’s limited “public service use”. Spence J., writing separately, was troubled by the timing of the zoning by-law’s enactment. In his view, the by-law “was simply a step . . . in the setting up of the Wascana Centre” and the “purpose as to the lands in question [was] very plainly to prevent [the residential] development . . . envisaged by the appellants” (pp. 246-47). In sum, both opinions centered, but disagreed, on whether the public service use zoning by-law was an independent enactment or was made with a view to the expropriation.
[44] Two Newfoundland decisions contrasted by the application judge and the Court of Appeal below offer a helpful comparison. In Halliday, a development freeze was placed on land situated within the area designated for the future C. A. Pippy Park on the outskirts of St. John’s. The court held that, “while there was no immediate intent to expropriate the lands in question” when the development freeze was implemented, “there was a declared intent to control development thereon to the end that the lands would be available for the use and purpose of the [C. A. Pippy Park] Commission, as the park was gradually developed” (para. 15). I agree with the City’s argument that Halliday supports the proposition that “an authority cannot downzone or ‘freeze’ a property’s development in anticipation of the need to acquire the property, thereby depreciating the value of the property in order to reduce the compensation payable” (A.F., at para. 106). The regulatory enactment in that case was made with a view to expropriation. On the other hand, the court in Atlantic Shopping Centres Ltd. v. St. John’s (City) (1985), 1985 CanLII 1876 (NL CA), 56 Nfld. & P.E.I.R. 44 (Nfld. C.A.), determined that there was no evidence to suggest that a restrictive enactment “was done in anticipation of” the particular road expansion project for which the land was expropriated (para. 20). Of significance was the fact that the restriction in issue was the same as that which applied to all other lands in the city. Distinguishing Halliday, the court concluded that the impugned regulation was an independent enactment and was not to be ignored in assessing compensation.
[45] Lastly, in Windsor (City) v. Paciorka Leaseholds Ltd., 2012 ONCA 431, 111 O.R. (3d) 431, at para. 27, the Court of Appeal for Ontario endorsed the view of Sachs J., dissenting, in the court below (2011 ONSC 2876, 106 O.R. (3d) 690 (Div. Ct.)). At para. 130, she had relied on Jewish Community Centre of Edmonton Trust v. The Queen (1983), 27 L.C.R. 333 (Alta. L.C.B.), at p. 360, which said that an enactment is ignored in assessing compensation if it is made “for the purpose and ‘with a view to the development under which the land is expropriated’”. In Paciorka, the City of Windsor expropriated land for the purpose of creating a nature park. A Provincial Policy Statement enacted under Ontario’s Planning Act, R.S.O. 1990, c. P.13, applied to environmentally sensitive lands across the province, including the subject lands, and imposed development restrictions. The Court of Appeal adopted the dissenting judge’s conclusion that the Provincial Policy Statement could not be ignored as it “applies across the province and was not directed at the Expropriated Lands”, and was “passed independently of, and without any connection to, the specific development for which the land was expropriated” (para. 27 (emphasis deleted)).
(2) Determining the Scope of the Expropriation Scheme
[46] The weight of the jurisprudence on this subject affirms that, in determining whether a regulation’s effect on a property value should be ignored for compensation purposes (the application of the Pointe Gourde principle), the key question is whether the enactment was made with a view to the expropriation or, conversely, was an independent enactment. This jurisprudential trend is reinforced by several expropriation statutes that expressly state that, in determining market value, no account may be taken of enactments “made with a view” to the development underlying the expropriation (see Expropriation Act (B.C.), s. 33(g); Expropriation Act, R.S.A. 2000, c. E-13, s. 45(e)), or have been interpreted in that manner (see Expropriations Act (Ont.), s. 14(4)(b); Paciorka, at paras. 22 and 27).
[47] As the application judge recognized, this is normally a factual determination to be made by the board or other authority tasked with determining compensation (para. 8; see also Vision Homes Ltd. v. Nanaimo (City) (1996), 59 L.C.R. 106 (B.C.C.A.), at para. 20; Clements v. Penticton (City), 2005 BCCA 212, 86 L.C.R. 81, at para. 12). Courts reviewing these determinations must accord deference to first instance decision-makers. On an appeal, compensation determinations are generally reviewable only for palpable and overriding error, absent an extricable error of law (Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at para. 36).
(a) The Inquiry Involves Examining the Purposes and Effects of the Enactment
[48] Determining whether an enactment was made with a view to expropriation involves examining its purposes and effects (see, e.g., Waters, at para. 58; Gibson, at p. 536; Kramer, at pp. 239 and 246-47; Halliday, at para. 15; Atlantic Shopping Centres, at paras. 18-20; Paciorka, at para. 27). The focus on purpose is appropriate given governments’ need to regulate in the public interest. As the intervener the City of Surrey explains:... government liability for regulations that reduce property value would be unworkable unless an element of intentionality was required . . . . As every land use regulation may impact property values, a focus on effects would render each land use regulation a source of potential liability, impairing the ability of governments to regulate in the public interest.
(I.F., at para. 8) The purposes of an enactment can be discerned by considering, inter alia, the debates, deliberations, and statements of policy that gave rise to it (see Catalyst Paper Corp. v. North Cowichan (District), 2012 SCC 2, [2012] 1 S.C.R. 5, at para. 29; see also Waters, at para. 63; Vision Homes, at para. 19). As explained in Catalyst Paper Corp., at paras. 29-33, the rationale for a municipal by-law can be found in the municipality’s long-term plans and correspondence involving officials. The preamble and terms of the enactment itself can also be of assistance (see Paciorka, at para. 27).
[49] In the constructive expropriation context, it is not until all reasonable uses of the property have been removed that a de facto taking occurs (Annapolis, at para. 19). In assessing compensation once constructive expropriation is found to have occurred, distinguishing enactments on the basis of both their purposes and effects ensures the property owner receives “fair compensation but not more than fair compensation” (Waters, at para. 61). Ignoring enactments’ purposes and singularly considering effects would present two equally undesirable possibilities. If the Pointe Gourde principle only excluded the regulation that had the effect of removing all reasonable uses of the property (mirroring the requirement from Annapolis for a taking to occur), governments would be permitted to downzone properties or freeze development in anticipation of expropriation to reduce the compensation payable. This idea has been rejected (see, e.g., Tener, at p. 557; Gibson, at p. 536). If, instead, all prior enactments affecting the property’s value — regardless of whether they removed all reasonable uses of the property or were made with a view to expropriation — were excluded from the compensation assessment, compensation would amount to a windfall. This approach would be inconsistent with settled law: “. . . regulation alone will not satisfy the test for a constructive taking . . .” and “compensation does not follow zoning either up or down” (Annapolis, at para. 43; Tener, at p. 557). Neither of these possibilities would achieve proper economic reinstatement, and both would distort the property’s true market value.
(b) Causation Does Not Drive the Inquiry
[50] The Court of Appeal characterized the Pointe Gourde principle as follows: “Any change in the value of the property caused by the scheme for which the expropriating authority’s compulsory taking powers were exercised is to be ignored in the computation of the property’s value for expropriation assessment purposes . . .” (para. 109 (emphasis added)). In this case, there is no dispute that the Watershed zoning in the Development Regulations diminishes the market value of the Lynch Property, as is clear from the parties’ competing appraisals. But is it part of the scheme? In reversing the application judge’s decision, the Court of Appeal also relied on causation in determining that the Watershed zoning was part of the expropriation scheme and therefore to be ignored for valuation purposes. In my view, causation is of limited assistance in determining the scope of the expropriation scheme.
[51] After reviewing the jurisprudence on the Pointe Gourde principle, the Court of Appeal noted that the critical issue in determining whether a particular enactment should be excluded in assessing market value is “whether there is a causal connection between the imposition of the planned use restriction and the expropriation which subsequently occurs” (para. 109, citing Paciorka, at para. 27). Later in its reasons, the Court of Appeal concluded that there was a causal connection between the adoption of the Watershed zoning regulations and the expropriation of the Lynch Property (para. 113). It also noted that the application judge had failed to take account of these interconnections (para. 115). Similarly, the respondents argue that a “broad and expansive approach to causation” should be taken, emphasizing that “[w]ithout all the prior links [including the Watershed zoning] the City’s 2013 decision would have been without lawful foundation” (R.F., at paras. 90 and 96). The respondents encourage an examination of “the whole of the chain, each link of which plays a key and unavoidable part in leading to the constructive expropriation” (para. 82).
[52] I do not agree that this broad conception of causation should drive the inquiry. It is inconsistent with the jurisprudence highlighted above, which affirms that zoning regulations properly bear on the compensation for expropriation. Adopting this approach would risk including as part of the expropriation scheme “decisions that neither contemplated nor required a taking” (I.F., Attorney General of British Columbia, at para. 43). Moreover, such an approach would emphasize form over substance. It will sometimes be the case that measures closely related to the expropriation that lower the property’s value are not links in the chain that enabled the taking to occur. For example, in Gibson, the City of Toronto had enacted a by-law implementing a freeze on any construction of buildings in anticipation of the future expropriation of the property, which occurred later under a different statutory authority. Hodgins J.A. reasoned that the by-law imposing the freeze could have been part of the expropriation scheme (and therefore its effects excluded from the compensation assessment) — notwithstanding that the decision to expropriate was not taken pursuant to that by-law (pp. 536 and 538). Put simply, the analysis does not turn on whether the regulatory enactment was a link in the chain of events leading to the expropriation (i.e., that “but for” the enactment there would have been no expropriation).
[53] The City’s causation proposal is, conversely, too narrow. The City submits that a simple question should have been asked by the courts below: “What was the act or decision by the City which caused the taking and hence the loss to the [respondents]?” (A.F., at para. 61). It notes that there would have been no taking and no loss had the City permitted development for agriculture, forestry, and public utility purposes, and that it was the City’s decision to refuse permission for any development on the Lynch Property that resulted in the constructive expropriation (paras. 61-62). I agree with the City’s submission that it is not enough for a regulatory enactment to be a “related connection” to the constructive expropriation to be ignored in assessing compensation (A.F., at para. 64 (emphasis deleted)). However, while, under the Annapolis criteria, a taking crystallizes at a particular moment in time, expropriation is nonetheless a process (Dell Holdings, at para. 37). Merely excluding the act or decision of the state actor that constituted the taking, and nothing further, would permit a state actor to progressively downzone or freeze a property in anticipation of acquiring it in an attempt to reduce the compensation payable. I note that the City itself accepts that the prohibition on such a manoeuvre is a “corollary” to the Pointe Gourde principle (A.F., at para. 71).
[54] While there must be a connection between the regulation and the expropriation for its effects to be excluded, a focus on causation masks the true inquiry. As I have explained, giving effect to the Pointe Gourde principle requires consideration of whether an enactment was made with a view to the expropriation. If it was connected in this manner, it should be considered part of the expropriation scheme and its effects excluded from the compensation assessment.
(c) Guidance for Conducting the Assessment
[55] It is not necessary for these reasons to set out an exhaustive list of factors that will bear on whether an enactment was made with a view to expropriation, but the jurisprudence I summarize above offers some guidance for those tasked with making this factual determination. If a land use restriction is enacted as part of a city-wide or province-wide policy, or does not target specific properties, that may indicate that the restriction is an independent enactment and is not to be excluded under the Pointe Gourde principle (see Kramer, at p. 239; Atlantic Shopping Centres, at para. 20; Paciorka, at para. 27). It may also be relevant that the impugned regulation was enacted by a different public authority than that which expropriated the property (see Paciorka, at paras. 16 and 26). Further, a government’s knowledge of another level of government’s development plans is not conclusive of an enactment having been made with a view to expropriation (see Kramer, at p. 239).
[56] Bad faith is not a prerequisite to a finding that an enactment was made with a view to expropriation. No “‘scheme’ in any nefarious connotation need be proved” (Kramer, at pp. 246-47, per Spence J.). Plainly, by-laws that control development in anticipation of eventual expropriation can be firmly rooted in public interest considerations. For example, on the facts of Gibson, there would have been a sound policy reason for the City of Toronto to adopt a by-law preventing building construction on a parcel of land it was intending to later expropriate for road widening. If that was its intent, however, the enactment would be ignored in assessing compensation for the parcel’s expropriation. Gibson illustrates that the existence of an “intimate connection” between the impugned regulatory enactment and the project or development that the expropriation facilitates may signal that the enactment was made with a view to expropriation (p. 538). In short, applying the Pointe Gourde principle requires consideration of whether the enactment was made for the purpose of expropriating rather than regulating.
[57] The jurisprudence on the scope of the scheme to be ignored under the Pointe Gourde principle does not supply bright-line rules. This is to be expected given that the question of whether an enactment was made with a view to expropriation (or, conversely, whether it was an independent enactment) depends entirely on a case’s factual circumstances. There may well be differences of opinion on the characterization of particular enactments, but this type of assessment calls out for flexibility in its application and deference in its review.
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