Arbutus Corridor at Broadway and Arbutus - 26 Mar 2010 Photographer unknown.

23 November 2011

Government on the Take

Vancouver British Columbia - Governments regulate the use of property. Sometimes that regulation has a minor effect on the uses to which a property owner can put that property. Sometimes the regulation has a more severe effect. And, sometimes the regulation is so severe as to effectively strip all uses. In that last instance, it is said to effect a "regulatory taking", also known as a "constructive" taking, or a "de facto expropriation", meaning that it effectively achieves a taking-by-regulation.
 
A regulatory taking, therefore, occurs where government, rather than expropriating and paying compensation, instead by way of regulation, strips away all uses to which the property can be put.
 
Canada is rare in the Western world for its lack of constitutionally entrenched property rights. The individual protections under the Charter of Rights and Freedoms do not include a right to property or any significant protections for property holders. While statutory protections exist in respect of expropriation (which entails the actual taking of title), and while common law protections have been recognized and affirmed by the Supreme Court of Canada which provide that compensation is payable absent express legislative language directing otherwise, Canada's legal regime for the protection of property rights remains deficient. This is because there is no liability in Canadian law for governments to compensate for regulated property use, even where the regulation is so extensive as to amount to a regulatory taking.
 
While compensation has never been payable in the event of regulated property use falling short of a regulatory taking, this extension of government immunity in cases of regulatory takings is a recent development in the law. Prior to the 2006 decision of the Supreme Court of Canada in Canadian Pacific Railway (CPR) v. Vancouver, the common law rule regarding compensation described above, that is, the rule requiring the payment of compensation absent express legislative language directing that there be no compensation paid, was widely understood as applying to regulatory takings. In this case, CPR invited the City of Vancouver to purchase or expropriate with compensation some land it had ceased to use. Instead, the City simply designated the former railway corridor as a public thoroughfare for transportation and "greenways" such as heritage walks, thereby precluding any other form of development. Thus, the CPR was statutorily prohibited from developing its own land for alternate purposes, including residential or commercial. The Supreme Court of Canada upheld Vancouver's actions and declined to award compensation to the CPR.
 
As a result of the CPR case, it now seems reasonable to conclude that property-holders in Canada enjoy no protection from regulatory takings. In light of this, the Canadian Constitution Foundation undertook a study entitled, "Regulation of Property Use and Regulatory Takings in Alberta", to analyze the extent of regulated land use, including regulatory takings, in just one Canadian province:  Alberta.
 
Chris Schafer.