What’s at stake as Halifax heads to Supreme Court of Canada over Blue Mountain-Birch Cove Lakes

When it reaches the Supreme Court of Canada in the new year, Halifax’s battle with a property developer over Blue Mountain-Birch Cove Lakes could set precedent across the country.

After granting leave to appeal in June, the highest court in Canada is scheduled to hear Annapolis Group Inc. v. Halifax Regional Municipality in February. Because of the potential implications for governments and major landowners, the case has attracted eight intervenors.

As the Halifax Examiner reported in January 2021, the case concerns 965 acres of land on the east side of the provincially-protected Blue Mountain-Birch Cove Lakes Wilderness Area:

Most of the land was zoned urban reserve in 2006 — meaning it couldn’t be developed until 2031 without a significant council process.

Annapolis Group and another developer hoped to build a sprawling subdivision through the lakes and wilderness anyway, and applied to develop the land in 2007. Their plans cut into the municipality’s conceptual park boundary, and the two sides hired an independent facilitator to try to come to an agreement.

The facilitator, Justice M. Heather Robertson, sided with the developer.

Robertson’s report, tabled in June 2016, was not well received, with more than 1,400 people writing to council in opposition. Following a staff recommendation, regional council voted in September 2016 to refuse to start the development process and move ahead with the park as planned.

In January 2017, Halifax developer Annapolis Group Inc. sued the municipality for “alleged de facto expropriation, abuse of public office and unjust enrichment,” seeking $119 million in damages.

That claim of de facto expropriation, central to Annapolis Group’s case, is an allegation that, by not allowing the company to develop its land, Halifax took it from the developer without paying.

Lawyers for the municipality sought in 2019 to have that portion of the lawsuit thrown out, applying for partial summary judgement to dismiss the claim as without evidence and unworthy of a trial. Justice James Chipman ruled for Annapolis Group in November 2019, writing that the company’s claim “raises genuine issues of material fact requiring a trial.”

In January, the Nova Scotia Court of Appeal unanimously overturned Chipman’s decision.

“There are simply no facts in dispute that would relate to the de facto expropriation claim,” Justice David Farrar wrote.

“Annapolis has the same rights with respect to its lands that it had prior to Council’s resolution on September 6, 2016. Nothing has changed.”

Annapolis appealed that decision to the Supreme Court of Canada, and as the Examiner reported in June, the court agreed to hear the case.

Since then, the court has set a date for a hearing, February 16, 2022; Annapolis and the municipality have filed factums making their arguments; and the court has approved the addition of eight interveners in the case. Those interveners are: the Canadian Constitution Foundation; Ecojustice Canada Society; the provincial governments of British Columbia, Ontario, and Nova Scotia; the federal government; the Ontario Landowners Association; and the Canadian Home Builders’ Association.

Annapolis seeks to lower the bar

Why are those interveners interested? Annapolis is hoping to affect a significant change to Canadian common law. The developer wants the Supreme Court to revisit the legal test for de facto expropriation, potentially making it harder for governments to tell property owners what they can and can’t do with their land.

The test was part of the focus of the Nova Scotia Court of Appeal decision granting HRM’s request for partial summary judgement. It comes from a 2006 decision from the Supreme Court of Canada, Canadian Pacific Railway Co. v. Vancouver (City). In that case, Vancouver rezoned land it had previously given to CP, which interfered with the railway’s plans to redevelop. The court found the city hadn’t de facto expropriated the land, and set out the test:

For a de facto taking requiring compensation at common law, two requirements must be met: (1) an acquisition of a beneficial interest in the property or flowing from it, and (2) removal of all reasonable uses of the property.

Lawyers for Annapolis, from the Toronto-based firm Lenczner Slaght, argued in their August factum to the court that in creating the test, “this Court introduced a new concept into de facto taking case law: the acquisition of a beneficial interest. However, the reasons of the Court do not provide any explanation for why this is a necessary part of the test, or what was intended by ‘acquisition of a beneficial interest in the property or flowing from it.’”

The developer argues that the test shouldn’t require acquisition of the land at all, just the deprivation of “the reality of proprietorship.”

“The history of the zoning for the Annapolis Lands reflects that they would see serviced development in the future,” the lawyers wrote. “Simply because development has not yet occurred on these lands does not mean it is reasonable for HRM to force the lands to remain undeveloped.”

Annapolis argues the municipality has left it with no reasonable uses for its land.

“The practical effect of the zoning applied to the Annapolis Lands is that Annapolis has no reasonable or economic uses of the land, other than serviced development,” reads the factum.

“Annapolis can apply for serviced development, but it is only permitted if secondary planning is approved by HRM. HRM is obligated to consider secondary planning requests in good faith and in accordance with express planning criteria. It has not done so.”

The company argues “HRM has obtained the benefit of a public park while avoiding the financial commitment required to purchase the Annapolis Lands,” and “Annapolis bears the extraordinary burden of providing a Regional Park to the public.”

It points to HRM’s past promotion of hikes crossing Annapolis land and signage bearing HRM’s logo at trailheads as evidence that the municipality is already using its land as a park.

In reality, there is no park yet. Council passed a motion earlier this month directing staff to “initiate a park planning project for Blue Mountain-Birch Cove Lakes,” and to reassess the conceptual park boundary with an eye to making it much bigger.

In an October response, lawyers representing HRM argue that the developer hasn’t made the case either for de factor expropriation, or revisiting the test. The factum, signed by McInnes Cooper lawyer Michelle Awad, makes the case that removing acquisition of land as an element of de factor expropriation “will likely impact all levels of government.”

“Simply put, if the acquisition element is eliminated, every case of ‘regulatory infringement’ will become a case of de facto expropriation. This will overturn the longstanding principles which deny compensation for zoning and other legislative obligations vested in municipalities and other governments,” reads the factum.

But Annapolis isn’t really trying to make things better for other landowners, HRM argues:

“While presented as a plea to make the law more just for property owners, this Appeal in fact is simply an attempt to make the tax payers of Halifax the insurers of the Appellant’s decades-long development gamble.”

Nova Scotia court process continues

While the Supreme Court of Canada process unfolds, there is also a concurrent process in the Nova Scotia Supreme Court system.

The Court of Appeal only threw out one part of Annapolis’s claim against HRM, the de facto expropriation. The developer also sued the municipality for “abuse of public office and unjust enrichment.”

The trial is scheduled for September 2022, but in a decision released this week, Justice Chipman wrote that “it is very difficult to say whether the existing trial dates are going to remain.

“I say this with reference to the possibility that the Supreme Court of Canada may not render a decision in sufficient time for the current trial to remain scheduled to begin less than a year from now.”

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