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Zoning Regulations Impact Owner Compensation for Expropriated Property

St. John’s (City) v. Lynch, 2024 SCC 17  

Reading Time: 3.5 minutes (approx.) 

By: Krista Nasartschuk 

This appeal stems from the constructive expropriation of property owned by several members of the Lynch family. The property was located in Newfoundland and Labrador at the Broad Cove River watershed. Expropriation of the property arose because the Broad Cove River is utilized by the City of St. John’s Newfoundland for its local water supply.  

When it was initially conveyed via Crown grant in 1917, the property was located in unorganized territory and, as such, not subject to any planning authority. Over time, due to a series of amendments to the City of St. John’s Act, the property became subject to the City’s zoning regulations, including the 1994 Development Regulations. These regulations dictated that there were no permitted uses within the watershed zone, however three discretionary uses were permitted, agriculture, forestry and public utility. 

It was the Lynch family’s intention since the 1990s to utilize the property for residential development. Following rejections of their applications for development, the Newfoundland Court of Appeal declared that the property had been constructively expropriated.  

The City requested that the amount of compensation payable be determined by the Board of Commissioners of Public Utilities. At this juncture, the Board considered whether the property should be assessed based on the uses allowed by the existing zoning regulations, or if those regulations should be ignored and the property assessed as though residential development could proceed. It was determined that existing zoning regulations must be taken into account.  

The family was granted leave to appeal in the Newfoundland Court of Appeal, which ordered the Board to determine the compensation amount without reference to existing zoning regulations.  

The Supreme Court of Canada restored the decision of the application judge and in doing so indicated that to ignore the existing zoning regulations would provide the Lynch family with something they never would have had in the absence of the constructive expropriation – land which can be developed into residential housing.  

The SCC clarified that determination of the appropriate amount of compensation for expropriated property is based upon market value, which is impacted by zoning regulations. Other statutory and common law factors are also relevant, however, such as the Pointe Gourde Principle, which states that changes in value resulting from the expropriation scheme itself are to be ignored.  

When determining whether a zoning regulation is made with a view to expropriation or was, in fact, an independent enactment, the SCC states that relevant factors for consideration include: 

  • Whether the land use restriction was enacted as part of a city wide or province wide policy 
  • Whether the restriction targets specific properties 
  • Whether it was enacted by a different public authority than that which expropriated the property 

Upon considering the zoning regulations applicable to the Lynch property, the court found that they were an independent enactment and not a part of the expropriation scheme. As such, they were a valid consideration in the determination of the property’s fair market value. 

Link: https://canlii.ca/t/k4jbz

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