Mariner Real Estate Ltd v Nova Scotia (Attorney General), 1999 NSCA 98 (CanLII)

Cromwell J.A. (Glube C.J.N.S. concurring) — #

I. Introduction #

This case involves a collision of important interests. On one side, there are the interests of the respondents in the enjoyment of their privately owned land at Kingsburg Beach. On the other is the public interest in the protection and preservation of environmentally fragile and ecologically significant beach, dune and beach ridge resources. In the background of this case is the policy issue of how minutely government may control land without buying it. But in the foreground is the narrower issue of whether the stringent land use regulations applied by the Province to the respondents’ lands is an expropriation of them within the meaning of the Expropriation Act, R.S.N.S. 1989, c. 156.

The respondents’ lands were designated as a beach under the Beaches Act, R.S.N.S. 1989, c. 32. This designation brings with it a host of restrictions on the uses of and activities on the land. Pursuant to power conferred by the Act and Regulations made under it, the Minister refused to grant the respondents permission to build single family dwellings on their land. The respondents sued, claiming their lands had, in effect, been expropriated and that they were entitled to compensation. Tidman, J., at trial, found that there had been an expropriation.

In reaching this conclusion, the trial judge made two key findings. First, he decided that the respondents had been deprived of land within the meaning of the Expropriation Act. There were alternative bases for this finding. One basis was that the designation, on its own, was, in law, a taking of land. The alternative basis was that the taking resulted from the designation coupled with the application to the respondents’ lands of the regulatory regime flowing from the designation. These, in combination, in the judge’s view, took away virtually all of the land’s economic value and virtually extinguished all rights of ownership.

The second key holding by the trial judge was that the province acquired land within the meaning of the Expropriation Act because the regulation of the respondents’ lands enhanced the value of the provincially owned property from the high watermark seaward.

In my respectful view, the learned trial judge erred in each of these conclusions. For reasons which I will develop, my view is that the loss of economic value resulting from land use regulation is not a taking of land within the meaning of the Expropriation Act. Further, in my opinion, the respondents did not establish either the loss of virtually all rights of ownership, or that the Province had acquired any land as a result of the designation. I would, therefore, allow the appeal, set aside the order of the trial judge and in its place make an order dismissing the respondents’ action.

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III. Analysis #

(a) De facto Expropriation #

The respondents’ claim that what was, in form, a designation of their land under the Beaches Act is, in fact, a taking of their land by a statutory authority within the meaning of the Expropriation Act. This claim of de facto expropriation, or as it is known in United States constitutional law, regulatory taking, does not have a long history or clearly articulated basis in Canadian law. We were referred to only three Canadian cases in which such a claim was made successfully, only two of which dealt with the expropriation of land.

The scope of claims of de facto expropriation is very limited in Canadian law. They are constrained by two governing principles. The first is that valid legislation (primary or subordinate) or action taken lawfully with legislative authority may very significantly restrict an owner’s enjoyment of private land. The second is that the Courts may order compensation for such restriction only where authorized to do so by legislation. In other words, the only questions the Court is entitled to consider are whether the regulatory action was lawful and whether the Expropriation Act entitles the owner to compensation for the resulting restrictions.

De facto expropriation is conceptually difficult given the narrow parameters of the Court’s authority which I have just outlined. While de facto expropriation is concerned with whether the “rights” of ownership have been taken away, those rights are defined only by reference to lawful uses of land which may, by law, be severely restricted. In short, the bundle of rights associated with ownership carries with it the possibility of stringent land use regulation.

I dwell on this point because there is a rich line of constitutional jurisprudence on regulatory takings in both the United States and Australia which is sometimes referred to in the English and Canadian cases dealing with de facto expropriation: see for example Belfast (City) v. O.D. Cars Ltd., [1960] A.C. 490 (U.K. H.L.). The Fifth Amendment to the United States Constitution (which also applies to the States through the Fourteenth Amendment) provides that private property shall not be taken for public use without just compensation. In the Australian Constitution, section 51(xxxi) prohibits the acquisition of property except upon just terms. While these abundant sources of case law may be of assistance in developing the Canadian law of de facto expropriation, it is vital to recognize that the question posed in the constitutional cases is fundamentally different.

These U.S. and Australian constitutional cases concern constitutional limits on legislative power in relation to private property. As O’Connor, J. said in the United States Supreme Court case of Eastern Enterprises v. Apfel, 118 S. Ct. 2131 (U.S. Mass. 1998), the purpose of the U.S. constitutional provision (referred to as the “takings clause”) is to prevent the government from “… forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” Canadian courts have no similar broad mandate to review and vary legislative judgments about the appropriate distribution of burdens and benefits flowing from environmental or other land use controls. In Canada, the courts’ task is to determine whether the regulation in question entitles the respondents to compensation under the Expropriation Act, not to pass judgment on the way the Legislature apportions the burdens flowing from land use regulation.

In this country, extensive and restrictive land use regulation is the norm. Such regulation has, almost without exception, been found not to constitute compensable expropriation. It is settled law, for example, that the regulation of land use which has the effect of decreasing the value of the land is not an expropriation. As expressed in Ian Rogers, Canadian Law of Planning and Zoning (looseleaf, updated to 1999) at s.5.14, “The law permits the appropriation of prospective development rights for the good of the community but allows the property owner nothing in return.” Numerous cases support this proposition including Belfast (City) v. O.D. Cars Ltd. (supra) and Calgary (City) v. Hartel Holdings Co., [1984] 1 S.C.R. 337 (S.C.C.). Many others are reviewed by Marceau, J. in Alberta (Minister of Public Works, Supply & Services) v. Nilsson (1999), 67 L.C.R. 1 (Alta. Q.B.) at para 35 ff. I would refer, as well, to the following from E.C.E. Todd, The Law of Expropriation in Canada, (2nd, 1992) at pp. 22-23:

Traditionally the property concept is thought of as a bundle of rights of which one of the most important is that of user. At common law this right was virtually unlimited and subject only to the restraints imposed by the law of public and private nuisance. At a later stage in the evolution of property law the use of land might be limited by the terms of restrictive covenants.

Today the principal restrictions on land use arise from the planning and zoning provisions of public authorities. By the imposition, removal or alteration of land use controls a public authority may dramatically increase, or decrease, the value of land by changing the permitted uses which may be made of it. In such a case, in the absence of express statutory provision to the contrary an owner is not entitled to compensation or any other remedy notwithstanding that subdivision approval or rezoning is refused or development is blocked or frozen pursuant to statutory planning powers in order, for example, to facilitate the future acquisition of the land for public purposes. “Ordinarily, in this country, the United States and the United Kingdom, compensation does not follow zoning either up or down … (but) a taker may not, through the device of zoning, depress the value of property as a prelude to compulsory taking of the property for a public purpose …. (emphasis added)

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In light of this long tradition of vigorous land use regulation, the test that has developed for applying the Expropriation Act to land use restrictions is exacting and, of course, the respondents on appeal as the plaintiffs at trial, had the burden of proving that they met it. In each of the three Canadian cases which have found compensation payable for de facto expropriations, the result of the governmental action went beyond drastically limiting use or reducing the value of the owner’s property. In British Columbia v. Tener, [1985] 1 S.C.R. 533 (S.C.C.), the denial of the permit meant that access to the respondents’ mineral rights was completely negated, or as Wilson, J. put it at p. 552, amounted to total denial of that interest. In Casamiro Resource Corp. v. British Columbia (Attorney General) (1991), 80 D.L.R. (4th) 1 (B.C. C.A.), which closely parallels Tener, the private rights had become “meaningless”. (1978), [1979] 1 S.C.R. 101 (S.C.C.) In Manitoba Fisheries Ltd. v. R. (1978), [1979] 1 S.C.R. 101 (S.C.C.), the legislation absolutely prohibited the claimant from carrying on its business.

In reviewing the de facto expropriation cases, R.J. Bauman concluded, and I agree, that to constitute a de facto expropriation, there must be a confiscation of “… all reasonable private uses of the lands in question.”: R.J. Bauman, “Exotic Expropriations: Government Action and Compensation” (1994), 54 The Advocate 561 at 574. While there is no magic formula for determining (or describing) the point at which regulation ends and taking begins, I think that Marceau, J.’s formulation in Nilsson is helpful. The question is whether the regulation is of “sufficient severity to remove virtually all of the rights associated with the property holder’s interest.” (at para 48).

Considerations of a claim of de facto expropriation must recognize that the effect of the particular regulation must be compared with reasonable use of the lands in modern Canada, not with their use as if they were in some imaginary state of nature unconstrained by regulation. In modern Canada, extensive land use regulation is the norm and it should not be assumed that ownership carries with it any exemption from such regulation. As stated in Belfast (City), there is a distinction between the numerous “rights” (or the “bundle of rights”) associated with ownership and ownership itself. The “rights” of ownership and the concept of reasonable use of the land include regulation in the public interest falling short of what the Australian cases have called deprivation of the reality of proprietorship: see e.g. Newcrest Mining (W.A.) Ltd. v. Australia (Commonwealth) (1996), 190 C.L.R. 513 (Australia H.C.) at p. 633. In other words, what is, in form, regulation will be held to be expropriation only when virtually all of the aggregated incidents of ownership have been taken away. The extent of this bundle of rights of ownership must be assessed, not only in relation to the land’s potential highest and best use, but having regard to the nature of the land and the range of reasonable uses to which it has actually been put. It seems to me there is a significant difference in this regard between, for example, environmentally fragile dune land which, by its nature, is not particularly well-suited for residential development and which has long been used for primarily recreational purposes and a lot in a residential subdivision for which the most reasonable use is for residential construction.

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(c) Is loss of economic value loss of land under the Expropriation Act? #

The trial judge found that the respondents had been deprived of land. His main conclusion appears to have been that the loss of “virtually all economic value” constituted the loss of an interest in land. He also found, however, that the “… fee simple in the [respondents’] lands has been stripped of its whole bundle of rights.” Both aspects of his holding are before us in this appeal and, in my respectful view, both are in error.

The judge found as a fact that the plaintiffs had lost virtually all economic value of their lands. That is a question of fact. The trial judge decided to accept the evidence of the respondents’ expert, Mr. Hardy, on this point. While there was some attempt to attack it in this Court, I conclude that the finding is reasonable and supported by the evidence at trial and should not, therefore, be disturbed on appeal.

The judge further found that the loss of virtually all economic value was the loss of land within the meaning of the Expropriation Act. This holding contains two key elements: that the loss of all economic value is the loss of land within the meaning of the Act, and further, that the loss of virtually all economic value is a taking of land as those phrases appear in the Expropriation Act.

I will address in this part of my reasons the first of these holdings. Does the loss of economic value of land constitute the loss of land within the meaning of the Expropriation Act?

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The important point is this. While the distinction between the value of land and interests in land is, in one sense highly technical, it is, nonetheless, deeply imbedded in the scheme of compensation provided for under the Expropriation Act. It is fundamental to the entitlement to compensation under the Act claimed by the respondents. This is so because the distinction defines the line between cases in which governmental interference with the enjoyment of land is compensable under the Act and cases in which it is not. An impressive argument may be made supporting a broader approach to compensation for governmental interference with the enjoyment of land. The logic of drawing the line based on whether an interest in land has been lost may, as noted by Wilson, J. above, be seriously questioned. Nonetheless, the Expropriation Act draws the line in this way. It is, therefore, necessary to give the legislation an interpretation consistent with the words employed and the underlying policy decision which they reflect.

I conclude, therefore, that the learned trial judge erred in holding that the loss of virtually all economic value of the respondents’ land, was the loss of an interest in land within the meaning of the Expropriation Act.

(d) Loss of the “bundle of rights” #

That brings me to the trial judge’s holding that the effect of the designation and the way it was applied here was to strip the fee simple of its whole bundle of rights. The cases have long recognized that at a certain point, regulation is, in effect, confiscation. The law insists that the substance of the situation, not simply its form, be examined. As noted in Nilsson, restrictions on the use of land may be so stringent and all-encompassing that they have the effect of depriving the owner of his or her interest in the land, although leaving paper title undisturbed.

While the decline in economic value of land is not the loss of an interest in land, it may be evidence of the loss of an interest in land. As the respondents’ appraiser, Mr. Hardy, stated in his report, the value of land is a reflection of several factors, including the scope of the incidents of ownership attached to the lands in question:

Our consideration of the legal basis and economic factors of value in land valuation concluded that it is the rights of ownership that give land value and it is these rights that are the subject of valuation. When the rights of ownership are excessively restricted or removed, it is logical that the value of the land is diminished, destroyed or made idle.

It follows that, where the effect of land use regulation is to eliminate virtually all the normal incidents of ownership, this will be reflected in the market value of the land. It is not, however, the decline in market value that constitutes the loss of an interest in land, but the taking away of the incidents of ownership reflected in that decline.

We have been referred to only three Canadian cases in which compensation has been ordered where governmental regulatory action has been held to be a de facto expropriation: Tener, Casamiro Resource Corp. and Manitoba Fisheries Ltd. I have already reviewed these cases earlier in my reasons. Judging by these cases, de facto expropriations are very rare in Canada and they require proof of virtual extinction of an identifiable interest in land (or, in Manitoba Fisheries Ltd., of an interest in property).

The respondents submit that the Beaches Act and the Regulations, coupled with the refusal of Ministerial permission for development, prohibit virtually all activities normally associated with the ownership of land. The trial judge accepted this submission.

Preclusion of residential development, as proposed by the respondents, particularly on lands of this environmental sensitivity, is not, of itself, the extinguishment of virtually all rights associated with ownership. For example, Mariner and 20102660 N.S. Limited proposed to build using standard concrete basements. In considering these applications, the Minister had before him the Jacques Whitford report which opined that standard concrete foundations would cause serious damage to the dune systems. Furthermore, it was clear on the evidence that the building of residences on two of the Moshers’ lots (i.e., the cemetery and garden lots) would not be permitted, quite apart from the Beaches Act. Yet it is not submitted that the requirements dealing with lot size and septic requirements constitute expropriation because they, in effect, prevent building residences on these lots.

With respect, the trial judge erred in finding that the Beaches Act designation and ensuing regulation resulted in the expropriation of these two of the Moshers’ properties. Residences could not be built on them prior to the designation, and there is no evidence that permission for other uses has been refused.

What of the properties for which permission to build single family dwellings was refused? The trial judge found that virtually all incidents of ownership had been removed through that refusal and the other restrictions applied to the land. With great respect to the trial judge, I disagree.

Many of the restricted activities may be authorized by permit. These include most of the traditional recreational uses described by Mrs. Mosher in her evidence. However, there is no evidence that a permit has been sought for any of these kinds of activities, much less refused. That being so, it is hard to follow the respondents’ argument that all of these things are prohibited. As noted earlier, it is not the requirement to obtain a permit that constrains the enjoyment of the land, but its refusal. When, as here, the claim is that the impact of a regulatory scheme has, in effect, taken away all rights of ownership, it is not the existence of the regulatory authority that is significant, but its actual application to the lands. As stated in MacDonald, Sommer & Frates, supra, the Court cannot determine whether regulation has gone too far unless it knows how far the regulation goes.

The respondents in this case proved at trial that they would not be allowed to build the proposed single family residences. With respect to three of the Mosher’s lots, there was not even an application to build; as mentioned, residential development on two of those lots was probably impossible quite apart from the designation. Some reasonable or traditional uses of this dune property may be allowed by permit. Aside from the applications to build fences, no applications for permits relating to these other uses have been made, let alone refused. The respondents had the burden of proving that virtually all incidents of ownership (having regard to reasonable uses of the land in question) have, in effect, been taken away. Neither the respondents nor the Province appear to have explored the possibility that development specifically designed in a way consistent with protection of the dunes might occur. The respondents, while asserting that all reasonable uses of the land are precluded by the operation of the Act and Regulations, have not shown that they would be denied the required permits with respect to such other reasonable or traditional uses of the lands. In short, there is an absence of evidence relating to environmentally appropriate development plans on the land in question, and an absence of evidence of refusal of permission for the respondents to engage in other reasonable or traditional uses. These, in combination, result, in my opinion, in the respondents having failed to establish that virtually all incidents of ownership have, by the effect of the Act and Regulations, been taken away.

I would conclude, therefore, that the respondents failed to establish that they had been deprived of land within the meaning of the Expropriation Act.

(e) Acquisition of Land #

As noted, there must not only be a taking away of land from the owner but also the acquisition of land by the expropriating authority for there to be an expropriation within the meaning of the Act.

There is no suggestion here that the Province acquired legal title or any aspect of it. The land remains private property although subject to the regulatory regime established by the Beaches Act. The argument is that the effect of the regulatory scheme is, for practical purposes, the acquisition of an interest in land.

The respondents submit (and the trial judge held) that Tener stands for the proposition that where regulation enhances the value of public land, the regulation constitutes the acquisition of an interest in land. I disagree.

In my respectful view, Tener, is, at best, equivocal on this point. When the judgments in Tener are read in their entirety and in light of the facts of the case, there is no support for the proposition on which the respondents rely. It is clear in the judgments of both Estey, J. and Wilson, J. in Tener that what was, in effect, acquired in that case was the reversion of the mineral interests which had been granted by the Crown. Estey, J. stated that “[e]xpropriation … occurs if the Crown … acquires from the owner an interest in property.” He added that the acquisition of the “outstanding interest” of the respondents was a step in the establishment of the Park. He concluded that “[t]he denial of access to these lands occurred under the Park Act and amounts to a recovery by the Crown of a part of the right granted to the respondents in 1937.”In other words, the effect of the regulatory scheme was not only to extinguish the mineral rights of the respondents, but to re-vest them in the Crown. Similarly, Wilson, J. held that the effect of the denial of access was to remove an encumbrance from the Crown’s land. She stated that “… what in effect has happened here is the derogation by the Crown from its grant of the mineral claims to the respondents’ predecessors in title … it is nonetheless a derogation of the most radical kind one which … amounts to a total denial of that interest”.

The respondents place great weight on comments of Estey, J. In Tener to the effect that the action taken by the government was to enhance the value of the park. These comments, while on their face supportive of the respondents’ position, must be read in the context of Estey, J.’s statements in the case that an expropriation necessarily involves the acquisition of land and that the extinguishment of the Teners’ mineral rights constituted, in effect, the re-acquisition of such rights by the Crown. I do not think, with respect, that his statements to the effect that the re-acquisition enhanced the value of the park takes away from his holding that the Crown re-acquired in fact, though not in law, the mineral rights which constituted land under the applicable definition. I am supported in this view by Wilson, J.’s unequivocal statements to similar effect with regard to the respondents’ profit à prendre.

The respondents also rely heavily on Manitoba Fisheries Ltd.. In my opinion, their reliance on that case is misplaced. The crucial element in that case was that the same legislative scheme that deprived the company of its goodwill also conferred a monopoly to conduct the same business on the new corporation. The Court not only held that there had been a deprivation but also, in effect, a transfer of the goodwill to the new corporation. Ritchie, J., for the Court, noted that it was conceded in that case that the legislation had resulted in depriving the company of its business; the basic contention of the Crown was that the business was not taken away by the Crown or the new corporation. This contention was rejected by the Court. At p. 468, Ritchie J stated that:

Once it is accepted that the loss of the goodwill of the appellant’s business which was brought about by the Act and by the setting up of the Corporation was a loss of property and that the same goodwill was by statutory compulsion acquired by the federal authority. It seems to me to follow that the appellant was deprived of property which was acquired by the Crown. (emphasis added)

It is true that, as the respondents submit, the goodwill did not flow to the Crown but to the new corporation. However, the new corporation was created by federal legislation as part of the monopoly scheme and was admitted to be an agent of the federal Crown: see p. 463. The Supreme Court of Canada, not surprisingly, did not draw a distinction between the corporation created by the Crown as its agent and the Crown itself in these circumstances. The crucial point, to my way of thinking, is that the asset which was, in effect, lost by Manitoba Fisheries Ltd. was the asset gained, in effect, by the new federal corporation.

The respondents also rely on the decision at trial in Casamiro Resource Corp. v. British Columbia (Attorney General) (1990), 43 L.C.R. 246 (B.C. S.C. [In Chambers]), at 248. The learned trial judge in that case stated, relying on Manitoba Fisheries Ltd., supra, that whether the Crown acquired the mineral rights or not was irrelevant. There is no discussion of this point in the judgment on the appeal to which I have referred above. While not doubting the result in Casamiro Resource Corp., which was upheld on appeal, this statement of the trial judge in Casamiro Resource Corp. is, with respect, clearly wrong. Contrary to what his statement suggests, for there to be an expropriation, there must be an acquisition as well as a deprivation. Moreover, the reliance on Manitoba Fisheries Ltd. for a contrary position by the trial judge in Casamiro Resource Corp. is, with respect, misplaced for the reasons I have already developed. As noted, there was in Manitoba Fisheries Ltd. an acquisition, in effect, of the goodwill by the federal authority.

I conclude that for there to be a taking, there must be, in effect, as Estey, J. said in Tener, an acquisition of an interest in land and that enhanced value is not such an interest.

The respondents further submit that their lands have been effectively pressed into public service and that this is sufficient to constitute an acquisition of land. The judgment of the United States Supreme Court in Lucas v. South Carolina, 112 S. Ct. 2886 (U.S. S.C. 1992) is relied on. I do not think that case assists us here.

The U.S. constitutional law has, on this issue, taken a fundamentally different path than has Canadian law concerning the interpretation of expropriation legislation. In U.S. constitutional law, regulation which has the effect of denying the owner all economically beneficial or productive use of land constitutes a taking of property for which compensation must be paid. Under Canadian expropriation law, deprivation of economic value is not a taking of land, for the reasons I have set out at length earlier. It follows that U.S. constitutional law cases cannot be relied on as accurately stating Canadian law on this point. Moreover, in U.S. constitutional law, as I understand it, deprivation of property through regulation for public purposes is sufficient to bring a case within the constitutional protection against taking for “public use”, unlike the situation under the Expropriation Act which requires the taking of land. It is not, as I understand it, necessary in U.S. constitutional law to show that the state acquires any title or interest in the land regulated. For these reasons, I conclude that the U.S. takings clause cases are not of assistance in determining whether there has been an acquisition of land within the meaning of the Nova Scotia Expropriation Act.

On this aspect of the case, Australian constitutional law is of more assistance. As noted, s. 51 (xxxi) of the Australian Constitution prohibits the acquisition of property on other than just terms. The focus of the prohibition is on acquisition, rather than taking with the result that the Australian cases, unlike most of the U.S. takings clause cases, have addressed in detail what is required for there to be an acquisition. For example, in Australia (Commonwealth) v. Tasmania (1983), 158 C.L.R. 1 (Australia H.C.) three members of the High Court of Australia (Mason, Murphy and Brennan, JJ.) held that a federal statute which had the effect of preventing development on the land in question without the Minister’s approval, enacted to protect and conserve the land for cultural and environmental reasons, did not constitute an acquisition of property. Mason, J. at para. 70 of his reasons, put it this way:

The effect of s. 9, and perhaps to a lesser extent, of ss. 10 and 11, is to prevent any development of the property in question, subject to the Minister’s consent, so as to preserve its character as a wilderness area. ….. In terms of its potential for use, the property is sterilized, in much the same way as a park which is dedicated to public purposes or vested in trustees for public purposes, subject, of course, to such use or development as may attract the consent of the Minister. In this sense, the property is “dedicated” or devoted to uses, that is, protection and conservation which, by virtue of Australia’s adoption of the Convention and the legislation, have become purposes of the Commonwealth. However, what is important in the present context is that neither the Commonwealth nor anyone else acquires by virtue of the legislation a proprietary interest of any kind in the property. (emphasis added)

Brennan, J. expressed the same conclusion as follows at para. 94:

In the present case the Wilderness Regulations and ss. 9, 10 and 11 of the Act affect the freedom of the State of and of the HEC to use the Wild Rivers National Park and the HEC land for the construction of the proposed dam. But that is not sufficient to attract the operation of par. (xxxi). Unless proprietary rights are acquired, par. (xxxi) is immaterial to the validity of the impugned Commonwealth measures. Though the Act conferred a power upon the Minister to consent to the doing of acts which were otherwise prohibited on or in relation to land, that power was not a proprietary right. In my opinion, the Commonwealth acquired no property from Tasmania. (emphasis added)

These comments are particularly significant for Canadian expropriation law because the Australian High Court has found there to be an acquisition of land in a case roughly parallel to Tener. In Newcrest Mining (W.A.) Ltd. v. Australia (Commonwealth) (supra), at p. 633 the issue was whether the prohibition of mining in a national park constituted an acquisition of the appellant Newcrest’s mining leases. Justice Gummow, expressing the majority view on this issue, accepted the submission of the appellants that the state acquired “identifiable and measurable advantages” consisting of acquisition of the land “freed from the rights of Newcrest to occupy and conduct mining operations thereon.”: at pp. 69-70. Fundamental to this decision, as was the case in Tener, is that the sterilization of the mining leases, in effect, removed a limitation on the legal interest in the land which the Commonwealth owned subject to that interest. There was in Newcrest Mining (W.A.) Ltd., as in Tener, an acquisition, in effect, of some identifiable interest in land.

Returning to the respondents’ submissions in this case, in my opinion, the freezing of development and strict regulation of the designated lands did not, of itself, confer any interest in land on the Province or any other instrumentality of government. I am reinforced in this opinion by many cases dealing with zoning and other forms of land use regulation. Estey, J., in Tener, notes that ordinarily compensation does not follow zoning either up or down. The Supreme Court of Canada in Dell Holdings Ltd., supra, accepted the general proposition that, under our law, owners caught up in the zoning or planning process, but not expropriated, must simply accept the loss (provided, of course, that the regulatory actions are otherwise lawful). Development freezes have consistently been held not to give rise to rights of compensation: for a review of the authorities, see Nilsson, supra. One of the bases of these decisions is that the restriction of development generally does not result in the acquisition of an interest in land by the regulating authority.

There was no evidence that the economic value of the Crown’s land was enhanced. Even if its value could be considered to be enhanced in some other sense, such enhancement, in my view, is not an acquisition of land for the purposes of the Expropriation Act.

I conclude that the trial judge erred on this aspect of the case. In my respectful view, regulation enhancing the value of public property, if established, is not an acquisition of “land” within the meaning of the Expropriation Act.

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IV. Disposition: #

I would allow the appeal, set aside the order of the trial judge and in its place make an order dismissing the action. The case raises several important issues which, in my view, it was in the public interest to have resolved. For that reason, I would not disturb the trial judge’s order for costs at trial and I would make no order as to costs of the appeal.

Appeal allowed.