Canadian Pacific Railway Co. v Vancouver (City)

2006 SCC 5 (CanLII)

McLachlin C.J.C. — #

1. Introduction #

Over a century ago, in 1886, the provincial Crown granted the Canadian Pacific Railway Company (”CPR”) a corridor of land for the construction of a railway line from False Creek, in the City of Vancouver (”City”), south to Steveston, on Lulu Island (named after Miss Lulu Sweet, a young actress in the first theatrical company to visit British Columbia). It is this corridor of land, now known as the “Arbutus Corridor”, that lies at the heart of this appeal.

In 1902, a railway line was built on the corridor. As the century advanced, traffic declined. From time to time, there was talk of using the corridor for an urban transit line, but nothing came of it and, ultimately, the line was placed elsewhere. In 1999, CPR formally began the process of discontinuing rail operations on the corridor under the Canada Transportation Act, S.C. 1996, c. 10.

The Arbutus Corridor has for many years been bounded on both sides and for virtually its entire length by extensive urban development. CPR put forward proposals to develop the corridor for residential and commercial purposes. It also indicated that if the City or any other public body wished to acquire the land, it was willing to sell it at whatever price was determined by agreement or expropriation.

Nothing happened. With increasing vigor, CPR expressed its view that it was intolerable for the City and other governmental bodies to seek to keep the corridor intact without purchasing it. Spirited public debate ensued. The City, as early as 1986, indicated in planning documents and Council resolutions its preference to preserve the corridor for transportation purposes. In the end, the City made it clear that it would not buy the land and adopted the Arbutus Corridor Official Development Plan By-law, City of Vancouver, By-law No. 8249, (25 July 2000) (”ODP By-Law”), that designated the corridor as a public thoroughfare for transportation and “greenways”, like heritage walks, nature trails and cyclist paths.

The City’s powers are derived from the Vancouver Charter, S.B.C. 1953, c. 55, an Act of the Legislature of British Columbia, which serves the same purpose as a “municipal act” but applies only to the city of Vancouver (see Appendix A). Development plans under s. 561 of the Vancouver Charter are essentially statements of intention which do not directly affect land owners’ property rights. However, once development plans are adopted as “official” (”ODPs”) under s. 562, they preclude development contrary to the plans: s. 563.

Building on earlier planning documents, the intent of the ODP By-law was “to provide a context for the future of the [corridor]”. More particularly, s. 1.2 stated: “The Arbutus Corridor has been used for many years for a rail line and this plan accommodates this use, but also provides for a variety of other uses.”

The by-law outlined the uses to which the corridor could be put (s. 2.1):

This plan designates all of the land in the Arbutus Corridor for use only as a public thoroughfare for the purpose only of:

(a) transportation, including without limitations:

(i) rail;

(ii) transit; and

(iii) cyclist paths

but excluding:

(iv) motor vehicles except on City streets crossing the Arbutus Corridor; and

(v) any grade-separated rapid transit system elevated, in whole or in part, above the surface of the ground, of which one type is the rapid transit system known as “SkyTrain” currently in use in the Lower Mainland;

(b) greenways, including without limitation:

(i) pedestrian paths, including without limitation urban walks, environmental demonstration trails, heritage walks and nature trails; and

(ii) cyclist paths.

The effect of the by-law was to freeze the redevelopment potential of the corridor and to confine CPR to uneconomic uses of the land. CPR regards this effect as unfair and unreasonable. It does not allege that the City acted in bad faith. However, it argues: (1) that the by-law is ultra vires City and should be struck down; (2) that the City is obligated to compensate CPR for the land; and (3) that the by-law suffers from procedural irregularities and should be struck down on that account.

The Chambers Judge held the by-law to be ultra vires the City, declined a declaration that the City must compensate CPR and found it unnecessary to consider the procedural issues ((2002), 33 M.P.L.R. (3d) 214 (B.C. S.C. [In Chambers]). The British Columbia Court of Appeal rejected all three arguments and allowed the City’s appeal ((2004), 26 B.C.L.R. (4th) 220 (B.C. C.A.)). CPR now appeals to this Court. Despite considerable sympathy for CPR’s position, I conclude that under the Vancouver Charter, the City was entitled to refuse compensation and to pass the by-law, and that the courts have no option but to uphold it. I would therefore dismiss the appeal.

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3. Analysis #

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3.2 Compensation #

CPR argues there is a presumption that the Legislature intended any taking of property to be compensated. It argues that the ODP By-law, by limiting its use, constitutes an effective taking of its land. It cannot use the land for any economically viable purpose. It cannot, it says, even run a railway because the by-law precludes maintenance of its track. In these circumstances, the City has effectively “taken” its land and must compensate it, CPR urges.

Like the Court of Appeal, I am not satisfied that the by-law prevents track maintenance or the operation of a railway on the corridor. Indeed, CPR has no desire to operate a railway there. Its real complaint is that the by-law prevents it from developing or using the corridor for economically profitable purposes. This amounts, it argues, to a de facto taking of its land, requiring compensation.

CPR argues that at common law, a government act that deprives a landowner of all reasonable use of its land constitutes a de facto taking and imposes an obligation on the government to compensate the landowner.

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 (see Mariner Real Estate Ltd. v. Nova Scotia (Attorney General) (1999), 177 D.L.R. (4th) 696 (N.S. C.A.), at p. 716; Manitoba Fisheries Ltd. v. R. (1978), [1979] 1 S.C.R. 101 (S.C.C.); and British Columbia v. Tener, [1985] 1 S.C.R. 533 (S.C.C.).

In my view, neither requirement of this test is made out here.

First, CPR has not succeeded in showing that the City has acquired a beneficial interest related to the land. To satisfy this branch of the test, it is not necessary to establish a forced transfer of property. Acquisition of beneficial interest related to the property suffices. Thus, in Manitoba Fisheries, the government was required to compensate a landowner for loss of good will. See also Tener.

CPR argues that, by passing the ODP By-law, the City acquired a de facto park, relying on the observation of Southin J.A. that “the by-law in issue now can have no purpose but to enable the inhabitants to use the corridor for walking and cycling, which some do (trespassers all), without paying for that use” (para. 117). Southin J.A. went on to say: “The shareholders of … CPR ought not to be expected to make a charitable gift to the inhabitants” (para. 118). Yet, as Southin J.A. acknowledged, those who now casually use the corridor are trespassers. The City has gained nothing more than some assurance that the land will be used or developed in accordance with its vision, without even precluding the historical or current use of the land. This is not the sort of benefit that can be construed as a “tak[ing]”.

Second, the by-law does not remove all reasonable uses of the property. This requirement 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”: see Mariner Real Estate, at p. 717. The by-law does not prevent CPR from using its land to operate a railway, the only use to which the land has ever been put during the history of the City. Nor, contrary to CPR’s contention, does the by-law prevent maintenance of the railway track. Section 559’s definition of “development” is modified by the words “unless the context otherwise requires”. Finally, the by-law does not preclude CPR from leasing the land for use in conformity with the by-law and from developing public/private partnerships. The by-law acknowledges the special nature of the land as the only such intact corridor existing in Vancouver, and expands upon the only use the land has known in recent history.

CPR also argues that the British Columbia Expropriation Act, R.S.B.C. 1996, c. 125, requires the City to compensate CPR (Appendix B). Section 1 of the Act defines “expropria[tion]” as “the taking of land by an expropriating authority under an enactment without the consent of the owner”, and goes on to define “expropriating authority” as “a person … empowered under an enactment to expropriate land”. Section 2(1) of the Act provides that “[i]f an expropriating authority proposes to expropriate land, th[e] Act applies to the expropriation, and, if there is an inconsistency between any of the provisions of th[e] Act and any other enactment respecting the expropriation, the provisions of [the Expropriation Act] apply”. The Expropriation Act requires compensation for land expropriated, while the Vancouver Charter states the City is not obliged to compensate for adverse effects to land caused by an ODP. CPR argues that this constitutes an inconsistency and that, under s. 2 of the Expropriation Act, the requirement of compensation in that Act must prevail.

This argument rests on the premise that there is an inconsistency between the Expropriation Act and the Vancouver Charter as applied to the facts in this case. It assumes that the land is “expropriate[d]” or “taken” and that the two statutes impose different obligations in this event - compensation in one case, no compensation in the other. In fact, however, the provisions of the Vancouver Charter prevent a conflict from ever arising. Section 569 of the Vancouver Charter provides that property affected by a by-law “shall be deemed as against the city not to have been taken”. The Expropriation Act applies only where there has been a “tak[ing]” or “expropriat[ion]”. Since by statute there is no taking or expropriation here, there is no inconsistency with the Expropriation Act and s. 2(1) cannot apply.

I add this. Even if the facts of this case could be seen to support an inference of de facto taking at common law, that inference has been conclusively negated by s. 569 of the Vancouver Charter. The Province has the power to alter the common law. Here, by providing that the effects of the ODP By-law cannot amount to a “tak[ing]”, it has rendered inapplicable the common law de facto taking remedy upon which CPR relies.

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Conclusion #

While one may sympathize with CPR’s position, none of its arguments withstand scrutiny. The City did not exceed the powers granted it by the Vancouver Charter. Neither the Vancouver Charter nor principles of common law require it to compensate CPR for the ODP By-law’s effects on its land. Finally, the City’s conduct in enacting the by-law complied with the requirements of fair process.

I would therefore dismiss the appeal with costs.

Appeal dismissed.