Top Court Rules that Compensation in Property Cases Should Be Based on Zoning Regulations in Watershed Areas

The Supreme Court of Canada determines that the zoning of a property in St. John’s, N.L., as a watershed area should be the basis for compensating the owners in the event of land expropriation.

In a unanimous decision on May 10, the Supreme Court states that compensation should be calculated according to the restricted uses permitted by the zoning regulations, not based on the assumption that a housing development could have taken place.

The owners’ formal application to develop the property was turned down in 2013, leading to a court declaring that the land had been effectively expropriated, thus entitling the owners to compensation.

The Supreme Court asserts that an authority cannot halt a property’s development in anticipation of acquiring the land, which would devalue the property and reduce the compensation owed.

When evaluating the impact of a regulation on property value, the crucial question is whether the regulation was enacted with the intention of expropriation or if it was an independent decision.

In its ruling, the Supreme Court determines that the watershed zoning was an independent decision, and therefore the assessment of the property’s market value must consider that it is limited to specific agricultural, forestry, and public utility uses.

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