Antrim Truck Centre v. Ontario (Transportation) and the Ethos of De Facto Expropriation

I: The Ethos of De Facto Expropriation

Statutory schemes across Canada, such as Ontario’s Expropriations Act, RSO 1990, c E.26, provide that if the state directly expropriates private property, it must compensate the erstwhile owner of that property. It has long been recognized, however, that state regulation of private property that has the effect of eliminating the incidents of private ownership is functionally equivalent to direct expropriation of that property. Such state activity is known as ‘de facto expropriation,’ and it requires compensation at common law even if it advances a compelling public interest.

The ethos of de facto expropriation doctrine—by which I mean the general conception of the relationship between state and citizen that animates its common law development—differs markedly between Canada and the United States. In the United States, state regulation of private property that advances a public purpose while at the same time depriving a citizen’s land of all of its economically beneficial use requires compensation. The rationale of this doctrine, as articulated by Justice Scalia in Lucas v. South Carolina Coastal Council,  505 US 1003 (1992), is that the burdens imposed by the regulation, the aim of which is to confer a benefit on society as a whole, should not have to be borne by a single citizen. The doctrine traces its conceptual foundations to the Fifth Amendment of the US Bill of Rights, which provides that no person shall be deprived of life, liberty, or property “without due process of law.” By contrast, there is no comparable right to property against the state entrenched in the Canadian Charter of Rights and Freedoms. It has been held by Chief Justice McLachlin in Canadian Pacific Railway Company v. City of Vancouver, 2006 SCC 5, that, in Canada, a finding of de facto expropriation requiring compensation at common law depends on establishing that a citizen’s land has been deprived of virtually all of its reasonable uses.

Since it is evidently more difficult to establish that state regulation has eliminated all reasonable uses of one’s property than it is to establish that it has eliminated all economically beneficial use of it, the Canadian ethos of de facto expropriation gives the state far greater latitude to regulate private property in the public interest without having to compensate individual citizens than does the ethos in the United States. To put this point in another way, in Canada the common law is more sympathetic than in the United States to the need for the state to impose burdens on individual property owners for the sake of conferring public benefits on society as a whole.

In the 2013 case of Antrim Truck Centre v. Ontario (Transportation), 2013 SCC 13 [Antrim], the Supreme Court of Canada delivered a judgment on an area of property law called injurious affection, which bears a close affinity to de facto expropriation. Injurious affection occurs where a defendant’s activities interfere with the plaintiff’s use or enjoyment of her land. It does not necessarily contemplate expropriation of the plaintiff’s property by the defendant, but it applies where the activities of a statutory authority damage privately owned land. The Ontario Expropriations Act provides citizens with a right to compensation for injurious affection under certain conditions.

In this comment on Antrim, I argue that the Supreme Court’s interpretation of how the Expropriations Act should be applied in the context of a claim for injurious affection departs from what I have called the Canadian ethos of de facto expropriation. The Supreme Court’s interpretation instead draws upon the American ethos of that doctrine in the course of developing the law of injurious affection. In Part II, I outline the judicial history and reasons of the Antrim judgment. In Part III, I show that the reasons are heavily inflected by the American ethos of de facto expropriation. I conclude in Part IV with a general discussion of the Antrim decision’s implications for Canadian property law.

II: Antrim Truck Centre v. Ontario (Transportation)

The appellant in Antrim owned a truck stop on Highway 17 near Antrim, Ontario. The Ministry of Transportation (‘the Ministry’) opened a new section of Highway 417 that ran parallel to Highway 17 at the point of the appellant’s property. The construction of the new section resulted in the closure of Highway 17, putting the appellant’s truck stop out of business. The appellant brought a claim before the Ontario Municipal Board (‘the Board’) for compensation for injurious affection (para 12).

The Ontario Expropriations Act provides a right to compensation for injurious affection if three requirements are met (see s 1(1)): first, the damage to the plaintiff’s land must result from action taken under statutory authority; second, the action would give rise to liability but for that statutory authority; third, the damage must result from the construction and not the use of the works. In Antrim, only the second requirement was disputed. The appellant had to show that if the Ministry’s highway construction had not been undertaken under statutory authority, it could have successfully sued for damages caused by the construction. It argued before the the Board that it would meet this requirement because it would be entitled to damages for private nuisance (paras 5-6).

The Board awarded the appellant damages for business loss and loss of market value in its land. This decision was overturned by the Ontario Court of Appeal for two reasons: first, it held that the Board failed to consider several of the factors it was “obliged to take into account in assessing the reasonableness of the interference” with the appellant’s use and enjoyment of its land; second, it held that the Board “failed to recognize the elevated importance of the utility of the defendant’s conduct where the interference is the product of an “essential public service” (paras 13, 15).

The Supreme Court of Canada overturned the Court of Appeal’s judgment and restored the Board’s compensatory award. Justice Cromwell, writing for a unanimous Court, began by affirming the two-part test required to support a claim for damages for private nuisance, namely that the interference with the owner’s use or enjoyment of land must be both substantial and unreasonable. He wrote that “[a] substantial interference with property is one that is non-trivial … the reasonableness analysis … is concerned with whether the non-trivial interference was also unreasonable in all of the circumstances” (para 19). With respect to the reasonableness requirement, the particular issue in the instant case was how to determine whether the interference with the appellant’s property was unreasonable given that the Ministry was carrying out an activity in furtherance of the public interest.

Justice Cromwell held that the reasonableness analysis requires the Court to undertake a balancing exercise to determine “whether the interference is such that it would be unreasonable in all of the circumstances to require the claimant to suffer it without compensation” (para 25). A number of factors enter into this exercise, including the severity of the interference, its frequency and duration, the character of the neighbourhood in which it occurs, the sensitivity of the plaintiff, and the utility of the defendant’s conduct. Justice Cromwell emphasized that the factors are not a checklist. Courts and tribunals are not bound by or limited to them. Instead, the factors to be considered are those that are relevant in a particular case (para 26)

The utility of the defendant’s conduct is especially relevant in cases where the defendant is a statutory authority advancing a public interest. Justice Cromwell stated, however, that “in the reasonableness analysis, the severity of the harm and the public utility of the impugned activity are not equally weighted considerations” (para 30). The activities of a public authority will usually be of significant utility. If they are equally balanced against the interests of the plaintiff, they will generally outweigh even very serious interferences with the plaintiff’s land. The problem with this consequence is that it undermines the purpose of providing statutory compensation for injurious affection, which is to “ensure that individual members of the public do not have to bear a disproportionate share of the cost of procuring the public benefit” (para 38).

The utility of the authority’s activities therefore cannot be used on its own to resolve the reasonableness analysis. It must be regarded as one factor amongst all the others relevant in a particular case to be balanced. The goal is to arrive at a determination of whether the interference with the plaintiff’s property ought to be compensable because its burden should be borne, not by the plaintiff individually but by the public generally, or whether burden should be borne by the plaintiff as a cost of living in an organized society committed to advancing the public good.

Justice Cromwell identified two errors in the Court of Appeal’s approach to the balancing exercise inherent in the reasonableness analysis of a private nuisance claim. First, it erred in concluding that the Board ought to have considered a specific list of factors when engaging in the balancing exercise. That the Board considered the factors that it viewed as relevant in the instant case when decided on its compensatory award was sufficient to have reached a reasonable decision.

Second, the Court of Appeal erred in concluding that the Board failed to properly take into account the utility of the Ministry’s conduct in the instant case. According to Justice Cromwell, the board adverted to the importance of highway construction to the public good, but properly did not allow that concern “to swamp consideration of whether it was reasonable to require the appellant to bear without compensation the burden inflicted on it by the construction” (para 57). Thus, the Board’s reasonableness analysis in assessing the appellant’s private nuisance claim was conducted appropriately.

III: Toward the American Ethos of De Facto Expropriation

The Court of Appeal’s judgment in Antrim was informed by what I have called the Canadian ethos of de facto expropriation. On this conception of the relationship between state and citizen, recall, citizens’ private property interests should more readily yield to the state’s need to advance the public interest by eliminating a substantial quantity of the incidents of a person’s private property.

The Court of Appeal held that, for the purposes of assessing whether the appellant’s claim in private nuisance would succeed against the Ministry, it was appropriate to strictly balance the severity of the Ministry’s interference with the appellant’s land against the public importance of the Ministry’s goal of highway construction. In effect, it maintained that it would be reasonable for the appellant to accept the burden imposed on it by the Ministry’s activities for the sake of the benefit that those activities conferred on society as a whole. Underlying this argument was therefore the view that individuals should, more often than not, accept diminutions of their private property interests when the public good is at stake.

In rejecting the Court of Appeal’s reasoning, the Supreme Court of Canada adhered more closely to the American ethos of de facto expropriation. According to this conception of the relationship between state and citizen, citizens should not be required bear a disproportionate share of the burdens of social cooperation by accepting diminutions of their private property interests so that the state can advance even a compelling public interest.

Justice Cromwell held that the balancing exercise to be undertaken in a private nuisance claim when assessing whether it would be reasonable for a plaintiff to accept an interference with its land should not strictly pit the severity of the interference against the public utility of the activity precipitating it. Rather, the exercise should consider a variety of other relevant factors, none of which enjoys superior weight than the others. Underlying this loosening of the balancing exercise is the view that there are, in contemporary society, a significant amount of scenarios in which it would be unreasonable to require a person’s individual private property interests to yield even to highly important public goods advanced by the state, such as highway construction. For Justice Cromwell, the contemporary law of injurious affection, rooted as it is in statutes such as the Ontario Expropriations Act, ought to make room for this social reality.

IV: Conclusion

I have argued in this comment that the Supreme Court of Canada’s decision in Antrim departs from the Canadian ethos of de facto expropriation. Instead, it draws upon the American ethos of that doctrine in the course of developing the law of injurious affection. It remains to be seen whether the American ethos will be carried forward by the Supreme Court of Canada in future decisions in the area of property law, which so often pits the private interests of the individual against the public interests of society. Canadian social and political culture, unlike that of the United States, is typically more deferential to the state and its cultivation of public goods, even at the expense of individual rights (for the classic defence of this proposition, which has become known as the Hartz-Horowitz Thesis, see G Horowitz, “Conservatism, Liberalism, and Socialism in Canada: An Interpretation” (1966) 32:2 Canadian J Econ & Poli Sci 143). This asymmetry is exemplified by the fact that the US Bill of Rights, but not the Canadian Charter, contains a broad protection of individual property rights. Hence, it might be argued that the shift to the American ethos of de facto expropriation in the area of injurious affection operative in the Antrim case is to be regarded as anathema to Canadian social and political culture in the final analysis.