DISGUISED EXPROPRIATION

In 2008, Québec City adopted a by-law requiring owners of waterfront properties to protect a strip of land adjacent to the shore measuring between 10 – 15 meters, depending on the configuration of the land, in order to protect the drinkable water supply and the lakeshore.

Some property owners applied to court to ask for the nullity of the by-law on the ground that it deprived them of the full use and enjoyment of a significant part of their property and was the equivalent of confiscation or a disguised expropriation without compensation. The trial judge dismissed the suit which ended up before the Quebec Court of Appeal, whose decision can be found at 2011 QCCA 1165 (Wallot v. Ville de Québec).

The stated objective of the by-law was to protect the shores of Lac Saint-Charles and to maintain the quality of its water. According to the Appellants, the primary effect of the by-law was to interfere with the enjoyment of their property without otherwise lessening their obligations relating to the exercise thereof i.e. their property taxes remained the same. The Appellants argued that the by-law amounted to a de facto expropriation of a substantial part of their property thereby depriving them of its reasonable use.

According to the Court of Appeal, the solution to the dispute required a determination as to whether there had in fact, been a suppression of all reasonable use of Appellants’ property. The Court of Appeal commenced its analysis by recalling that the right of ownership in Quebec is not absolute.

The principles established by jurisprudence that the Court of Appeal reviewed in its analysis included the following:

• Disguised expropriation requires the absolute negation of the owner’s right to access his property.

• Disguised expropriation requires interference with the exercise of the right of ownership to such extent that it renders the use of the property impossible.

• It is not because a law or zoning by-law tends to sterilize the right of ownership in whole or in part, or interferes with its exercise, even in a draconian fashion, for it to be considered to be abusive or unenforceable.

• Unless the by-law amounts to a veritable confiscation of private property, economic prejudice resulting from the imposition of restrictions on use and enjoyment cannot affect the validity of the by-law.

The Court of Appeal concluded that for such a by-law to be considered illegal, the restriction must be equivalent to an absolute negation of the right to exercise ownership of the property or a de facto confiscation of the property. Limitations on the right of ownership or its exercise that tend to only partially sterilize a right without depriving the owner of the reasonable use of his property will not be considered to be abusive.
Although the trial judge recognized that the by-law caused the Appellants certain inconvenience, he nevertheless considered that their property had not lost all of its value and that the by-law still allowed the reasonable use of and exercise of their right of ownership. Moreover, the trial judge concluded that the Appellants still retained a degree of use of the protected strip. He concluded that the effects of the by-law could not be interpreted as being a confiscation of the strip of the property adjacent to the lakeshore.

The Court of Appeal accepted the reasoning of the trial judge and added that it had not been demonstrated to the satisfaction of the Court that the by-law diminished the right of ownership and its fundamental attributes, including the exclusive use of the property. The Court could not conclude that the benefits that the Appellants derive from their ownership would, as a result of the by-law, transfer to Quebec City. Moreover, the consequence of the by-law was not to convert the Appellants’ ownership into public property. The by-law, despite certain restrictions, still allowed for the reasonable use of the part of the property adjacent to the lake, a view of the lake and even the possibility of using, in a restricted manner, the protected strip.

The Court noted that the municipality had not attempted to acquire waterfront property indirectly but rather through its zoning regulation, sought to control the use of such property in the collective interest of its residents.

In summary, the Court of Appeal concluded that the Appellants’ claim must fail and that any analysis of the evidence clearly demonstrated that the Appellants retained the substantial use of their entire property, including the strip adjacent to the lakeshore.