MEMO TO: John Kenward FROM: Marc Denhez RE: Constitutional Rights and Private Property SUMMARY: I have been asked whether Canada has a clear counterpart to the U.S. constitutional provisions respecting private property. Although the answer is no, it should also be remembered that the U.S. position is not an absolute protection of property rights either. ANGLO-CANADIAN POSITION In Anglo-Canadian law, there is a centuries-old “presumption” in the rules of legal interpretation: in interpreting legal documents (including land use controls), courts will not read into them a right to interfere with private property, unless there is clear statutory authority for that interference. However, when the legislation is clear, the courts are bound by that legislation, and must give effect to it, even if the result intrudes on property rights. This is distinct from the position of property rights under the U.S. constitution. Although there had been some discussion during the 1980's of entrenching a similar mention of property rights in the Canadian Charter of Rights and Freedoms, that did not materialize. The Canadian Charter of Rights and Freedoms is sometimes used to overturn legislation which violates the rights protected by the Charter. That situation sometimes leads to the following question: if property rights (on the U.S. model) were introduced to the Charter, would that mean that legislation violating property rights could then be overturned by the courts? The answer is: not exactly – because that is not how the U.S. model actually works. U.S. POSITION One should be clear, however, on what the U.S. constitution actually says. It does not entrench an absolute right to property. It does not necessarily reverse government decisions that intrude on property rights: instead, it usually allows such intrusions to continue subject to compensation. There are two applicable constitutional provisions, one referring to federal powers, and the other referring to states; the first is part of the lengthy Fifth Amendment, and the other is the Fourteenth Amendment. Among the clauses of the Fifth Amendment, there is the following: No person shall ...be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use without just compensation. The Fourteenth Amendment includes the following: No state shall ...deprive any person of life, liberty, or property, without due process of law. The legal analysis in the U.S. therefore requires two main steps. - The first is to ask: has property been “taken”? - If so, the next question is not whether the “taking” should be reversed, but rather what compensation would be payable. In the case of land use controls, one U.S. authority summarized the situation as follows (Private Property and the Public Good, by Craig M. Call, September 16,1997): Compensation for loss of property value due to zoning restrictions is usually not due unless all viable use of property is denied, and is rarely due where existing uses are allowed to continue. A taking can occur where the landowner has reasonable investment-backed expectations that a use would be allowed and/or where rights to develop property have vested, such as where permits are issued and work is underway. In general, zoning laws are upheld when communities follow a comprehensive plan with uniform application of rules applied fairly to all classes of property owners.... (The Supreme Court applied) the "Penn Central balancing test", where the goal of a restriction that is for the public good is compared to the burden it places on property owners. No compensation is due if an adequate benefit is shown and some viable use of the property remains. Part of the calculation is based on the owner’s “reasonable investment backed expectations”, and if the regulation devalues the property too much, compensation may be due.... If all viable use of property is denied, any regulation, no matter how noble its purpose, will require compensation. In a South Carolina case, the owner of two recreational lots was prohibited from building on them after coastal protection regulations were enacted. Since the restrictions had the effect of removing all market value from the lots, a taking had occurred. In that case, the property owner had recently acquired the lots at substantial cost. If he had owned the land for a long time, and the regulations had allowed his traditional use to continue, this case may have been decided differently. In other words, the U.S. constitutional protection of private property rights applies unequivocally to land use controls that eliminate the value of land. - In Canadian law, most planning statutes (e.g., the Ontario Planning Act) provide recourse to the courts to strike down (“quash”) e.g., a zoning by-law that effectively sterilized land so that it had no functional use. - In the U.S., enabling legislation for zoning usually provides a similar recourse to the courts; but in addition, there are constitutional provisions stipulating that compensation should be payable. That proviso for compensation is not replicated in the Canadian constitution. Given the above parameters of the U.S. provisions, there has been a longstanding debate over whether similar provisions in Canada would make a significant difference to the day-to-day concerns of the development industry. That debate continues to this day. I trust the above will prove helpful, and I would be pleased to answer any further questions.