A Saskatchewan municipality passed a by-law to expropriate a roughly 2-acre road parcel from a quarter section of privately-owned land. The affected landowners applied unsuccessfully to the Court of Queen's Bench to quash the by-law, following which the issue of compensation for the expropriation was set to be determined. In a decision released last October, the Court ruled that, in the circumstances of this particular case, no compensation was payable for the taking.
The road had actually been constructed by the municipality in 1980 to provide access to nearby lands. The 2-acre roadway cut across an 8-acre triangular piece of the quarter section, which was cut off from the remainder of the lands by a railway line. The landowners (and/or their predecessors-in-title) had acquiesced in the construction and continuing use of the road. The municipality had continued to maintain the road since its construction.
In 2004, the landowners applied to subdivide the quarter section to turn the 8 acre parcel into a one-lot subdivision. This prompted the municipality to raise a concern about the maintenance of the road access across the property. Eventually, the one-lot subdivision proposal turned into a two-lot proposal. Between 2004 and 2011, the municipality and the landowners attempted to negotiate a resolution. The municipality offered to purchase the 2-acre parcel in December, 2010, but no agreement was reached. In March, 2011, the municipality passed its expropriation by-law.
In determining compensation, the Court of Queen's Bench found that the highest and best use of the land being taken was not a two-lot subdivision as proposed by the landowners. The Court found that a two-lot subdivision was not a "reasonably probable use of the eight acre parcel" and that "there was no reasonable expectation that such a subdivision would occur." For one thing, the road access issue was holding up any approval of a two-lot subdivision. There was also evidence that the subdivision would not meet setback requirements.
The Court then looked at the effect of the taking on the eight-acre parcel as a whole: "what, then, should the applicants be paid, taking account of the value of the road parcel? Based on the before and after method, the applicants should receive the difference between the value of the eight acre parcel that they owned prior to the expropriation, and the value of the approximately six acre site that they will have after the expropriation. That calculation accounts for the value of the road parcel, the damage to the remaining six acre parcel, and any increased value to the remaining land arising from the work to be done - that is, the maintenance of a public road - on the road parcel. "
On the basis that the highest and best use of the land affected was as an eight-acre one-lot subdivision, the Court concluded that no compensation was payable: "Given that the transfer of the road parcel without compensation was an unavoidable cost of a single lot subdivision, the value of the eight acre parcel for a single lot subdivision was the same before and after the expropriation of the road parcel. The applicants accordingly suffered no loss as a result of the expropriation. Indeed, and as noted by counsel for the respondent, the expropriation of the road parcel puts the applicants one step closer to having the legal access that is a requirement for any subdivision. As such, it is a special benefit to the applicants."
The Court would have reached the same conclusion had the highest and best use of the land been agricultural: "no compensation is payable - even if the highest and best use of the eight acre parcel was the existing agricultural use. The road parcel is already used for the road, and is not available for agricultural use. As such, loss of title to the road parcel would not affect the value of the quarter section for agricultural purposes. "
Read the decision at: Colhoun v Rural Municipality of Lumsden No. 189.