According to the “Pointe Gourde” principle in expropriation law, “compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition.” If the expropriating authority’s reason for taking the property (the “scheme”) actually enhances the market value of the property, the property owner does not get to rely on the enhanced value in the calculation of compensation payable: the property owner is not entitled to a windfall. In determining the value of the property taken, the scheme must screened out – “screening out the scheme”. This common law principle has been codified in Section 14(4)(b) of the Expropriations Act in Ontario, which provides that no account shall be taken of “any increase or decrease in the value of land resulting from the development or the imminence of the development in respect of which the expropriation is made or from any expropriation or imminent prospect of expropriation”.
The Pointe Gourde principle is taken from a 1945 case of the same name heard before the Judicial Committee of the Privy Council in the UK. The case involved the expropriation of land in Trinidad for use as a quarry from which stone would be taken to construct a nearby naval base. The compensation owing to the owners was to reflect the “value of the quarry as a going concern”. The quarry owners argued that the value of their quarry should include consideration of the higher profits they would make because their stone was to be used for the naval base. The Judicial Council, which was the highest court for cases from Trinidad (as it was at one time the highest court for Canadian cases), decided against the quarry owners. The increase in the market value of the property was due entirely to the expropriating authority’s plan to build the naval base. The expropriating authority benefitted from securing a nearby and accessible source of a large quantity of stone (the quarry), but without the plan for the naval base construction this did not increase the market value of the property taken.
The expropriation “scheme” to be screened out in determining value, or “development” as used in the Expropriations Act, refers not only to a specific project or initiative, such as the construction of the naval base in Pointe Gourde, but to the full set of government actions, plans and policies leading to a taking of property in connection with the project or initiative. This was discussed in a 2025 decision of the Ontario Land Tribunal (“OLT”) arising from the expropriation of land for the new Ontario Line subway line in Toronto. The OLT was tasked with determining the market value of the land expropriated for the subway line project: “what a reasonably informed person would pay for the property based upon the property’s highest and best use (“HBU”) at the time using the knowledge available to the person as at the valuation date”. In accordance with Section 14(4)(b) of the Expropriations Act, the OLT was barred from considering any change in value resulting from the planned subway line development itself. Indeed, the OLT found that it could not consider any change in value resulting even from the provincial government’s announcement of the Ontario Line project several years earlier in 2019. That announcement was effectively the “scheme” to be screened out of the compensation analysis.
The OLT also clarified that both sides – the expropriating authority and the property owner – share the responsibility of assisting the tribunal in determining how the scheme affected the market value of the property taken. The owner must show that its proposed valuation is not based on a highest and best use for the property that relies on factors related to the scheme. If the expropriating authority challenges the proposed valuation because it is influenced by the scheme, the authority bears a “positive obligation” to put forward evidence of how the scheme has affected the proposed valuation.
In the Ontario Line case, the property owner claimed compensation based on highest and best use of its property being a high-density mixed-use high-rise tower including residential and commercial uses. The expropriating authority argued that the development potential of the property that would allow for the owner’s proposed highest and best use actually depended on the Ontario Line scheme. In other words, without the proposed transit project (the expropriating authority argued unsuccessfully that the transit project pre-dated the 2019 announcement and that the Ontario Line was part of a scheme stretching back over 20 years), the level of density of development on the property suggested by the owner could not be achieved. The OLT disagreed, concluding that the owner’s proposed site density (highest and best use) was consistent with approvals for other developments in the area and did not depend on the Ontario Line transit project. As noted by the OLT, the expropriating authority failed to show what specific increase or decrease in value resulted from the Ontario Line project:
The Tribunal recognizes that the requirements of section 14(4)(b) of the Act are often not easy to apply in expropriation proceedings. As already noted, the reality is that there may be simply no way for either Party to empirically demonstrate whether there was “increase or decrease in value” resulting from the Expropriation. The situation might have been quite different if, for example, the Claimant had relied on a particular development approval by the City where the City’s staff had made it clear in writing that their approval was predicated on the impacts of the Scheme – or conversely, where City’s planners had written that the Scheme was not considered at all. However, no such specific evidence exists in this case.
