Supreme Court Of Newfoundland And Labrador Rejects Developer's Constructive Expropriation Claim

In the recent decision Index Investment Inc. v. Paradise (Town), 2023 NLSC 112, the Supreme Court of Newfoundland and Labrador validated the Town of Paradise's decision to rezone lands owned by a developer for conservation. The rezoning decision, which occurred as part of the Town's municipal plan review, was found to be reasonable and did not amount to a constructive expropriation of the developer's land.

Municipalities can take comfort in this decision. It affirms the principle that cities and towns do not owe compensation to private landowners whose lands are reduced in value by the reasonable exercise of municipal zoning authority.

This decision is also notable in that it is the first in the province to evaluate a claim for constructive expropriation since the Supreme Court of Canada clarified the two-prong test in Annapolis Group Inc. v. Halifax Regional Municipality, 2022 SCC 36. Ultimately, Index confirms that landowners face a high evidentiary threshold