Ford's Greenbelt flip-flop could spell legal trouble for taxpayers, lawyers say

The Ontario government's sudden reversal on opening up parts of the Greenbelt for development could now put it and taxpayers in legal jeopardy for potential damages, some legal experts say.

Last month, Premier Doug Ford apologized to Ontarians and walked back the government's decision to remove 2,995 hectares of protected land from the Greenbelt to pave the way for housing development. The stunning flip-flop came after public outcry and separate inquiries from both the province's integrity commissioner and auditor general revealed major flaws with the process.

While critics of the plan cheered the reversal, lawyer Tim Gilbert said it's unlikely developers will forgive so easily.

"I don't think apologies go far enough. I think developers are interested in making money and building homes. That's what they're there to do," said Gilbert, managing partner at Gilbert's Law.

CBC Toronto spoke to several legal experts about the potential for civil liability, which comes as the RCMP launches a criminal probe into the matter. 

In general, legal experts say governments are not held liable for decisions they make about land use. But some say developers that own the lands being put back under protection could sue the province to attempt to recoup money spent developing plans and investing in the required infrastructure. Others say those who bought land at a premium could also seek damages.

Value will likely drop for reclaimed lands

The protected agricultural land soared in value to about $8.3 billion after last November's initial Greenbelt opening announcement, Ontario's auditor general found in his report.

For instance, in 2017, Flato Developments spent $15 million on just over 41 hectares of farmland outside of Markham, Ont. Property Corporate records show the company then sold about 29.5 hectares of that land to yet another development company, Torca UMV Inc., in April 2022 for $62 million. 

About 4.5 hectares of that land was removed from the Greenbelt. Once the Ford government formalizes its reversal in legislation, nearly 15 per cent of the land will become once more undevelopable — and much less valuable.

"I think the real compensation, the real dollars, are in the change of value of the land. That number is eye-popping, it's many billions of dollars," Gilbert said. 

Ford sidestepped questions last month about what the legal ramifications of the reversal might be, but Gilbert said he can see the government justify not paying anything by leaning into the fact that not much development has happened yet.

Still, Trevor Farrow, dean of York University's Osgoode Hall Law School, said developers could try to hold the provincial government liable for money spent on architects, designers and other experts hired to map out prospective builds.

"There's nothing normal about this situation at all."

Province plans to bar developers from taking legal action

Housing Minister Paul Calandra has stated that forthcoming legislation will include a provision to codify the boundaries of the Greenbelt and a provision to prevent developers from seeking compensation. 

He argued despite the land being removed from the Greenbelt, no zoning had been changed and therefore the circumstances surrounding development never changed.

But developers could argue the Greenbelt land swap and building expectations were misrepresented by the provincial government, said Sarah Turney, an expert in property and development litigation and partner at Fasken Martineau DuMoulin LLP. 

"They spent money based on those representations, they incurred costs, and on that basis they should be compensated," Turney said.

In Ontario, there is a tort of negligent misrepresentation, but in order for the developers to make that argument, they will have to prove that there was, what Turney called, a "special relationship" between them and the government. Promises from the podium don't qualify as a special relationship, Turney said.

The integrity commissioner says there were eight draft agreements outlining development expectations with developers as of Aug. 8, 2023. Those agreements not been made public.

Developers may argue changes done in bad faith

Annik Forristal, a partner at McMillan LLP said governments, municipalities and the province have generally have not been held liable for decisions on land use.

"But that's not to say that under the specific facts and circumstances, for some of these developers and landowners, that might not be an option," she said.

If the reversal was done in bad faith, Forristal says that could be a way for developers to claim the losses that have resulted, such as land value.

"An example of bad faith is where the decision isn't being made on the basis of public interest, public policy or good land use planning," she said.

In his investigation earlier this year, the Auditor General raised concerns that some lands being opened for development were purchased after Ford was elected — some in the weeks leading up to the government's decision to open them to development. 

Even if developers feel confident they can make a case for bad faith, Forristal says the Greenbelt Act itself will be tricky to navigate as the it has not allowed for any claims, compensations or damages to date.

"The basis that any of these land owners or developers would have for a claim will be very fact-specific, very specific to their circumstances, and the nature of any conversations or agreements they might have had."