Eminent domain

It has long been recognized that one of the reasons nations such as Canada, Great Britain and the United States have created so much individual wealth is that they have a tradition of upholding the principle of private property ownership. In the so-called developing nations, no such tradition exists, thus people in those countries are poor.

Ownership gives people the ability to raise additional capital by using their property as collateral. In turn, this additional capital can be used to purchase more property, possessions or to create a business. In the developing world, it is difficult to receive additional funds from a bank if you are a squatter without title to land in a shanty town.

The tradition derived from English common law is also entrenched in the American Constitution, which makes it all the more surprising that the U.S. Supreme Court made a narrow 5-4 ruling to allow a municipal government to expropriate people’s homes and turn the land over to private developers.

The case resulted from a suit brought by 15 homeowners in New London, Connecticut, who learned they were to be forced to sell their properties to private developers who would demolish their homes to make room for office buildings and retail complexes.

The Supreme Court ruled that “eminent domain” could be used by cities to take private homes and hand them over to developers.

The tradition in both Canada and the U.S. is that private land can be expropriated by a municipal government but only for public use and following the awarding of adequate compensation. In Canada, it is illegal for a private individual to take your property — it’s called theft. But, in the U.S., the theft of private property for private purposes has become legalized when a public body intervenes on behalf of the thief.

On the other hand, there is little in either country to prevent the taking of private land for public purposes, though the tradition derived from English common law contains these three understood points: the taking of your property must be for public use; the taking of your property must be through due process of the law; and the taking of your property must be with just and timely compensation.

These principles have evolved in Britain since the time of the Magna Carta in 1215 and were carried over to Canada and the United States.

While Canada’s Charter of Rights and Freedoms makes no mention of property rights — Diefenbaker’s 1960 Canadian Bill of Rights does recognize “the right of the individual to ... enjoyment of property and right; not to be deprived thereof except by due process of the law,” but this is not the same as constitutional protection —  the Fifth Amendment of the U.S. Constitution says that 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.”

What the U.S. Supreme Court did was erase the “public use” clause of the amendment in favour of hotels and pricier homes. The Court said that such development was public use because it generated more tax revenue.

“Promoting economic development is a traditional and long-accepted function of government ... (T)here is no basis for exempting economic development from our traditionally broad understanding of public purpose,” wrote Justice John Stevens.

“Who among us can say she already makes the most productive or attractive use of her property?” asked Justice Sandra Day O’Connor, who wrote a dissenting opinion. “Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded ... Nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.”

An argument has been made that all American land is now state-owned with the state able to transfer title of land ownership at its whim, merely by saying it’s in the public’s interest. Justifiably, the fear is that politically-connected developers will convince local politicians that a row of tract houses in some modest neighbourhood should go. On the other hand, wealthy homeowners would be protected because they still have power.

“The government now has licence to transfer property from those with fewer resources to those with more,” added Justice O’Connor.

This is akin to a return to pre-1215, when the king owned all land and allocated its use to his favourites and could just as quickly repossess the land if the vassal fell out of favour.

Should Canadians fear the U.S. Supreme Court ruling? No, it has no direct bearing on Canadian law, but its concept could be transferred to Canada by Canadian politicians. As it now stands, without our own carefully-worded (not to repeat the American mistake) constitutional protection of property, the turning over of land to private interests in the name of public use is easily obtained through a new act or bylaw of a Canadian governing body.