Casual Legal: Natural person powers in land acquisitions

By Greg Weber
Reynolds Mirth Richards Farmer LLP
Alberta Municipalities Casual Legal Service Provider

Whenever municipalities need land for an infrastructure project, it is prudent for them to try acquiring the properties from landowners consensually. These transactions occur through normal land purchases and transfers in exchange for the market value of the land.

Municipalities can acquire land in this way because they have “natural person powers” under section 6 of the Municipal Government Act (MGA): “A municipality has natural person powers, except to the extent that they are limited by this or any other enactment.” This approach creates finality with land owners while curtailing any further potential compensation rights they would have if it became necessary to expropriate the properties.

The use of natural powers to acquire land within the context of expropriation proceedings can be tricky because those powers may be limited in unexpected ways. For example, municipalities put on their “public powers hats” whenever they engage their expropriation powers under section 14 of the MGA. This creates important context for land deals.

In Steam Whistle Brewing Inc. v Alberta Gaming Liquor Commission, 2019 ABCA 468, the Court of Appeal confirmed that public bodies may act in a hybrid capacity: it’s not always either/or for when natural or public powers are engaged. The Court further confirmed that, in such circumstances, any time a municipality’s public powers enhance its negotiating position, it is operating in this hybrid capacity. Whenever a municipality is operating in a hybrid capacity, it needs to be very careful, particularly when the context of the transaction effectively removes the landowners’ autonomy to genuinely consent to the deal.

Although it is possible to enter into a “natural person power” transaction for land even against the backdrop of expropriations, it is always a good idea to seek legal advice before doing so to ensure the agreement contains properly worded terms that will protect the municipality and the integrity of the deal. However, any situation where the natural persons powers are relied on to effectively take land without a genuine exercise of autonomy in consenting to the transaction will be dubious and municipalities should tread carefully.

One common example where such a situation could arise is when the landowner has a tenant who was not consulted or part of the transaction, and the result of the transaction is the elimination of the tenancy. This situation could arise in any context where there is a tenancy, whether it be a residence, a commercial property, or agricultural land and such a transaction could be deemed to be an expropriation of the leasehold interest.

To access Alberta Municipalities Casual Legal Helpline, Alberta Municipalities members can call toll-free to 1-800-661-7673 or send an casuallegal [at] abmunis.ca (email) to reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please call 310-MUNI (6864) or send an riskcontrol [at] abmunis.ca (email) to speak to Alberta Municipalities Risk Management staff. Any Regular or Associate member of Alberta Municipalities can access the Casual Legal Service.

DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.