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UBC Theses and Dissertations

The principle of compensation in relation to public interference in the real property market : an interface of law and economics Heung, Raymond


The objective of this thesis is to examine the principle of compensation in relation to public interferences in the real property market. Public activities in the real property market frequently have the effects of incurring losses to be suffered by some individuals in society and gains to be enjoyed by others. One crucial problem is how we should draw the line between compensable losses and non-compensable losses. In-order to determine the criteria of compensability, we have resorted to economic principles as well as legal rules. Economic principles are relevant because the losses (caused by public activities) that we are interested in are economic losses. Legal rules are also relevant because courts have often been left with the responsibility of determining fair compensation. As far as legal rules are concerned, we recognize three legal rules that have been developed from judicial decisions and legal commentary, and have been deemed to be critical in determining the criteria of compensability. We evaluate these three rules against the economic principles of allocative efficiency and the principles of justice developed by John Rawls, and we have come to the conclusion that these three rules have inherent weaknesses in determining how we should draw the line between compensable and non-compensable losses. However, these three legal rules have considerable influence on judicial decisions with respect to the provision of compensation caused by the following three types of public interferences, namely, compulsory acquisition of land, injurious affection on land, and planning restrictions of land use. Consequently, the provision of compensation under each of the above three occassions for compensation have frequently been unsatisfactory and inadequate. We have also examined recent legislative reforms in Canada, and we have noted certain welcoming changes in statutory law and have also pointed out some other areas where further reforms are required.

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