Township Liable To Muskoka Cottage Owners For Failing To Inspect Building Permit

• Published date: 28 January 2021
• Subject Matter: Real Estate and Construction, Construction & Planning
• Law Firm: Gardiner Roberts LLP
• Author: Mr James Cook

Owners of a cottage in Muskoka obtained judgment against the Township of the Lake of Bays in the amount of $361,875, resulting from the Township's failure to properly inspect construction after a building permit had been issued: Breen v. The Corporation of the Township of Lake of Bays, 2021 ONSC 533 (CanLII).

In March, 1999, the plaintiffs purchased a cottage for $710,000 in Lake of Bays, Ontario. In 2011-2012, during renovations, the plaintiffs' architect discovered several structural issues, leading to an inspection by an engineer. The engineer determined that the entire cottage was structurally unsafe and that there were serious violations of the Building Code Act (the "Act") and the applicable Building Code regulations.

The plaintiffs' engineer concluded that constructing of an addition to the cottage would not be permitted until the outstanding structural deficiencies were addressed. Given the extent and severity of the structural deficiencies, the engineer believed that the repair costs could exceed the re-construction costs of the cottage. The plaintiffs stopped occupying the cottage in 2013, and thereafter removed the contents, turned off the heat, and drained the plumbing.

In 2014, the plaintiffs commenced an action in the Ontario Superior Court of Justice against the Township seeking damages for negligent building inspections and breaches of its legal duty to enforce the provisions of the Act and Building Code.

In January 2021, following a multi-day trial, the Honourable Mr. Justice Sutherland found that the Township breached a duty of care owed to the plaintiffs. The Township owed a duty of care to the plaintiffs as owners of a property that was constructed pursuant to a building permit which it had issued. The Township conceded that it was reasonably foreseeable that carelessness on the Township's part relating to approval of the building permit might cause damages.

The more difficult question was whether there were any policy reasons limiting the duty of care owed to the plaintiffs. Following the Supreme Court of Canada's decision in Ingles v. Tutkaluk Construction Ltd., 2000 SCC 12 (CanLII), the court reasoned that the purpose of the building inspection scheme is to protect the health and safety of the public by enforcing safety standards for all construction projects. Municipalities in Ontario are required to appoint inspectors who will inspect construction projects and enforce the provisions of the Act and Building Code.

Accordingly...