Peter M. Reinitzer

The appellant, FCT Insurance Company Ltd., appealed a trial judgment that found FCT responsible for losses sustained by the respondent, John Breen, arising from structural defects in a cottage property for which he had obtained title insurance.

The trial judge found that the defects rendered the title unmarketable and fell within the coverage of the title insurance policy, relying on the principles established in MacDonald v. Chicago Title Insurance Company of Canada.

The Court of Appeal allowed the appeal, finding that the trial judge erred in applying MacDonald to the facts of this case.

The court distinguished this case on two fundamental grounds: first, Mr. Breen was on notice at the time of purchase of potential problems with the building permit process; and second, even if a final inspection had been conducted, it would not have revealed the hidden construction defects.

The court concluded that the situation involved unmarketability of the land rather than the title, and that title insurance is designed to protect against defects that would be revealed by off-title searches, not hidden defects.

The appeal was allowed and the claim dismissed.

The plaintiffs hired the defendant contractor to build a dwelling on their property.

The contractor ceased work when the dwelling was 50% complete, citing the plaintiff's constant interference and abusive behaviour.

The plaintiffs sued for breach of contract, negligent misrepresentation, and negligence, arguing the contract was unenforceable because the contractor was not a registered Tarion builder.

The contractor counterclaimed for breach of contract and injurious falsehood based on internet posts and a complaint to Tarion.

The court found that the plaintiff breached the contract by interfering with construction methods.

However, the court dismissed all claims and counterclaims, finding no damages were proven by either party and that the Tarion complaint was protected by absolute privilege.