BRACEBRIDGE COURT FILE NO.: CV-22-0023 DATE: 20240404

Superior Court of Justice - Ontario

RE: William Huether and Emily Huether, Plaintiffs AND: Jacki Danielle Sharpe, Kayley Spalding, Rebecca Jeffrey, Coldwell Banker Thompson Real Estate Brokerage and The Corporation of the Township of McMurrich Monteith, Defendants

BEFORE: The Honourable Madam Justice M.E. Vallee

COUNSEL: David Morin and Peter Reinitzer, Counsel for the Plaintiffs Daniel Zacks, Counsel for the Defendant Township

HEARD: March 13, 2024

Ruling on motion for summary judgment

[1] The defendant Township brings this motion for summary judgment requesting an order dismissing the plaintiffs’ claim against it on the grounds that the limitation period expired before the commencement of the action. [1] On May 9, 1986, the Township of McMurrich Monteith issued a building permit to an owner/builder to build a house on property municipally known as 3522 Sisted Road South, Sprucedale. The plaintiffs purchased the property in 2021 and commenced an action on February 22, 2022. The Township states that the alleged negligence occurred in 1988, 36 years ago, so the action is statute barred.

[2] The Township has a statutory obligation to protect the health and safety of the public by enforcing minimum construction standards for buildings. The plaintiffs state that the permit was never closed. The Township failed to monitor the construction and complete all necessary inspections required to enforce the Building Code. For example, the builder used clay bricks for the crawl space’s foundation walls. They were not a permitted material for this purpose. The house’s foundation is failing. The plaintiffs allege that the Township is negligent because it has failed to monitor its open permit file and carry out all required inspections. Negligence in these circumstances is ongoing and continuous. Section 15 of the Limitations Act, 2002 does not apply. The limitation period for the plaintiffs’ claim has not expired.

Legal Issue to be Decided

[3] Did the Township have a duty to continuously monitor the permit file until it carried out all necessary inspections required to enforce the Building Code?

[4] If so, is the plaintiffs’ claim issued on February 22, 2022 statute barred by s. 15(2) of the Limitations Act, 2020, S.O. 2002, C. 24?

Applicable Law

[5] The Limitations Act states that if a claim was not discovered until after January 1, 2004 but the act or omission took place before that date, the ultimate limitation period of fifteen years starts to run as if the act or omission had taken place on January 1, 2004. (see s. 15(1) and (2))

[6] In Wong v. Lui, 2023 ONCA 272, the court stated that the purpose of the ultimate limitation period is to balance the concern for plaintiffs with undiscovered causes of action with the need to prevent the indefinite postponement of a limitation period, and the associated costs relating to record keeping and insurance. It aims to achieve this balance by running without regard for the plaintiff’s knowledge of the claim from the date of the act or omission that founds it. (see paras. 23-25)

[7] In McIntosh v. Parent at p. 423-424, the court considered what would constitute a continuous cause of action. It stated that a continuous cause of action is one which arises from the repetition of acts or omissions of the same kind as that for which the action was brought…If once a cause of action arises, and the acts complained of are continuously repeated, the cause of action continues and goes in de die in diem [from day to day].

[8] In Roberts v. Portage La Prairie at 491, the Supreme Court of Canada stated that an act or omission continues “so long as it is still in the course of being committed and is not wholly past”.

[9] The governing legislation regarding construction of this building is the 1980 Building Code Act, RSO 1980, c 51 (the Act), the 1983 Building Code, Ontario Regulation 583/83 (the Building Code) and By-Law 4-80. The Building Code states that a permit holder shall notify the Chief Official at various stages of construction. The 1983 Building Code did not require a municipality to carry out construction inspections.

[10] In Ingles v. Tutkaluk Construction Ltd. (2000) SCC 12 the court stated that when a municipality decides to inspect, the municipality makes the policy decision to inspect construction projects and enforce the provisions of the Act. Having done so, it owes a duty of care to all who it is reasonable to conclude might be injured by the negligent exercise of its inspection powers. (see para. 23)

[11] In Breen v. Lake of Bays (Township) 2022 ONCA 626, a case that concerned a cottage built between 1989 and 1999, the court stated, “Once a building permit is granted, the municipality has an obligation to inspect the building to comply with the Act and the requisite Building Code. Anything less would make the whole building permit and inspection process meaningless.” (see para. 41)

Background

[12] On May 9, 1985, Blair Attwood (the owner/builder) applied for a building permit to construct a house on the property. The application provides very little detail about the project – only that the house would be 20’ wide, 32’ long and 16’ high. The footings were to be 20 x 8” and poured. Although drawings were required, there is no evidence that any were submitted. The Township issued the permit the same day.

[13] The house was built with a crawl space. The owner/builder used clay bricks to construct the foundation walls, even though the Building Code refers to only concrete and concrete block for foundations.

[14] The Building Code required the owner/builder to advise the Township of certain stages of construction. Sentence 2.9.1.1(1) sets them out. They are:

(a) Commencement of the construction of the building; (b) Readiness to construct the footings; (c) Substantial completion of the footings and foundations; (d) where the building is within the scope of Part 9, substantial completion of (i) Structural framing, (ii) Insulation and vapour barriers (iii) Not Applicable (e) Not Applicable (f) Not Applicable (g) Substantial completion of interior finishes and heating, ventilating and air-contaminant extraction equipment (h) Substantial completion of exterior cladding, fire access routes and site grading or (i) Completion and availability of drawings of the building as constructed.

(Some of the sections are not applicable because the house did not have ductwork. It was electrically heated and had no air conditioning.)

[15] The Chief Building Official (CBO) Cliff Helka made some notes on page two of the application. They show that he carried out an inspection on July 24, 1986 and noted five deficiencies. They include, “floor support beam still not strengthened”. [2] and “water in the crawl space”. The deficiencies were to be addressed by August 5, 1986. The CBO left a letter.

[16] On August 8, 1986, the CBO issued an Order to Comply setting out several violations including “4 vents in crawl space”. The CBO must have looked at the crawl space to determine that vents were needed. Compliance was required by August 29, 1986. His notes for August 8 and August 15, 1986 say, “no answer”. His note on August 6, 1986 states, “Work being done for [illegible word] date August 22 Fri”. [3]

[17] On another copy of the same Order to Comply, there is a handwritten note, “All complied with”. This handwriting is obviously not the same as the CBO’s handwriting setting out the violations.

[18] The last Township document is a Treasurer’s Certificate dated February 22, 1988, the purpose of which is explained below.

The Township’s Position

[19] Richard Gibb, who is 83, swore the supporting affidavit for the Township’s motion. He worked as the Township’s Clerk and Treasurer from 1987 to 2005 and then as the Deputy Clerk and Treasurer from 2005 to 2017 when he retired.

[20] In 1988, a prospective purchaser contacted the Township to obtain a Treasurer’s Certificate. Mr. Gibb states that the Certificate is “the Township’s official representation of taxes owing, outstanding building permits and work orders, and applicable zoning with respect to a Township property as of the date the Certificate is issued.” He states that he always followed a process to prepare a Certificate. He would:

1. verify the property’s description;
2. investigate all amounts owing for property taxes for the current and past years;
3. search for open building permits and outstanding work orders by speaking with the CBO and reviewing the permit file; and,
4. confirm whether any zoning restrictions or local improvement charges applied.

[21] Mr. Gibb states that he completed the Treasurer’s Certificate on February 22, 1988. It states:

1. Occupancy Permits not used or issued in this municipality.
2. There are no outstanding work orders against this property or building.
3. No zoning affects this property.
4. No local improvement charges are planned.

[22] The parcel register shows that after 1988, the property was bought and sold several times. The plaintiffs purchased it October, 2021.

[23] Mr. Gibb states that in the 1980s, the Township followed a process for closing building permits. In paragraphs 24 to 27 of this affidavit, he states that the steps were:

An inspector would do a final inspection and confirm that the construction complied with the applicable laws and regulations. If it did, the inspector would “note the final inspection on the building permit. This meant that the building permit was closed.

If construction was not in compliance, the inspector would issue a work order. When the inspector confirmed satisfaction of the work order, the inspector would note compliance on the work order. This notation meant the building permit was closed. The Township did not issue any other document or take any other step to indicate the closure of a building permit.

A closed work order made during a final inspection always meant a closed building permit.

[24] Mr. Gibb states that he determined that the 1986 work order (Order to Comply) was issued during a final inspection. The handwritten note “All complied with” meant the permit holder had satisfied the work order to the CBO’s satisfaction and it was closed. On cross-examination, if the permit had remained open, the Certificate “had the effect of closing the building permit for the purposes of the Township and the parties to the transfer.”

[25] The Township states that over the last 100 years, there have been 12 cases about continuing torts. None of them are about negligence. The Township provides two cases as examples of where the court has determined that the defendants’ acts or omissions were not continuous. Albert Blume Limited v. London Transit Commission 2021 ONCA 74 concerned a defendant who was operating a manufacturing company and continuously released contaminant on to its neighbour’s property. At some point, the defendant stopped releasing the contaminant. After that, the act was not continuous. (see para. 51)

[26] Tyszko v. St. Catharines (City) 2023 ONSC 2892 concerned the City’s installation of storm sewers at the plaintiff’s residence. With every rain, the sewers flooded his property. The plaintiff argued that the defendant had a continuing obligation to ensure water flowed into catch basins. The court held that the installation of the sewers was a singular act of negligence that did not continue. (see paras. 39-42 and 44 – 46)

[27] The Township states that trespass and nuisance can be continuous torts if the activity occurs every day. If only damages are ongoing, that is not sufficient to constitute a continuous tort.

[28] The Township states that the tort of negligence is not capable of being continuous. There is no jurisprudence to support the plaintiffs’ position. The duty to inspect arises and ends within a defined time period: it arises when the permit is issued and ends when construction ends. It cannot continue past the end of the construction. The omissions as stated by the plaintiff occurred after the permit was issued and before occupancy. Occupancy must have occurred before the builder sold the property. Even if the Township had decided to monitor and then had done the last inspection later, it would not have disclosed the foundation deficiencies. The deficiencies haven’t changed since 1986. They did not continuously renew. The permit was closed so there was no reason for continuous monitoring.

[29] The duty to inspect has been recognized since 1989. Even if the Township was negligent in 1986 or 1987 by failing to monitor the permit file and by failing to conduct further inspections, among other things, this does not amount to a continuous tort. There is no standard for frequency of monitoring. A breach of a duty to monitor is a singular breach. There is nothing continuous. It is an omission that occurred 36 years ago. The omission was not discovered before 2004. According to s. 15(2) of the Limitations Act, the limitation period began to run in 2004. The ultimate limitation period is 15 years from 2004, being 2019. The plaintiffs bought the property in 2021 and commenced their claim after the limitation period had expired.

[30] The purpose of the ultimate limitation period is to balance the concern for plaintiffs with undiscovered causes of action with the need to prevent the indefinite postponement of a limitation period, and the associated costs relating to record-keeping and insurance. It aims to achieve this balance by running without regard for the plaintiff’s knowledge of the claim from the date of the act or omission that founds it. (see Wong paras. 23-25)

[31] The plaintiffs’ action against the Township is what the ultimate limitation period is meant to address. The CBO, Mr. Attwood and Matt Hannikan, the inspector, are deceased. The only known person alive who was employed at the Township during the material time is Mr. Gibb. The Township states that “occupancy was presumably before the owner-builder sold the property in March 1987 and certainly before the Township confirmed in the Treasurer’s Certificate that the dwelling was fit for occupancy in February 1988. One can infer that the dwelling was suitable for occupancy.

The Plaintiffs’ Position

[32] The plaintiffs state that the Township advances a common law argument; however, this case is different because the Township has a statutory duty. It cannot immunize itself from liability by doing nothing. The reasoning in Breen applies to this case. As noted above, the trial judge stated,

I am of the view that once a building permit is granted, the municipality has an obligation to inspect the building to comply with the Act and the requisite Building Code. Anything less would make the whole building permit and inspection process meaningless.”

[33] The Court of Appeal stated,

46. The trial judge found fault where the municipality carried out its statutory mandate unreasonably. Choosing not to inspect everyday was reasonable, but failing to conduct any inspection after June 1991 [the date of the last inspection] was not.

[34] Furthermore, section 10 of the Act grants an inspector the authority to inspect at any time to determine whether a building is safe. The Building Code does not permit foundation walls to be constructed of clay brick. If the Township had reviewed its file and inspected before the plaintiffs’ vendor installed the insulation in the crawl space, it could have made an order. The Township has residual inspection powers even after construction ends and even after a permit is closed.

[35] The plaintiffs state that the Treasurer’s Certificate has no bearing on the status of building permits or inspections under the Act. Section 408 of the Municipal Act, R.S.O. 1980 c 302 states that upon demand, the treasurer shall give a written certified statement of the arrears due on any land. The arrears relate to municipal taxes. The treasurer does not have the authority to make statements regarding Building Code compliance or the status of permits.

[36] The plaintiffs point out some inconsistencies in the Township’s statement of defence. In paragraph 5 it states, “On or about May 9, 1985, the Township, after reviewing the Permit Application and all building plans submitted with it, issued Permit No. 15A86 (hereinafter referred to as the Permit) to the Builder in relation to the Permit Application.” There is no evidence that the builder submitted any building plans with the application. Mr. Gibb stated that nothing was missing from the Township’s file. In paragraph 6, the Township states, “The Township performed certain inspection of the work authorized under the Permit, including the inspections of the footings, foundations and structural framing.” There is no evidence that any subsequent inspection was done. In paragraph 18, the Township states, “…any action or inaction by it with respect to its issuance or closing of the permit, or the monitoring and inspection of work authorized under the Permit resulted from a policy decision made in a good faith exercise of its discretion and, accordingly, it is not liable to the Plaintiffs.” The plaintiffs state that the Township had no authority to made a decision that remaining inspections were not required.

[37] An ongoing omission falls within section 15 (6) of the Limitations Act which states,

(6) For the purposes of this section, the day an act or omission on which a claim is based takes place is, (a) in the case of a continuous act or omission, the day on which the act or omission ceases; (b) in the case of a series of acts or omissions in respect of the same obligation, the day on which the last act or omission in the series occurs;

[38] There is no evidence that the CBO did a further inspection to determine whether the violations listed in the Order to Comply were addressed. The handwriting “all complied with” is not the CBO’s handwriting. Mr. Gibb stated later in his cross-examination that “All complied with” meant that the violations on the Order to Comply had been addressed. There is no evidence that the Township determined that the house was fit for occupancy. Accordingly, the permit could not have been closed.

Did the Township have a duty to continuously monitor the permit file until it carried out all necessary inspections required to enforce the Building Code?

[39] Part of the Township’s argument is based on three assumptions that are not correct: that occupancy must have occurred before the builder sold the property; that the requirement to inspect ends when construction ends; and that the permit was closed.

Occupancy/Completion of the Building

[40] A builder could end construction before a building completed. The Act uses the term “completion of the building” not “the end of construction”. It sets out the following conditions for occupation:

7. Except as authorized by the regulations, no person shall occupy or use or permit to be occupied or used any building or part thereof newly erected or installed, (a) until notice of the date of completion of the building or part thereof is given to the chief official; (b) until, (i) an inspection is made pursuant to such notice, or (ii) ten days have elapsed after the service of the notice of after the date of completion, whichever occurs last; and (c) until any order made by an inspector under section 8 is complied with.

[41] There is no evidence that the owner/builder gave any notice of the completion date of the building nor that any inspection was done to confirm it. There is no evidence that the conditions for occupancy were met.

Status of the Permit

[42] The Township states that it considered the building permit file closed as of February 22, 1988, the date of the Treasurer’s Certificate. It states that since it was closed, there was no reason for continued monitoring. If the Township had breached a duty to monitor, that breach had begun and ended before February 22, 1988.

[43] On cross-examination, Mr. Gibb was asked why he assumed that the permit file had been closed. He responded, “Strictly that the Township was of the understanding that the requirements of the Order to Comply had been satisfied and they were no longer concerned about the building itself.”

[44] Neither the Act nor the Building Code refer to a procedure for “closing a permit” but it is a commonly used phrase.

[45] Sub-section 2.9.1 of the Building Code sets out various stages of construction and states that the permit holder shall notify the chief official:

(a) of the commencement of the construction of the building; (b) of the readiness to construct the footings; (c) of the substantial completion of the footings and foundations; (d) where the building is within the scope of Part 9, of the substantial completion of, (e) structural framing (f) insulation and vapour barriers (g) not applicable (h) not applicable (i) of the substantial completion of interior finishes and heating, ventilating…and air contamination extraction equipment; (j) of the substantial completion of exterior cladding, fire access routes and site grading; or (k) of the completion and availability of drawings of the building as constructed.

[46] The CBO carried out an inspection on July 24, 1986 and made notes regarding framing deficiencies, outstanding work required for backfilling of footings and required vents. There is no mention of a foundation inspection. The Order to Comply dated August 8, 1986 sets out violations regarding framing, backfilling and the required vents. Although there is a note on the second copy of the Order to Comply stating “all complied with”, I interpret this to mean that the stated violations were addressed. There is no evidence that the CBO contacted the owner/builder about the status of the project and the outstanding inspections. There is no evidence that the CBO carried out inspections for substantial completion of items (i) and (j) set out above.

[47] On cross-examination, Mr. Gibb could not provide any authority for his statement that a Treasure’s Certificate had the effect of closing the permit. I agree with the plaintiff that a Treasurer does not have authority to determine whether a permit is closed. That authority rests with the CBO or an inspector who has the expertise to determine whether the items listed in (i) and (j) above have been substantially completed. There is no evidence that they were substantially completed. The permit could not have been closed.

Wong v. Lui

[48] The Township relies on Wong; however, the facts are different. The motion judge stated, “The plaintiffs submit that the City is liable in negligence for approving and closing building permits relating to defective construction work (the “impugned Defects”) carried out under building permits opened in 1987.” [4] From this, I infer that the required inspections were done and the permit file was closed. The court considered the commencement of the limitation period regarding a minor. The building permits were issued in 1987. Ms. Wong purchased the property in August, 2019, when she was 31 years old. She argued that the limitation period did not run until she turned 18. She commenced her action less than 15 years later. The court held that she had no standing to commence an action until she purchased the property. The provisions in the Act relating to a minor did not apply to her. The ultimate limitation period had run out on January 1, 2019.

[49] In Breen, the court held that a municipality has a duty of care to enforce the Building Code. The matter concerned a cottage for which the permit was issued in 1989. The municipality conducted three inspections up to 1991 when the insulation and vapour barrier were installed on the lower level. In January 1992, the municipality wrote to the owner/permit holder stating that it would consider the project closed unless told otherwise by February. The owner/permit holder did not respond. In June 1993 the municipality advised that it considered the project closed. No final inspection was done. The Breens purchased the cottage in 1989, used it for 13 years and then decided to renovate. Their engineer found several significant structural deficiencies constituting Building Code violations. The Breens commenced an action against the municipality.

[50] The court quoted from para. 23 of Ingles and stated the following,

39. First, in implementing this by-law, issuing the building permit and inspecting the Breens’ cottage on three occasions, the municipality made the policy decision to inspect construction projects and enforce the provisions of the Act. Having done so it “owe[d] a duty of care to all who it is reasonable to conclude might be injured by the negligent exercise of [its] inspection powers”.
40. This duty was especially applicable to the Breens. As subsequent purchasers, they had “no say in the actual construction of a building that proves defective. It is therefore reasonable that they should be entitled to rely on the municipality to show reasonable care in inspection of the progress of construction”. Rothfield, at p. 1267
41. Specifically I would not accept the municipality’s argument that the absence of an explicit requirement to inspect effectively rendered all inspections optional. Taken to its logical conclusion this risks undermining the purpose of the legislative scheme. As stated by the trial judge, at para. 115, “I am of the view that once a building permit is granted, the municipality has an obligation to inspect the building to comply with the Act and the requisite Building Code. Anything less would make the whole building permit and inspection process meaningless.”
42. The trial judge found fault where the municipality carried out its statutory mandate unreasonably. Choosing not to inspect every day was reasonable, but failing to conduct any inspection after June 1991 [the time of the last inspection carried out] was not.

[51] The Township states that if there was a duty to monitor and it was not done, that constitutes a singular breach. It is not continuous. I disagree. Monitor is defined as “observe and check over a period of time; maintain regular surveillance over.” [5]

Conclusion

[52] A defendant is sometimes prejudiced by the passage of time. Documents are lost and witnesses’ memories fade. Witnesses pass away. Evidence becomes stale. Here, the file and its contents were preserved in a filing cabinet in a room. Mr. Gibb stated that nothing was missing from the file. The documents speak for themselves.

[53] In Breen, the court stated that once a municipality makes the policy decision to inspect construction projects and enforce the provisions of the Act, it owes a duty of care to all who it is reasonable to conclude might be injured by the negligent exercise of its inspection powers. (see para. 39) In these circumstances, it is reasonable to conclude that this group includes subsequent purchasers.

[54] The owner/builder sold the property when the building had not met the conditions for occupancy and when the permit was still open. The property was subsequently bought and sold several times. There is no evidence that its status has changed.

[55] Over the years, the Township appears to have been indifferent to the fact that the permit was issued in 1986 and was still open. Because no final inspections were carried out to determine whether the building was substantially complete, the Township’s duty of care in these particular circumstances was to continuously monitor its open permit file and to follow up with the permit holder regarding the state of construction. Its duty to monitor continued until the CBO determined that the building was substantially complete and that it satisfied the conditions for occupancy. This never occurred. If the permit holder refused to respond, the Township had remedies. [6] Even though it had not inspected the building for substantial completion, nor determined that it met the conditions for occupancy, the Township placed the open permit file in storage.

[56] Because the Township has a duty to continuously monitor in these circumstances, the plaintiffs’ claim is not barred by s. 15(2) of the Limitations Act. Rather, section 15 (6) applies. For these reasons, the Township’s motion is dismissed.

Costs

[57] Both parties agreed that the successful party would be entitled to costs of $17,797.50 on a partial indemnity basis. Accordingly, the Township shall pay to the plaintiffs $17,797.50 within 30 days.

VALLEE J. Date: April 4, 2024