City of Ottawa Does Not Owe Developer Duty of Care over Contents of Easement

This is an update to our July 25, 2019 bulletin summarizing Justice Sally Gomery’s decision in Charlesfort Developments Ltd. v. Ottawa (City of), 2019 ONSC 4460. In that decision, Justice Gomery determined that the City of Ottawa was negligent in failing to advertise to Charlesfort the potential risks associated with a high pressure water main in a municipal easement running alongside the property it proposed to develop.

This decision was reversed in 2021 ONCA 410. The City argued that the trial judge had made three errors in her ruling: 1) in holding that the City owed Charlesfort a duty of care, 2) in finding that Charlesfort relied on the City’s misrepresentation, and 3) in varying the rate of pre-judgment interest that Charlesfort was entitled to.

The Ontario Court of Appeal, in a decision written by Justice Harvison-Young, determined that the City did not owe Charlesfort a duty of care during the rezoning process and could not be held liable for Charlesfort’s pure economic losses.

“Charlesfort essentially submits that the purpose of any undertaking by the City included assessing the viability of the condominium project and protecting Charlesfort’s economic interests in being able to build the project as planned. I disagree,” she said.

This decision significantly narrows the circumstances in which municipalities may be held liable for pure economic losses caused by their actions. Having determined that the City did not owe Charlesfort a duty of care, the Court determined that the second and third grounds of appeal raised by the City need not be considered.

The Aird & Berlis team included Timothy Hill (litigation), Jane Pepino (municipal and land use planning), Mark van Zandvoort (litigation) and Codie Mitchell (litigation).