Municipalities Do Not Owe a Duty of Care to Developers to Protect their Economic Interest during Rezoning Application Process

Charlesfort Development Limited v Ottawa (City),[1] a recent Court of Appeal case, acts as a fair warning to developers to be cautious when relying on information provided by municipalities. According to Charlesfort, a municipality’s role in processing zoning applications is limited to fulfilling its statutory duty of protecting the public interest. It does not include protecting a developer’s economic interests.

In Charlesfort, the developer, being Charlesfort Development Limited (“Charlesfort”), prepared plans for a condominium development based on representations the City of Ottawa (the “City”) made during the rezoning process regarding an easement running through the land. The city planner assigned to the file erroneously advised Charlesfort that the easement contained a trunk sewer. Charlesfort only learned a few years later that the easement contained an old four-foot-wide water main in unknown condition with millions of gallons of water flowing through it every hour.

Due to the nature and location of the water main, Charlesfort could not construct its underground parking garage as planned. It instead had to re-design the proposed garage. This resulted in less parking, decreased project revenue, and significant delays in construction. Charlesfort claimed that the City negligently misrepresented what the easement contained during the rezoning process and claimed $4.5M in damages.