Background
In 1986, the Township of McMurrich Monteith (the “Township”) authorized a building permit for a residential construction project. During the construction phase, several deficiencies were identified and an "Order to Comply" was issued and subsequently updated via a handwritten note stating, “all complied with.” In 1988, the Township issued a treasurer’s certificate to the new property owners, confirming there were no outstanding work orders. Over three decades later, in October 2021, the property was purchased by the plaintiffs who, upon discovering construction defects, initiated legal action against the Township and others, in February 2022.
The Township moved for summary judgment, arguing the plaintiffs claim was barred by the 15-year ultimate limitation period under section 15(2) of the Limitations Act, 2002, S.O. 2002 c. 24, Sched. B (the “Act”), noting the initial permit issuance in 1986. The motion judge dismissed the Township’s motion, determining that the Township's failure to adequately supervise and inspect the project amounted to ongoing and continuous negligence. This decision was predicated on the motion judge’s finding that the building permit remained 'open' due to incomplete closing formalities and that the Township had a “duty to monitor” open construction files. Accordingly, the ultimate limitation period was found to have not yet expired per section 15(6)(a) of the Act.
Court of Appeal’s Decision
The Court of Appeal overturned the decision of the motions judge and dismissed the plaintiff’s action against the Township. The appellate judges unanimously held that the motion judge erred in their interpretation of "continuous act or omission." The Court of Appeal clarified that a continuous act or omission requires repeated negligent actions, which in this case last occurred by 1988 when the Township treated the building permit as closed and disengaged from further involvement with the file. The Court emphasized that the mere existence of an ongoing duty to enforce the Ontario Building Code by the Township would not, in and of itself, extend the ultimate limitation period in the absence of a continuous act or omission under section 15(6)(a) of the Act.
While the absence of a continuing act or omission was sufficient to dispose of the appeal, the Court of Appeal went further to hold that the motion judge erred by presuming the Township had a duty to continuously monitor open permit files. It was found that the motion judge did not first undertake the requisite analysis to establish the existence of such a novel duty of care, and the assumption surpassed the established common law duties related to inspection practices.
Consequently, the Court of Appeal determined that the ultimate limitation period had indeed at law expired on January 1, 2019, thus barring the action against the Township.
In addition to the significant lessening of municipal liability exposure in similar claims, this decision will have substantial implications in regard to the storage and handling of historic permit files that have been dormant for at least 15 years.
This post first appeared on the Loopstra Nixon LLP website, at: https://www.loopstranixon.com/insights/publication/case-summary--huether-v-sharpe--2025-onca-140
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