City of Ottawa wins appeal of developer's water main lawsuit

·2 min read
On Friday, the City of Ottawa earned a successful appeal of a condo developer's $4.5-million lawsuit win in 2019. (David Richard/Radio-Canada - image credit)
On Friday, the City of Ottawa earned a successful appeal of a condo developer's $4.5-million lawsuit win in 2019. (David Richard/Radio-Canada - image credit)

The City of Ottawa earned a successful appeal of a condo developer's $4.5-million lawsuit win, which involved the discovery of a water main at a condo development site.

In the summer of 2019, Charlesfort Developments won a lawsuit against the city due to the water main — just a metre from the site's property line — that led to a costly redesign of its project on Richmond Road to avoid disturbing city infrastructure.

According to the decision, the problem water main was discovered after the company applied for, and was granted, rezoning in 2005 for a highrise tower called the Continental. The company was only told about the water main two years later, but the city couldn't tell Charlesfort about its condition or exact location.

In the original decision, Justice Sally Gomery said the city had information that could have led the company to buy another site. Gomery said the city made "negligent misrepresentations" to Charlesfort during the process.

At the time, the city's solicitor Rick O'Connor said it would appeal the decision, citing multiple grounds for appeal.

In an Ontario Court of Appeal ruling on Friday, the court overturned the previous decision, which had granted Charlesfort $4.5 million in damages and pre-judgment interest, such as increased costs, lost revenue and lost interest.

The city appealed on the basis the trial judge made three errors:

  1. Saying the city owed Charlesfort duty of care during the rezoning process (a legal obligation imposed on an organization to avoid omissions that could cause harm to others).

  2. Finding that Charlesfort relied on the city's misrepresentation.

  3. "In varying the rate of pre-judgment interest" the developer was entitled to.

In processing the developer's rezoning request, the appeal court judges ruled the city was carrying out its "statutory duty, which does not give rise to a private law duty of care."

"Charlesfort was not entitled to rely on the City's silence for the purpose of assuring itself that the project could proceed as planned and was viable prior to completing its real estate transaction," continues the ruling document.

"As I have concluded that the City did not owe Charlesfort a duty of care during the rezoning process such that the City can be held liable for Charlesfort's pure economic losses, there is also no need to consider the other grounds of appeal raised by the City."

The judges said for those reasons, the appeal was granted and Charlesfort's previous lawsuit is dismissed.

In a memo Friday, city solicitor David White wrote the city is now entitled to legal costs tied to the appeal and the previous trial, and that amount will be determined later.