City of Ottawa likely to appeal $4.5 million court decision in favour of developer

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The City of Ottawa has initiated the appeal process against a $4.5 million settlement award granted to Charlesfort Developments Ltd. by the Superior Court of Justice.

The development company began proceedings in 2009, claiming negligent misrepresentation in a case involving a water main and asking for $6.5 million in damages.

In 2004-2005, Charlesfort completed a site-specific rezoning application that would permit the construction of a high-rise condominium at 793 Richmond Road. The building, called the Continental, was to be a 15-storey building, with a two-storey underground parking garage. When a complication arose in the water main, Charlesfort claimed that the city failed to give all the necessary information about a high-pressure water main on an adjacent easement during its zoning review.

It was generally assumed the water main was in the centre of the easement, but the city couldn’t say exactly where. Charlesfort’s own testing revealed that it rested only one metre from the property line where the new condominium was being constructed, making the parking structure for the new building too close to the water main. Excavating right to the property line, as was originally planned for the parking structure, could result in damage to the pipe, risking workers’ lives and flooding the local area.

“We can’t inspect the pipe. The city does not know what shape it is in, or whether there are any thrust blocks. How could a reasonable person proceed under such conditions?” wrote Doug Casey, Charlesforth’s president, in a letter to the city in 2008. As a result the size of the parking structure was scaled back to allow more room for the water main. Additional insurance requirements and complications for the changes delayed construction by two years.

The Court’s decision, which came down following a 12-week trial in February and March of 2019, stated that the city was responsible to “take reasonable care to tell Charlesfort about relevant municipal infrastructure,” and thus should bear the risk for the water main.

The City responded that notice of the easement itself constitutes notice to the public of infrastructure, and that no additional responsibility was owed to a private developer, but the Court disagreed, stating that though the requirement may be novel, the duty of care existed for the city to inform Charlesfort of the water main. It found that Ottawa had failed to notify the developer of accurate and relevant information.

In its decision the Court found that Charlesfort would not have carried through with the project if it had all the relevant information, including purchasing the property on which it constructed the condominium.

Since 2004-2005 when the rezoning review process in this case took place, the rezoning review process has changed. The Planning Act in place at the time did not allow for the pre-consultation process and sharing of information that is required under the current system, the Court noted.

The Superior Court of Justice released its decision late last week. The City of Ottawa will complete its appeal application within the 30-day deadline required by the Court.

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