Safety is one of the top concerns in construction. In an effort to maintain safe construction practices, the Ontario legislature enacted the Building Code Act, 1992 as well as its regulations.[1] This piece of legislation aims to protect the broader Ontario society by imposing and ensuring compliance with a set of minimum construction standards. Part of these protections include setting obligations onto the various participants and players in the construction industries, such as builders providing construction services and owners of the land on which construction is done.
The Building Code Act affects all types of projects, regardless of their size or complexity.[2] Prior to any construction taking place, a builder permit must be obtained in accordance with the Building Code Act, which may include obtaining drawings and specifications from an architect or engineering and obtaining approval from the relevant municipal authority for those proposed drawings.
The process of obtaining of building permits is a constant issue in residential construction. The building permit process is not cheap. It also takes time and requires a significant amount of coordination between professionals and municipal authorities. As such, it is not unusual to find conflict in residential construction projects where owners and builders are at odds with respect to which party bears the obligation to obtain a building permit. It is even less uncommon to find projects where construction takes place without any discussions of building permits.
This brings an important question: who is ultimately responsible for obtaining a building permit, and who is ultimately liable under the Building Code Act for failing to obtain a permit.
Joint Liability under the Law
A standard maxim of law is that ignorance of the law is not a defence. Section 8(1) of the Building Code Act states that Section 8(1) of the Act indicates that “no person shall construct or demolish a building or cause a building to be constructed or demolished unless a permit has been issued therefor by the chief building official.” As such, it is clear that, where required, a building permit is mandatory and no construction is allowed without a permit.
Section 1.1(3)(a) of the Act requires builders to ensure that construction does not proceed unless any permit required under this the Building Code Act has been issued by the chief building official. It is not atypical for building contracts to also require contractors to obtain permits on behalf of residential homeowners.
On the surface level, it may appear that only builders are responsible for ensure the existence of a building permit for the project. However, Section 8(1) of the Building Code Act explicitly indicates that no person shall allow construction to take place unless a permit has been issued. Accordingly, although builders are required to obtain permits as required by the Building Code Act, as owners of the land, homeowners are responsible for complying with all building requirements.[3] Practically, if a builder does not complete construction with a permit or in accordance with the Building Code Act, the homeowner may be ultimately responsible for complying with a work order from the relevant municipal authorities in order to ensure that all construction is completed in accordance with this statute.
What are the Consequences?
Practically speaking, municipalities and relevant authorities are not unreasonable. More often than not, if it is discovered that construction was done in the absence of a building permit, the municipalities may be willing to retroactively work with homeowners to ensure that the construction was completed in accordance with the Building Code Act. If some of the work was complete contrary to the Code’s requirements, the Building Code Act creates mechanisms for municipalities to order that such deficiencies be addressed.
Where parties are non-cooperative, or where the Code violations are egregious, section 36 of the Building Code Act allows for regulatory proceedings prosecuting noncompliance with the Code and the Building Code Act. Namely, section 36(1)(b) of the Act indicates that a person is guilty of an offence if the person fails to comply with an order, direction or other requirement made under the Act. Where a person is convicted of an offence under this or another section of the Act, there are various fines to be paid.
In reviewing the case law, it appears that, while fines and penalties may be imposed up to $50,000.00[4] for individuals and $500,000.00[5] for corporations, the average fines are significantly lower.[6] The case of South Huron (Municipality) v. Ducharme provides some insight on the actual severity of offences involving both builders and homeowners. In South Huron, the Ontario Court of Justice found that the homeowners and builders were guilty of construction without the issuance of a building permit thereby contravening Section 8(1) of the Building Code Act.[7] The homeowners and builder also failed to cease construction after an order to cease construction was made, thereby contravening Section 14(4) and 36(6) of the Building Code Act.[8] As a result, the homeowners and builder were ordered to pay an overall fine of $25,000.00.[9]
The South Huron case demonstrates that, while the Courts have significant power to punish and penalize homeowners and builders, there is significant latitude to decrease the fines sought based on the severity of the offence and subsequent compliance.
Practical Lessons Learned
As a homeowner, even though builders are explicitly forbidden from commencing construction without a building permit as required, you may still be found liable. This means that, where a builder has gone bankrupt or otherwise does not have the means to comply with the Code or work orders, you will be stuck with the bill. As such, it is proper policy to ensure that all discussions surrounding building permits are addressed at the outset of negotiating your construction contract.
As a builder, you may run into a scenario where your homeowner clients may not want to spend the time and money on obtaining a building permit. The homeowners’ lack of desire to pay for a building permit cannot be relied upon as a defence.
The foregoing is for informational purposes only and should in no way be relied upon as legal advice. If you have any further questions, or would like to schedule an appointment for legal advice tailored to your circumstances and business, please contact me at dan@fridmar.com.
[1] Building Code Act 1992, S.O. 1992, c. 23 as well as O. Reg. 332/12: Building Code.
[2] There are, of course, exceptions to different types of construction requirements, such as construction under Part 9 of the Building Code regulation.
[3] Cleanol Integrated Services Ltd. v Johnstone, 2015 ONSC 768 at para 172.
[4] For the first offence, $100,000.00 for subsequent offences, see Building Code Act, s. 36(3).
[5] For the first offence, $1,500,000.00 for subsequent offences, see Building Code Act, s. 36(4).
[6] It is relevant to also note that not all regulatory offence decisions are publicized and that this statement is made on the basis of decisions on appeal from the regulatory offence proceeding that indicate that actual damages awarded.
[7] South Huron (Municipality) v Ducharme, 2007 ONCJ 725 at para 45.
[8] Ibid at para 47.
[9] Ibid at para 52.
