Ruling notes failure to obtain record of site condition for filing with environment ministry
In a case involving a contaminated property at Kingston Road West, Ajax, Ontario, the Ontario Divisional Court affirmed a demolition order, noting that the decision of the judge below had explained why such an order was not punitive.
In 1940475 Ontario Inc. v. The Corporation of the Town of Ajax, 2026 ONSC 1846, the appellants removed the former structures of what had once been an automotive repair facility, purchased in 2015.
On the property, the appellants planned to construct a four-storey mixed-unit building with 60 residential units and eight commercial units at grade. They intended to shift the property from a heavy commercial use to a mixed residential and commercial use.
In June 2016, the appellants formally submitted site plan applications to the Corporation of the Town of Ajax, which conditionally approved the applications. They entered into a July 26, 2021 site plan agreement (SPA), which contained preconditions for the property’s development.
Under the SPA, the appellants agreed to obtain a record of site condition (RSC), which was a summary of the property’s environmental condition, to be filed with Ontario’s Ministry of the Environment, Conservation, and Parks (MECP).
Obtaining an RSC, which was necessary when shifting land use to a more sensitive use, would involve completing environmental assessments to confirm that the property satisfied the required standards for the planned new use.
In September 2021, Ajax issued the appellants a conditional building permit (CBP), which permitted the completion of some below-ground work, including footings, foundations, and site services.
As a condition for issuing the CBP, the appellants had to file an RSC with the MECP prior to the issuance of a full building permit for above-ground construction.
As permitted by the CBP, the appellants commenced constructing the below-ground works. However, contrary to the CBP’s terms, the appellants also built above-grade.
From October to November 2021, the appellants ignored stop-work requests and Ajax’s order to comply and stop-work order, issued under Ontario’s Building Code Act, 1992.
In November 2021, Ajax applied to demolish the above-ground construction at the property. That month, Ajax obtained a mandatory injunction with consent banning further work on the property.
From November 2021 to September 2024, the appellants made multiple unsuccessful attempts and proposals to obtain an RSC.
On Sept. 18, 2025, Justice Annette Casullo of the Ontario Superior Court of Justice exercised her discretion under s. 38 of the Building Code Act to grant Ajax’s application for a demolition order.
In the proceedings, the appellants admitted they constructed the above-grade works in breach of the Building Code Act. On appeal, they sought to set aside the judgment based on a palpable and overriding error.
The Ontario Divisional Court dismissed the appeal. The court ordered the appellants to pay Ajax $30,000 in costs, including disbursements and harmonized sales tax, as agreed by the parties.
At the outset, the court noted that it had jurisdiction over the appeal under s. 38(3) of the Building Code Act, which allowed an appeal as of right from a Superior Court judge’s order to the Divisional Court under s. 38(1) of the Building Code Act.
First, the court saw no misapprehension of key evidence in the judge’s decision. According to the court, the judge’s statements on remediation or the inability to inspect the below-grade work did not indicate a palpable and overriding error.
The court acknowledged that either a full remediation or a risk assessment approach would lead to the issuance of an RSC, a condition precedent to the issuance of a permit for above-ground work at the property.
However, the court pointed out that the appellants had yet to obtain an RSC by Jan. 21, 2026, four and a half years after the execution of the SPA.
Second, the court rejected the appellants’ allegation of an internally inconsistent finding that there had been no material change in circumstances since 2021 that made a demolition order necessary or equitable.
Upon reading the entire decision, the court ruled that the judge took an intelligible path without palpable and overriding error.
The court explained that the judge exercised her discretion to order a demolition due to the appellants’ conduct resulting in unlawful construction before the initial return of the application and the issuance of the consent order in November 2021.
Third, the court disagreed with the appellants’ argument that the judge had incorrectly applied the Building Code Act’s purpose, which was to secure compliance, not to punish.
The court found that the appellants, who had yet to secure the required RSC, failed to comply with the Building Code Act for around four years from the date of the consent order to the date of the hearing before the judge.
The court concluded that the judge’s decision had addressed why the demolition order was not punitive in this case.
“In the context of a regulatory regime that engages the health and safety of the public, it is not acceptable to incentivize actors to make decisions, and take risks, to not comply with their legal obligations,” wrote Justice F. Bruce Fitzpatrick for the court.
