CONSEQUENCES RESULTING FROM THE ISSUANCE OF AN ILLEGAL CONSTRUCTION PERMIT

Municipalities are generally entrusted to administer land use planning laws and regulations affecting construction, usage and protection of the environment. Usually an inspector or other officer is entrusted with interpreting and applying such rules and standards which can be quite complex. What are the consequences of the issuance of a construction permit that is contrary to land use planning or environment protection laws and regulations to an owner who was diligent, acted in good faith and relied upon the expertise of the municipal officer? Must the municipality require the demolition of the illegal construction and if so, must the municipality indemnify the owner for the costs of construction and well as moral damages (lost time, inconvenience, aggravation)? In Côté v. Dionne et al., 2026 QCCS 3038, plaintiff believed in error that the vacant land that he purchased was buildable and sued the seller to cancel the sale and the municipality for damages. Plaintiff alleged to have been misled by the municipality that he could indeed build on the land. The court cancelled the sale on the ground that plaintiff’s consent to purchase was vitiated by an error regarding an essential element of the purchase. As for the liability of the municipality, it is subject to the general rules of liability in non-contractual matters i.e. fault and damages as a direct result thereof. The court found that the town officer, although well intentioned, was negligent in communicating inaccurate information to the plaintiff, who acted reasonably by relying upon the erroneous information provided by the officer of the town. The town was ordered to pay plaintiff the symbolic amount of $20,000 for trouble and inconvenience. In the Quebec Court of Appeal decision of St-Onge v. Municipalité de Saint-Hippolyte, 2000 canlii 9585, appellant appealed from a decision of the Superior Court that dismissed his claim in damages against the town. Appellant acquired vacant land with the intention of building a shopping center. Since that land was not serviced by the town sewer system, appellant had to install his own septic system. He consulted the town inspector who, after inspecting the land and conducting various tests, issued a permit in 1987 for the installation of a septic system and its connection to the building that appellant had built on the land. In 1990, the town retained an expert to study the soil in certain sectors who concluded that appellant’s shopping center was polluting the soil due to the fact that appellant’s septic system was installed in the vicinity of a high groundwater table. As a result, appellant had to abandon the existing septic system and build and instal a new one at a different location. Applying the principle that a municipality is liable for damages caused by its inspector pursuant to the issuance of a construction permit contrary to established legal standards, the town was condemned to pay damages in the amount of $68,064.71 including the costs of acquisition of additional land, professional fees, costs of installation of new septic system, trouble and inconvenience. Notwithstanding the town’s negligence when issuing an illegal permit, when the consequences result in prejudice to the environment or to neighbours, the town may apply to the Superior Court to order the owner to take corrective action or if not possible, to demolish the derogatory construction pursuant to Articles 227 and 227.1 of the Act Respecting Land Use Planning and Development, RLRQ c A-19.1. In the Quebec Court of Appeal decision of Ville de Montréal v. Chapdelaine et al., 2003 canlii 28303, both the Superior Court and the Court of Appeal refused to issue such an order, thereby allowing an illegal construction to persist. In 1966, the owner of a commercial property converted it to nine residential dwellings. The owner affirmed that a permit had been issued by the city, which was not able to confirm or deny it. Since then, the property had been continually occupied by residential tenants. However, the conversion to residential was contrary to the zoning by-laws then in effect and therefor, could not benefit from acquired rights. The city applied to the Superior Court to order the owner to render the property in conformity with the zoning by-law. Both the Superior Court and Court of Appeal concluded that Article 227 confers upon the court a certain discretion which, in particular and exceptional circumstances, it could exercise to deny the application of the city. The discretion extends to the choice of the appropriate remedy tp correct the derogatory situation but also, exceptionally, when the circumstances warrant it, the possibility to reject the recourse altogether. Such discretion should be used to alleviate an unjust consequence that would result from a strict and blind application of the regulation. Such discretion may be exercised to preserve, when particular circumstances warrant, a balance between the public interest and that of the individual property owner. The particular and exceptional circumstances of this case include the following: • the derogatory situation existed for 35 years • the transformation from commercial to residential had been carried out pursuant to a permit • the city had attributed civic addresses to each of the nine dwellings • the property had been inspected multiple times in the past by employees of the city without the issue having been raised • The owner’s request to the city to change the zoning to correct the problem was denied • The derogation did not harm the environment • No complaint was made by any neighbour regarding the property An interesting decision rendered by the Superior Court concerned the determination of the legality of a resolution of the Gatineau city council authorizing a minor derogation in favour of a residence. Stinson v. Ville de Gatineau, 2021 QCCS 3049. Neighbours unhappy with the minor derogation applied to have the minor derogation annulled on the ground that the derogation was not minor and was contrary to regulations of construction, zoning, and land use planning. They also asked that the property be demolished at th owner’s sole cost and expense. The owner also sued the city in damages, including building and demolition costs. Shortly after purchasing the property, the owner obtain a construction permit to build a retaining wall facing the river and a permit authorizing the construction of a residential building. In September 2013, the city realized that the construction permit was issued contrary its by-laws. The city informed the owner in October who advised him to obtain a certificate of location from a certified surveyor. The owner subsequently learned that the city’s urban planning committee recommended that city council grant a minor derogation and that the next step was only a formality. Construction continued normally and the owner moved into the new residence in February 2014. In June 2014, the owner learned that an application for a minor derogation would be presented to city council and that his neighbours would be contesting it. The owner alleged that the city acted dishonestly in allowing the construction to continue while knowing the consequences of its decision. Moreover, the owner was outraged that the city deliberately chose to protect its own interests over those of the owner and his neighbours. In the circumstances, the owner sued the city for $3,630,000 in compensatory and punitive damages, including the cost of construction and of the land, interest, moving costs, lost time, legal fees, loss of enjoyment of the property, and trouble and inconvenience. The city argued that the fault lay with the professionals hired by the owner (architect, surveyor) who allegedly failed to correctly apply the zoning by-law. The purpose of a minor derogation is to remedy the rigidity that may sometimes be excessive of zoning and land planning by-laws by avoiding the long and complex procedure of modifying municipal by-laws. The granting of a minor derogation must satisfy the requirements of articles 145.1 and following of the Act Respecting Land Use Planning and Development. In particular, the minor derogation can only be granted if the application of the by-law would cause a serious prejudice to the applicant. It cannot be granted if it would cause serious prejudice to the enjoyment of property by neighbours. The resolution could affect work in progress or already completed as well as work carried out in good faith pursuant to a construction permit. In the circumstances, the court concluded that the application of the neighbours was well founded and annulled the city council resolution granting the minor derogation. As for the remedy, although the city asked the court not to order the demolition of the residence, it did not propose any alternative solution. Considering also that the evidence did not support any other satisfactory remedy, the court ordered the demolition of the residence. The owner’s claim for damages is still pending before the Court.