The Corporation of the Town of Ajax v. 1940475 Ontario Inc., 2025 ONSC 5325
The decision in Ajax v. 1940475 Ontario Inc. concerns a municipal enforcement application brought under section 38 of the Building Code Act, 1992 (the “Act”). The Town of Ajax (the “Town”) sought a court order requiring the removal of all above grade work that had been constructed on a mixed use development without a building permit and in the absence of mandatory inspections. The case arose after a series of directives issued by the Town were ignored and after construction was advanced beyond the limits of a conditional permit. The application required the court to examine the purpose of the permitting and inspection regime and to determine whether demolition was necessary to uphold the integrity of that framework.
Background
The dispute involves the redevelopment of a property that was historically used as an automotive sales and repair facility, which resulted in documented soil and groundwater contamination.
In 2015, 1940475 Ontario Inc. and First Avenue Properties (collectively the “Developer”), acquired the site to construct a four-storey mixed-use building, with commercial uses at grade and residential units above.
Over the following years, the Developer submitted multiple site plan applications and environmental reports. The Town approved the site plan conditionally in April 2021 and later executed a Site Plan Agreement (“SPA”) that included Condition 31: no above-grade building permit could be issued until a Record of Site Condition (“RSC”) had been filed with the Ministry of the Environment, Conservation and Parks (“MECP”). The Town expected that the site would be remediated prior to an RSC being issued.
To allow limited early construction during remediation, the Town and the Developer entered into a Conditional Building Permit Agreement (“CBPA”) on September 14, 2021. The CBPA permitted only footings, foundations, and site services. The Developer expressly acknowledged that an RSC was required to obtain a full building permit and agreed to obtain one by April 15, 2022. Under the Town’s Building Code requirements, mandatory inspections were required before pouring footings, upon completion of foundations, and prior to backfilling.
Within weeks, these limits were violated. A Town inspector observed above-grade construction underway on October 13, 2021, despite:
- the absence of a full building permit for above-grade elements, and
- the fact that mandatory below-grade inspections had not been performed.
The Developer admitted both points.
On October 13, 2021, the Town issued an Order to Comply, being a formal enforcement directive issued by a municipal building official under the Act. Such an order requires a property owner or contractor to stop unauthorized work and to correct identified non-compliance. In this case, the Order required the Developer to immediately cease all above-grade construction and to provide the inspection and testing reports that were mandatory prerequisites under the Town’s building code requirements. The Developer did not comply.
The Town then escalated enforcement by issuing a Stop Work Order, a further statutory measure under the Act that requires all construction activity at the site to halt until the violation is remedied. The Town’s legal counsel also wrote to the Developer’s project manager advising that, if construction continued, the Town would apply to the Superior Court for injunctive relief.
A third inspection on November 17, 2021, confirmed that construction had continued despite these directives and warnings, and that exterior walls were nearing completion. Work then continued into late 2022.
In response, the Town brought an application for injunctive relief. On November 25, 2021, the Superior Court of Justice issued a mandatory injunction on consent. The injunction required the Developer to immediately cease all construction until a building permit had been issued and permitted only such work as the Town might specifically authorize in writing to address the safety concerns. Despite the injunction and its clear terms, the Developer proceeded on the following day to direct the installation of core slabs on the second floor without first obtaining the Town’s written authorization, placing the Developer in direct breach of the court order.
Environmental Compliance Issues
Parallel to the permitting violations, the Developer repeatedly failed to satisfy the environmental conditions required to obtain an RSC.
The first RSC submission (November 2021) contained “significant deficiencies”. A second submission (June 2022) was again deficient.
The MECP inspected the site under the Environmental Protection Act, finding contamination in soil and groundwater and highlighting that construction had occurred without a proper RSC. It required a subsurface investigation plan by October 31, 2022, a deadline that passed unmet.
The MECP also identified that of 19 monitoring wells originally installed:
- only 5 were located,
- the remaining 14 were damaged, destroyed, or buried during construction, and
- access to some wells was impossible because of the partially constructed building.
In mid-2023, the Developer proposed a pivot from remediation to a Risk Assessment (“RA”) approach. The Town expressed concern about this shift, noting the site’s longstanding contamination issues. The Town imposed a deadline of September 19, 2024 to obtain an RSC, warning that failure would result in a demolition application. The deadline passed without compliance.
In February 2025, the Developer submitted a Tier 3 Risk Assessment estimating an additional 12–18 months of work before any RSC could be filed. Meanwhile, the building remained partially constructed and exposed.
Legal Framework
Once it became clear that above grade work had continued in defiance of the Town’s directives and in breach of the conditional permit, the Town invoked its enforcement powers under section 38 of the Act. Section 38 permits a chief building official to apply to the Superior Court of Justice for an order compelling compliance with the Act or any order made under it. It also authorizes the court to make any further order the judge considers appropriate, which includes the power to order that construction completed without proper authorization be removed.
The Town commenced this application seeking a court order that would require the Developer to demolish the above grade structure that had been built without a permit. The proceeding therefore came before the Superior Court as a statutory compliance and enforcement matter rather than as a private dispute. The legal question before the court was whether it should exercise its discretion under section 38 to direct demolition of the work constructed in breach of the permitting and inspection requirements.
In considering that question, the court turned to the established authorities that interpret the purpose of the statutory scheme. The Supreme Court of Canada in Ingles v. Tutkaluk Construction Ltd., 2000 SCC 12 confirmed that the permit and inspection system serves to protect public safety by ensuring that construction proceeds only in accordance with approved plans and technical standards. The Divisional Court in Cavan Monaghan v. Kings Custom Homes Inc., 2022 ONSC 1888 further held that once unlawful construction is established, factors such as the cost of demolition, the extent of work completed, or the potential benefits of the project cannot be used to excuse noncompliance. Earlier decisions such as Gravenhurst (Town) v. Brunton, 2011 ONSC 1799 and Smith-Ennismore-Lakefield (Township) v Tarala, 2016 ONSC 7109 also support the proposition that demolition is an appropriate remedy when the permitting and inspection framework has been ignored.
The legal context for the court’s analysis was therefore clear. If the Town established that the Developer had advanced construction without the required permit and in the absence of mandatory inspections, the court had full authority to order that the work be removed in order to uphold the integrity of the statutory regime.
Court’s Analysis
Justice Casullo found that the Developer repeatedly disregarded both the Town’s regulatory framework and the statutory requirements governing safe construction. The court noted that the Developer proceeded with above-grade work in the absence of a full building permit, despite knowing that mandatory inspections had not been completed and despite multiple warnings and stop-work directives from the Town. These breaches were compounded by the fact that a mandatory injunction, issued on consent to halt construction until permitting was regularized, was ignored almost immediately, with the Developer directing the installation of core slabs the very next day without written authorization.
The court emphasized that this conduct occurred against the backdrop of longstanding and unresolved environmental issues. Multiple deficient RSC submissions, missed deadlines, damaged monitoring wells, and a late pivot to a Risk Assessment underscored the Developer’s failure to satisfy the conditions necessary for the issuance of an above-grade permit. Justice Casullo rejected the argument that the Developer was being punished for circumstances beyond its control. Instead, the court concluded that the Developer, an experienced entity with decades of industry knowledge, made a deliberate and calculated decision to advance construction in defiance of its obligations under the CBPA and the Act.
In the court’s view, allowing the unlawfully constructed structure to remain would undermine the integrity of the regulatory scheme and reward a “seek forgiveness rather than permission” approach incompatible with public safety. Relying on established jurisprudence, Justice Casullo held that demolition was the only remedy capable of reinforcing respect for the law and upholding the purposes of the Act.
Practical Takeaways
The decision provides several important lessons for the construction industry that extend far beyond the context of contaminated sites. The central point is that conditional building permits must be treated as narrow and specific authorizations. They allow construction teams to perform only the precise work described in the permit. Advancing beyond that scope, even for practical reasons such as crew availability or schedule pressure, creates a significant compliance risk. The remedy imposed in this case confirms that unauthorized work may not only be stopped but may also be subject to demolition even where substantial progress has been made.
The reasoning in the decision also underscores the importance of mandatory inspections in the permitting framework. These inspections are not administrative steps that can be bypassed. They are statutory safeguards that ensure critical building components such as footings, foundations and below grade systems are constructed safely. When a construction team proceeds to later stages of the project before required inspections take place, it may become physically impossible to verify compliance. Once concealed, an uninspected element can compromise the legality of all subsequent work. The court made clear that this type of sequencing failure can jeopardize the entire project.
Another practical lesson relates to the culture of risk management on construction sites. Some project participants adopt an approach that assumes work can continue and that issues can be resolved after the fact. The court reaffirmed that this approach is not acceptable. Proceeding with work in the face of unresolved compliance issues, ignoring orders from building officials or attempting to obtain approvals retroactively exposes the project to the most serious enforcement measures. The court explicitly rejected the idea that financial investment or the amount of work completed can shield an unauthorized structure from demolition.
The decision also highlights the need for clarity within project teams regarding responsibility for compliance. Owners, contractors and consultants must establish internal procedures to confirm that every required approval, inspection and authorization has been obtained before the next stage of work begins. Contractors should not proceed in circumstances where the scope of a permit is unclear or where required inspections have not taken place. Written communication and clear records are essential to protect all participants from regulatory and contractual consequences.
In addition, the case illustrates how quickly compliance problems can escalate. What begins as a missed inspection or an early stage permitting issue can lead to stop work orders, court proceedings and ultimately the removal of completed work. Large and complex builds are particularly vulnerable to these cascading effects. The decision therefore serves as a reminder that project scheduling must integrate regulatory requirements directly into the critical path.
Finally, the case confirms that unilateral construction activity undertaken in the name of safety does not remedy noncompliance. In this case the Developer argued that it needed to install core slabs to stabilize partially constructed walls. The court held that any such measures required written authorization. Construction teams must have a process for raising urgent safety issues with building officials rather than proceeding on their own initiative.
Conclusion
The decision in Ajax v. 1940475 Ontario Inc affirms that compliance with permitting and inspection requirements is fundamental to lawful construction. Conditional permits allow only the specific work they describe, and mandatory inspections must occur before further stages begin. When a project advances without these approvals, the resulting work is vulnerable to the strongest enforcement measures available, including demolition. Experience, investment and partial completion do not mitigate unauthorized construction. For the construction industry, the case stands as a reminder that disciplined adherence to permit conditions and inspection sequences is essential for project certainty and risk management.