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In The Corporation of the Town of Ajax v. 1940475 Ontario Inc., 2025 ONSC 5325, the Ontario Superior Court of Justice (the "Court") ordered the demolition and removal of all above-grade construction completed without valid building permits.
As this case illustrates, proceeding without the necessary authorizations can render even substantial construction unlawful and subject to enforcement action—including stop-work and demolition orders.
Strict compliance with building and environmental approval processes is essential. Municipalities and the courts will not hesitate to enforce the Building Code Act, 1992 (Ontario) (the "Act") when developers proceed without proper permits—regardless of how far construction has progressed and even after substantial investment.
The Facts
In 2015, 1940475 Ontario Inc. purchased the property located at 599 Kingston Road West in Ajax, Ontario (the "Property"). 1940475 Ontario Inc. and First Avenue Properties Inc. (collectively, "First Avenue"), intended to construct a four-storey mixed-use building on the Property, with commercial units at grade, and residential units above grade.
Historically, the Property was an automotive sales and repair facility that left behind contaminated soil, which was confirmed by environmental reports submitted by First Avenue to the Town of Ajax (the "Town") as part of the Town's building permit approval process.
In April 2021, the Town conditionally approved First Avenue's site plan application. In July 2021, as part of the site plan agreement between the Town and First Avenue (the "SPA"), First Avenue was required to satisfy several pre-construction conditions before a final building permit could be granted, and the development could proceed.
A key condition of the SPA required First Avenue to file a Record of Site Condition ("RSC") with the Ministry of the Environment, Conservation and Parks ("MECP") before any above-ground building permits could be issued. However, another condition of the SPA gave the Town the discretion to issue conditional permits that allowed First Avenue to complete below-grade construction at the Property before filing the RSC. In September 2021, the Town issued a conditional building permit, allowing certain below grade construction (the "Conditional Permit").
In October 2021, the Town discovered that construction had exceeded the scope of the Conditional Permit. The Town issued an order to comply, directing First Avenue to immediately stop all above-grade work and provide inspection and testing reports under the Act. A subsequent inspection, revealed continued noncompliance, prompting the Town to issue a stop-work order. In November 2021, at the Town's request, the Court issued a mandatory injunction, prohibiting First Avenue from carrying on any further work at the Property until a building permit was issued. First Avenue did not abide by the mandatory injunction, and construction continued until November 2022.
Between late 2021 and 2023, MECP rejected First Avenue's RSC submissions due to significant deficiencies, including incomplete testing and failure to assess soil and groundwater contamination. After an inspection, the MECP issued a report confirming the Property was still contaminated and that First Avenue began above-ground construction without a valid RSC. In October 2023, the Town reiterated that First Avenue must remediate the property and file a complete RSC or risk demolition of the above-grade structure. Instead of remediation, First Avenue proposed to obtain a risk assessment, which would require First Avenue to manage the contaminants indefinitely instead of removing them entirely.
Applicable Legislation
The Act is the legislative framework governing the construction, renovation and change-of-use of a building in the province of Ontario. Ontario's Building Code (the "Code") is a regulation under the Act that sets out the technical and administrative requirements and minimum standards necessary to ensure safety and uniformity in construction practices.
Before a builder can break ground on a project, they must obtain municipal approvals and building permits by submitting the required documents and reports, which typically include RSCs, site plan agreements and environmental assessments, along with inspections at key stages of construction.
Importantly, an RSC is required under the Code when there is a change in use of a property, for example, from industrial to residential, as the RSC confirms the site has been assessed and remediated to meet environmental standards.
Section 38 of the Act empowers a municipality to apply to the Court for an order requiring the demolition or removal of a building, or part of a building, which has been constructed, renovated, or altered without a required building permit. If the Court is satisfied that the construction was done contrary to the Act or without proper authorization, it may order the owner to demolish or remove the structure, or it may authorize the municipality to do so at the owner's expense. Considerations such as costs incurred due to demolition, or benefits to a community lost because of demolition, are legally irrelevant—the focus remains on enforcing compliance with the Act and the Code.
The Court's Application and Decision
While First Avenue admitted that it began the above-grade construction without a permit, it argued that demolition was an excessive remedy and continued working toward environmental approval. The Court rejected that argument, finding that First Avenue made a deliberate and calculated decision to build beyond the scope of its conditional permit, despite multiple warnings, orders and an injunction.
The Court held that allowing the unauthorized structure to remain would reward noncompliance, undermine municipal control, and compromise the integrity of the permitting system. Further, the Court reaffirmed that the Act and Code are designed to ensure public safety and uniform building compliance standards through regulatory oversight.
The Court granted the Town's application under section 38 of the Act, ordering the demolition and removal of all above-grade structures built without a valid permit.
Key Takeaways for Developers
The decision of the Court in this case highlights the powerful enforcement tools available to municipalities and the courts to enforce compliance with the Act and the Code. Developers must adhere to the precise limits of their building permits and satisfy all environmental and procedural prerequisites before proceeding with construction. Noncompliance, even when accompanied by partial approvals and conditional permits, can result in drastic consequences, including mandatory demolition of unpermitted structures.
The Court's decision also serves as a cautionary reminder that regulatory shortcuts in construction and environmental compliance can be very costly. Developers should never assume that conditional permits allow for above-grade construction without full environmental sign-off. Doing so exposes the development project to significant legal and financial risk.
In addition, this decision underscores the importance of conducting thorough due diligence before and during the permitting process, maintaining transparent communication with municipal officials and retaining qualified consultants to ensure all environmental prerequisites are met.
If you are a real estate developer currently in the process of obtaining building permits, do not hesitate to contact any member of the Wildeboer Dellelce LLP Real Estate practice group. We can guide you through every stage of the process, ensuring compliance with municipal and environmental requirements to help you avoid costly project delays or enforcement actions.
If you have any questions about this content, please contact Paul De Francesca at pdefrancesca@wildlaw.ca or Lovejot Bhullar at lbhullar@wildlaw.ca. The authors gratefully acknowledge the assistance of Articling Student Karla Ledesma in the preparation of this update.
This update is intended as a summary only and should not be regarded or relied upon as advice to any specific client or regarding any specific situation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
