Case information

Insurance — Title insurance — Unmarketable title — Whether the Court of Appeal correctly determined the meaning of “unmarketable title” in the policy of title insurance issued to the applicant — Whether the Court of Appeal erred in distinguishing MacDonald v. Chicago Title when there were no distinguishing facts — Whether the Court of Appeal erred in indicating that it was also necessary to establish that there was coverage under an underlying building permit problem — Whether the Court of Appeal erred in not considering other title risks that would have supported the applicant’s loss — Whether the Court of Appeal erred in equating knowledge that a final inspection of the cottage had never been done, with knowledge of a problem with the building permit process.

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

The applicant, Mr. Breen obtained title insurance from the respondent, FCT Insurance Company Ltd. for a cottage property. The cottage was constructed in 1989 under the authority of a building permit issued by the local township. A few years after the building permit was issued, the township assumed the project was complete and closed its file on the permit. Mr. Breen purchased the property under power of sale in 1999. He accepted his conveyancing solicitor’s advice and did not request a final inspection of the property. Approximately 10 years after acquiring the cottage, Mr. Breen decided to renovate. The contractor however identified violations under the Building Code Act, 1992 and an engineer’s report identified significant structural issues that needed to be dealt with. Mr. Breen was advised not to occupy the cottage and the cottage has not been used since. In March 2014, FCT initially confirmed coverage, on the understanding that there was an open building permit on the property, but reserved the right to change its decision should further facts emerged. In May 2014, FCT denied coverage because it had learned that there was no open building permit, and that, instead the township had closed its file on the permit.

The trial judge found that Mr. Breen was entitled to coverage under the policy for the losses arising from the defects in the cottage. The Court of Appeal allowed the appeal, set aside the decision of the trial judge and dismissed Mr. Breen’s action against FCT.