Moving into a new home, whether a standalone house or a condominium, has benefits many people find desirable. New construction should ensure that everything in the home works exactly as intended and avoids the possibility of shoddy work performed by previous owners or contractors they hired.
But of course, new construction doesn’t always mean everything is perfect. A construction project, especially for something like a condo building, has many moving parts, and mistakes can happen that may lead to the need for repairs.
Homeowners may pursue the developers of their homes for negligent construction or professional liability, especially if a deficiency is found early on. But what if a defect is only found years after the homeowners took possession? How long should a developer be left on the hook for negligent work? These questions were recently addressed in a decision issued by the Alberta Court of Appeal.
Problems emerge seven years after condo is built
The respondent developer (the “developer”) was hired along with two other corporations to build the condo building in 2004 or 2005. They would eventually be named as defendants along with the project manager and the architect who worked on the building, though the developer was understood to be the general manager of the construction project.
About 215 units were sold to the public at the same time the building was being constructed, and the units’ owners make up the building’s ownership as tenants in common. Each unit has a balcony, and while the units are individually owned, the balconies themselves constitute “common property” and fall under the control of the condominium corporation, which was the appellant in the case.
Problems with the balconies only emerged in 2012. The appellant’s statement of claim stated that water infiltration had caused extensive rot damage to the balconies. Engineering reports are said to have disclosed deficiencies in the waterproofing of the balconies to the extent that they no longer met the minimum load-bearing capacity under the province’s Building Code. As a result, the appellant decided to replace all of the balconies. The appellant then sued the developer for the cost of the repairs, stating that the developer breached their duty of care to the appellants.
The developer said that while they may have been in charge of the project overall, they were not involved in the actual physical construction of the balconies or any construction of the building at all, and therefore cannot be held liable. They asked for a summary judgment to dismiss the claim.
Chambers judge dismisses claim
The appellants had not actually provided any evidence that the developer or other named defendants had anything to do with the physical construction of the building. This was enough for the chambers judge to dismiss the claim, writing,
“I do not agree with the suggestion if I can that a developer, without more, would be vicariously liable for any negligence or breach of duty committed by any party involved in the construction of this building or any building.”
The court described the chamber judge’s decision as accepting the respondent’s opinion that a developer cannot be held liable in tort for deficiencies in construction unless they were actually physically involved in the construction. This means a developer would have no duty of care to detect or prevent defects, nor would they be vicariously liable for any breaches by contractors or subcontractors.
Court of Appeal looks at liabilities of developers for deficiencies in construction
The court explained that there were three avenues for the appellants to pursue liability against the respondents. They are categorized as:
(a) Contractual duties, including contractual covenants implied by law,
(b) Breach of a duty in tort, or
(c) Statutory duties.
The court found that the relationship between the parties was largely contractual in nature, though the appellants did not plea their claim in contract, and the contracts were not introduced as evidence. When the condominium was built, the Condominium Property Act did not prescribe any obligations pertaining to the quality of construction, nor are there any statutory obligations in place today.
In 1979, the Supreme Court of Canada issued a decision (“Fraser”) which stated that common law had not recognized any implied warranty of fitness for habitation when it comes to completed homes but drew a distinction with incomplete homes, such as those sold to the appellants. Generally speaking, common law does recognize that a home sold before it is complete will be “reasonably fit for human habitation” when construction is finished. That does not mean that such an expectation is ongoing or will last forever, and in this case, there was no indication that the units were not fit for habitation when they were built. Because of this and the lack of contractual evidence that would expand the respondent’s obligations, the claim could not move forward on the basis of contract law.
In turning to a breach of duty in tort, which was where the action was originally pleaded, the court found that common law was unclear when it came to a conflict between duties of care and contracts. Finding a duty of care requires a case-by-case analysis, for which the contract is needed. Again, in this case, no contract had been submitted by that point. Summary judgment, which the respondent requested, would not be a suitable venue for determining this question. The appellants were not found to be able to rely on statute, which means a breach of duty in tort would be the only applicable way to pursue their claim.
The court rejected the application for summary judgment and opened the door for a full trial. We will be sure to report back on what happens with this case as it develops.
Calgary construction lawyers advising you on construction law matters
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