Case: Condominium Corporation No. 0522151 (Somerset Condominium) v JV Somerset Development Inc, 2022 ABCA 193 (CanLII)

Keywords: Condominium Property Act, RSA 2000, c. C‑22; liability of developer in tort; balcony; construction deficiency

Synopsis:

The Respondent builds a 215-unit condominium. Years later, serious deficiencies are alleged in the design and construction of the condominium’s balconies. Balconies are part of the “common property” of the condominium, and are under the control of the Appellant condominium corporation. (See para. 4).

The Appellant decides to completely replace all the balconies and sue the Respondent for the cost of repairs. (See paras. 5-6). The Appellant’s statement of claim alleges the Respondent is a “developer” within the meaning of the Alberta Condominium Property Act, RSA 2000, c. C‑22. The Respondent’s defence asserts that a developer is not liable in tort for deficiencies unless actually involved in the physical construction of a building. (See para. 8).

The Respondent brings a motion for summary judgment; the Chambers Judge dismisses the Appellant’s claim on the basis there is no evidence that Respondent developer is actually involved in the physical construction. (See para. 12). The Court of Appeal (judgment by “The Court”; Justices Slatter, Strekaf, and Hughes sitting) finds the liability in tort of a developer for repairing construction deficiencies that pose a real and substantial risk of harm is “unclear” at law; allows the appeal and indicates that the claim “will have to go to trial, likely after further discovery of records”. (See para. 33).

Importance:

As summarized by the Court of Appeal, the decision of the Chambers Judge says that “a developer who is not actively involved in the construction has no duty of care to detect or prevent defects in construction, and is not vicariously liable for any breaches by the contractor or subcontractors”. (See para. 12). The key question in this case was whether that proposition is (or should be) accurate.

The reasons of the Court of Appeal provide a detailed outline of potential bases of liability for the developer of a condominium building for construction deficiencies under three categories: contractual duties (see paras. 14-23); breach of a duty in tort (see paras. 24-33); and statutory duties (see paras. 34-39).

The Appellant’s action was pleaded in tort. The Court of Appeal determined that, on the record, the law was unclear as to whether the principles in Winnipeg Condominium Corporation No. 36 v. Bird Construction Co., 1995 CanLII 146 (SCC) respecting construction defects that present a “real and substantial danger” apply to developers (but do apply to contractors). (See para. 33).

Ultimately, however, this was an appeal as against the decision of the Chambers Judge on summary judgment. Because the record and law in this case were not sufficiently clear, the Court of Appeal determined the Appellant’s claim could not be disposed of on a summary basis, and directed that the matter continue to trial. In other words, a future trial is required to determine whether the principles of Winnipeg Condominium should apply; whether a developer can be liable in tort for construction deficiencies. (See para. 33). Of course, stay tuned for the outcome, and for any subsequent appellate decisions on this fundamentally important question.

Counsel for the Appellant: Roberto Noce, Q.C. and Michael Gibson (Miller Thomson LLP, Edmonton)

Counsel for the Respondent: Peter Gibson (Field Law, Edmonton)

Discuss on CanLii Connects