In Winnipeg Condominium No. 36 v. Bird Construction Co.,  1 SCR 85, the Supreme Court of Canada opened the door to recovery in tort – i.e., by parties who do not have a contract with the defendant – of “economic loss” for design and construction defects.
“Economic loss” in this case means the cost of repairing the defects. This has meant that contractors, trades and design professionals can be sued by subsequent owners of a building for the cost of repairing defects which can be traced to design and/or construction errors, even when the building has been sold and re-sold several times. The result has been an increase in claims made directly against all participants in the design and construction of a project.
However, the Supreme Court of Canada limited this recovery to circumstances in which the defects “pose a substantial danger to the health and safety of the occupants“, and a recent B.C. case has now underscored that this element of danger is essential to any tort claim for construction defects.
In The Owners, Strata Plan KAS 3575 v. Renascence Enterprises (Shannon Lake) Corp., 2017 BCSC 1336, the BC Supreme Court dismissed a claim brought by the owners of a strata plan against a structural consultant for alleged structural defects in the strata’s building. The claim was decided on a summary judgement application before any of the defects had been proven. The court concluded that, even if the alleged defects existed, the fact that they did not pose a danger to the health or safety of the occupants of the building was fatal to the claim. The court said:
…the evidence of the plaintiffs’ representative is that there was no danger posed by the alleged deficiencies, no report from a structural engineer or any other party that the deficiencies posed a danger of any kind, and no urgency to the repairs...
The law is clear that there is no recovery for pure economic loss for deficiencies or shoddy work that do not pose a danger or a threat to the health or safety of persons.
The court therefore dismissed the claim against the structural consultant.
There have unfortunately been very few cases which assist in determining exactly how “substantial” the danger must be for a tort claim for economic loss to succeed under the Winnipeg Condominium ruling. Most construction defects can be argued to pose a danger, due simply to the nature of construction projects, and it is therefore difficult to obtain summary dismissal of a case where it is argued that a full trial will be necessary to explore the presence or extent of the alleged danger.
However, this case may assist in one respect: the plaintiffs’ apparent lack of urgency in carrying out repairs was mentioned as a factor in determining whether a substantial danger existed. In many cases, construction defects are left unrepaired for years, despite allegations of danger, and the owners’ inaction in such cases may prove decisive in future decisions. Only time will tell.