Can a Contractor Be Sued For Defects Before the Defects Cause Any Harm?

A Contractor May Be Held Liable For the Cost to Correct Defects Despite That the Defects Pose Only a Future Concern If the Defects Pose a Real and Substantial Danger For Which Harm Is Likely to Occur.

Understanding Various Issues Within the Law of Defective Workmanship Including Mitigation of Possible Future Harm

Model house with major crack in wall covered with bandaid. It may seem odd; however, in the past there was a heavily debated legal question about whether it was proper to sue a contractor for the cost to correct defects before the defects caused any harm. This legal question was debated for years and with many law scholars arguing academically as well as many legal advocates practically within actual cases that a harm is required.

The Law

With the precedent case of Winnipeg Condominium Corporation #36 v. Bird Construction Co. Ltd.[1995] 1 S.C.R. 85, the Supreme Court of Canada decided that where there is a "real and substantial danger", liability can arise for repair of defects prior to the defect causing any actual harm.  Specifically, in Winnipeg, it was stated:

37  Apart from the logical force of holding contractors liable for the cost of repair of dangerous defects, there is also a strong underlying policy justification for imposing liability in these cases.  Under the law as developed in D & F Estates and Murphy, the plaintiff who moves quickly and responsibly to fix a defect before it causes injury to persons or damage to property must do so at his or her own expense.  By contrast, the plaintiff who, either intentionally or through neglect, allows a defect to develop into an accident may benefit at law from the costly and potentially tragic consequences.  In my view, this legal doctrine is difficult to justify because it serves to encourage, rather than discourage, reckless and hazardous behaviour.  Maintaining a bar against recoverability for the cost of repair of dangerous defects provides no incentive for plaintiffs to mitigate potential losses and tends to encourage economically inefficient behaviour.  The Fourth District Court of Appeal for Florida in Drexel Properties, Inc. v. Bay Colony Club Condominium, Inc., 406 So.2d 515 (1981), at p. 519, explained the problem in the following manner:

Why should a buyer have to wait for a personal tragedy to occur in order to recover damages to remedy or repair defects?   In the final analysis, the cost to the developer for a resulting tragedy could be far greater than the cost of remedying the condition.

Woodhouse J. in Bowen v. Paramount Builders (Hamilton) Ltd., [1977] 1 N.Z.L.R. 394, at p. 417, described the problem in similar terms:

It would seem only common sense to take steps to avoid a serious loss by repairing a defect before it will cause physical damage; and rather extraordinary if the greater loss when the building fall down could be recovered from the careless builder but the cost of timely repairs could not.

Allowing recovery against contractors in tort for the cost of repair of dangerous defects thus serves an important preventative function by encouraging socially responsible behaviour.

38  This conclusion is borne out by the facts of the present case, which fall squarely within the category of what I would define as a "real and substantial danger".  It is clear from the available facts that the masonry work on the Condominium Corporation's building was in a sufficiently poor state to constitute a real and substantial danger to inhabitants of the building and to passers‑by.  The piece of cladding that fell from the building was a storey high, was made of 4" thick Tyndall stone, and dropped nine storeys.  Had this cladding landed on a person or on other property, it would unquestionably have caused serious injury or damage.  Indeed, it was only by chance that the cladding fell in the middle of the night and caused no harm.  In this light, I believe that the Condominium Corporation behaved responsibly, and as a reasonable home owner should, in having the building inspected and repaired immediately.  Bird should not be insulated from liability simply because the current owner of the building acted quickly to alleviate the danger that Bird itself may well have helped to create.

Subsequent to the Winnipeg decision, clarification to the rule that liability for the costs of repairs expended prior to any actual incident but where there is a "real and substantial danger" has occurred through various cases including the case of Vargo v. Hughes2013 ABCA 96, which determined that the danger need only be "likely to occur" rather than imminent.  Specifically, it was said:

[24]  The question raised by this appeal is whether Winnipeg Condo requires the “real and substantial danger” to the building’s occupants, i.e., the harm, to be imminent?  The Supreme Court’s only express reference to a time frame is that liability for repairing dangerous defects could extend to the end of the building’s useful life, and that was said in the context of indeterminate liability: para 50. However, the Court also pointed out that exposure to liability is limited in practice with the passage of time because it becomes increasingly difficult for building owners to prove that the defect is attributable to the negligence of those responsible for building it, and not simply to inevitable wear and tear. It is also important to note that in Alberta, the 10-year limitations defence as interpreted by Bowes v Edmonton (City of), 2007 ABCA 347, 425 AR 123 imposes another limit on indeterminate liability.

[25]  Commenting on Winnipeg Condo and Blacklaws, Professor Brown, as he then was, wrote:

the reasons of La Forest J. in Winnipeg Condominium, to the extent they furnish some elaboration of what was meant by a “real and substantial danger”, do not seem to imply a requirement of imminence. The defendant’s duty of care, we are told, is founded upon “the reasonable likelihood that a defect in a building will cause injury to its inhabitants.” A threshold of “reasonable likelihood” is not suggestive of imminence, but rather of possibility or, at best, probability.

Russell Brown, Pure Economic Loss in Canadian Negligence Law, (Markham, Ontario: LexisNexis) Canada, 2011 at 176

[26]  The main policy justification given by the Supreme Court in Winnipeg Condo for allowing the subsequent owner of a negligently constructed building to recover the cost of repairing defects which present a real and substantial danger was to encourage that subsequent owner to take preventative steps before physical damage to persons or property resulted. If a plaintiff can show a reasonable likelihood of a real and substantial danger to the building’s occupants, there is no point in making the owner wait until the risk of injury or damage manifests itself before attending to the repair of the dangerous defect. Secondarily, the Court held that a rule permitting recovery of the cost of repairing dangerous defects also encouraged economic efficiency because it encouraged timely repair of such defects before damage occurs when the cost of repair would tend to be less than the cost of fixing the damage.

[27]  And, once it has been established that sufficient harm is reasonably likely to occur within the useful life of the building, what, if anything, is gained by imposing an imminence requirement on the harm?  If predicting when the risk will manifest itself is not possible, what constitutes “imminent”?  Or, what constitutes “imminent” in circumstances where the defect might take months to repair?

[28]  Consider two possibilities. In each, structural defects make it reasonably likely that real and substantial danger to the building’s occupants will occur from the collapse of the roof under a heavy snow load within the building’s useful life.

[29]  In the first scenario, an expert concludes that it is reasonably likely for the roof to collapse at any time, without prior warning signs (e.g., cracks) so the owner has no way of knowing whether the house is safe at any particular point. The collapse could happen tomorrow or near the end of the building’s useful life. A reasonable homeowner would repair the damage immediately given the risk of real and substantial danger to the building’s occupants. The reasonable likelihood of the collapse occurring at any time makes time frames less relevant.

[30]  In the second scenario, the expert concludes that the defect is such there would be signs warning of danger (e.g., cracks). As long as there are no signs, it can be assumed that the house is presently safe. Even in this case a reasonable homeowner would likely take steps to repair the damage without waiting for the warning signs, if repairing the defect right away is less costly than waiting for cracks to appear.

[31]  As Winnipeg Condo explains at paragraph 37:

the plaintiff who moves quickly and responsibly to fix a defect before it causes injury to persons or damage to property must do so at his or her own expense. By contrast, the plaintiff who, either intentionally or through neglect, allows a defect to develop into an accident may benefit at law from the costly and potentially tragic consequences. In my view, this legal doctrine is difficult to justify because it serves to encourage, rather than discourage, reckless and hazardous behaviour. Maintaining a bar against recoverability for the cost of repair of dangerous defects provides no incentive for plaintiffs to mitigate potential losses and tends to encourage economically inefficient behaviour.

[32]  This goal could be frustrated by imposing an imminence requirement. If the plaintiff establishes at the time of the suit a reasonable likelihood of a defect causing real and substantial danger to the building’s occupants and the danger is reasonably likely to occur within the useful life of the building, the time frame within which the harm is likely to occur may be irrelevant. Said another way, some dangers are real and substantial without being imminent whereas others must be imminent to present a real and substantial danger to the building’s occupants.

ii.  Conclusion

[33]  In summary, to the extent that the obiter dicta in Blacklaws might suggest that the risk must always be imminent, we respectfully disagree. Our conclusion is supported by appellate decisions in other jurisdictions which also considered (and rejected) whether Winnipeg Condo requires a plaintiff to prove imminence: Mariani at paras 29-32; Roy at paras 37-42.

With this said, the recent case of Kaissieh v. Done, 2022 ONSC 425, appears to confuse the point of law in Vargo by suggesting that liability for a possible risk rather than an actual harm does arise only where there is, "an imminent, real and substantial danger" whereas it was said:

[86]  The common law does not recognize a right to be free from the prospect of damage. Rather, it recognizes “a right not to suffer damage that results from exposure to an unreasonable risk” (emphasis in original): see Atlantic Lottery, at para. 33Maple Leaf Foods, at para. 44. Therefore, negligence law does not recognize “the risk of injury or harm” or, “increased risk of injury or harm” as compensable types of damage. The tort of negligence does not offer compensation for “damage” that has not yet occurred, absent a negligently created risk that exposes the plaintiff to an imminent, real and substantial danger to health and safety: see Del Giudice, at para. 232.

As per the Vargo case, and although unstated, it is expected and presumed that the word "imminent" as stated in Kaissieh simply means "likely to occur" rather than suggesting that the risk of harm must be an immediate concern.


Page 1 - Defect Issues, introduction Page 2 - Cause of Action, contract law or tort law Page 3 - Mitigation Requirement, reduce losses Page 4 - Mitigation, future risk of harm defect Page 5 - Who to Sue, privity of contract and vicarious liability Page 6 - Mandate to Produce, expectations overule specifications Page 7 - General Damages, aggravation and disappoinment

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