CANADA - Legal News - Warranty Date - Responsibility

Originally Posted By: rwand
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Warranty Date Does Not Terminate Responsibility

The law of negligence recognizes that there must be a sufficient degree of proximity between the wrongdoer and the wronged for there to be liability; there must be a duty of care owed by one party to another. In construction law the same holds true. Recent court rulings have found that the passing of a warranty date does not necessarily terminate the responsibility of those involved in the construction process - even to those who were not parties to the original construction contract.

Construction warranties have changed considerably in British Columbia over the years. For new home construction they are currently 2 years for labour and materials, 5 years on the new home ?envelope,? and 10 years for the structure. The passing of recent legislation in B.C. has considerable significance for parties to a construction contract. The Homeowner Protection Act, as well as the Local Government Act are key in this area. However, it is the Supreme Court of Canada decision of Winnipeg Condominium Corporation No. 36 v. Bird Construction Co. that has changed the way the Courts look at cases regarding builder responsibility.

The central issue in Winnipeg Condominium was compensation for economic losses arising from repairs to a building. The SCC noted that ?no adequate policy consideration exists to negate a contractor?s duty in tort to subsequent purchasers of a building to take reasonable care in constructing the building, and to ensure that the building does not contain defects that pose feasible and substantial danger to the health and safety of the occupants.? What was so significant about the decision in Winnipeg Condominium was the Court?s finding that a subsequent purchaser who was not party to the original construction contract could hold the contractor liable for substandard workmanship that posed a danger to the occupants of the building. Developments in the B.C. leaky condo crisis have followed this same line of reasoning. Problems of responsibility have become questions of who is to blame ? if you cannot point to one particular party as responsible then you may be able to hold them all responsible. Typically an action of this nature is against the original parties involved in the design and construction of the building. These may include the developer, contractor, subcontractors, designers, architects and engineers, and site inspectors. Claims are typically for breach contract, and/or breach of an implied warranty of habitability. This implied warranty of habitability is a relatively new action; in Oak Tree the B.C. Court of Appeal recognized that an implied warranty could only apply to latent defects and not to visible defects in work because visible defects were deemed to be accepted by the purchasers.

Further claims against other parties may arise for breach of a duty of care, negligent misrepresentation and failure to warn of a risk to health and safety, especially by present owners against a previous owner or developer. Exclusion and limitation of liability clauses, normally added by the vendor or developer that aim to protect them from negligence in the original construction contract, have been read down by the Courts; ambiguity will be construed against the party who drafted the exclusion clause. The maxim ?buyer beware? is not available to protect contractors or vendor of a building from liability even after a warranty expires. As the Court stated in Winnipeg Condominium ?the imposition of liability on the builders provides an important incentive for care in the construction of buildings and a deterrent against poor workmanship.?

The moral of the story, at least for developers, contractors and subcontractors is that it is foolhardy to think that your liability comes to an end with the expiry of a warranty period.

Mark Baron is a partner at Pushor Mitchell LLP. He can be reached by phone by email at

Raymond Wand
Alton, ON