Canada: According To The Court Of Appeal, Failure To Send A Notice To A Buyer Is Fatal

Last Updated: June 18 2013
Article by Émilie Germain-Villeneuve

In a recent judgment (Optimum société d'assurances inc. c. Trudel, 2013, QCCA716), the Court of Appeal reiterates that the obligation of a buyer to give a notice of the defect to the vendor in virtue of Article 1739C.c.Q., is an essential condition to the success of a legal action instituted based onthe warranty of quality. The Court in fact confirms that in cases where no exception can be raised to justify the execution of the remediation work before sending a notice (for example in urgent matters), the failure tosend such notice to the vendor is fatal to the buyer's action.

The Court of Appeal confirms the decision rendered by the Superior Court which had granted the vendor's Motion to dismiss. The latter was sued by the buyer for hidden defects. He argued that the buyer failed to send him a notice in virtue of 1739 C.c.Q. and that based on this argument alone, Optimum's subrogation claim should be dismissed.

The underlying facts were as follows.

On November 22th, 2008, a fire completely destroyed Optimum's Insured's house. On November 25th, 2008, the adjuster mandated by Optimum visited the premises and suspected that the fire had been caused by a wrongful installation of a wood-burning stove. The adjuster called an expert to validate his theory. The expert confirmed, on or about November 27th, 2008, that the cause of the fire was in fact the improper installation of the wood-burning stove.

Between January 15th and 19th, 2009, Optimum proceeded with the demolition of the house and began its reconstruction, which ended in March 2009. Optimum indemnified its Insured on or about May 13th, 2009. The next day, Optimum put on demand the vendors of the building, Trudel and Lafond invoking that they were bound by the legal warranty and that they were liable for the hidden defect affecting the property, namely the wrongful installation of the woodburning stove. On May 20th, 2010, the vendors put on demand their own vendor, Ms. Dumoulin.

Optimum instituted its subrogation action against Trudel and Lafond on February 8th, 2011 and against Dumoulin on February 28th, 2012. Trudel, Lafond and Dumoulin respectively presented a Motion to dismiss based on the fact that they were never put on demand before the house was demolished and that they were not able to assess the cause of the fire.

The Superior Court concluded that Optimum's failure to send a notice before proceeding to the demolition of the building deprived the defendants of their right to obtain a counter expertise and, furthermore, to present a full defense.

The Court of Appeal reiterated that the demolition of the building did not did give Optimum the right not to send the notice required by section 1739 C.c.Q. and that the buyer could not, on the one hand, oppose to the vendor the defective installation of the stove and, on the other hand, argue that the vendor does not have the right to verify the origin of the fire. Optimum's action was dismissed with costs.

That being said, it is important to note that the Court of Appeal insisted on distinguishing the consequences of the failure to send a notice in matters raising the warranty of quality issue and the ones raising faulty installations. On this subject, the Court mentions the decision rendered in the matter of Nergiflex (2010 QCCA 1868) where it concluded that the failure for a claimant to inform the installer of a stove of its potential liability did not constitute an automatic bar to instituting legal proceedings; it was an argument that could be raised in defense to affect the evidence brought up by the claimant's expert.

This decision is quite surprising since the Court of Appeal and the inferior courts have most often been very reluctant to grant, at a preliminary stage, a Motion to dismiss based on the only argument of the absence of a notice. This decision will certainly be of help to the Defendants who wish to obtain an early dismissal of a case when they were not put in demand by the claimant in a timely manner. As such, it is absolutely important to make sure that all third parties be put in demand as quickly as possible after a loss, more importantly in files where the right of action relies on the warranty of quality.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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