The recent decision of the Ontario Court of Appeal in O'Dowda v. Halpenny et
al. is a useful reminder of the duties of
contractors, subcontractors, architects and engineers who take part
in the design and construction of buildings.
In this case, the plaintiffs purchased a house in 2003 from the
defendants. They discovered structural problems soon afterwards.
They obtained an expert report in late 2003. One of the problems
disclosed by the report had to do with the load bearing ability of
They sued the vendors and commissioned a further report, which
was prepared in early 2005, identifying further problems and
raising safety concerns about the roof.
In March 2006, at his examination for discovery, one of the
vendors testified that the house had been designed by G.S. Morton
& Associates Ltd. The Morton firm also prepared the working
drawings. Later that year, the purchasers added the Morton firm as
an additional defendant alleging that it had been negligent in
designing the house, causing it to be a danger to safety.
The Morton firm moved for summary judgment dismissing the action
on the basis that it had been added as a defendant more than two
years after the cause of action arose. The judge granted the
motion, concluding that the purchasers knew or should have known
that the negligent design of the house had created a condition of
danger to safety after they reviewed the first report, even though
the words "danger" and "safety" were not used
in it. The judge also ruled that the purchasers should have known
that it was the Morton firm that had designed the home because soon
after taking possession, they had received the plans to the home
stamped with the Morton firm's name on it. As a result, the
judge ruled that the purchasers knew of the problem, and who had
caused it through faulty design work, more than two years
The purchasers appealed to the Court of Appeal.
The Court of Appeal very usefully reviewed the law in this area.
It referred to a 1995 Supreme Court of Canada case making it clear
that contractors involved in the design and construction of
buildings will owe a duty in tort to subsequent purchasers of the
building if it can be shown that it was foreseeable that a failure
to take reasonable care in constructing the building would create
defects that pose a substantial danger to the health and safety of
the occupants. If the negligence is established and the defects
become clear before any damage occurs, such contractors are liable
for the reasonable cost of repair.
In this case, there was no question that the Morton firm was
potentially liable to the purchasers in tort, even though there was
no direct contractual connection between the purchasers and the
Morton firm. The question before the court in this case was whether
or not the judge had made a mistake determining that the purchasers
missed the two-year limitation period in adding the Morton firm as
The Court of Appeal determined that the judge had indeed made a
mistake. The court pointed to an affidavit that had been sworn on
the summary judgment motion, which was never challenged, indicating
that the purchasers were not aware that the house might be
dangerous by design until they received the second report in 2005.
The court found that it had been an error of law for the motion
judge to ignore that uncontested sworn evidence without giving any
reasons for doing so. The court considered that the motion judge
had the discretion to reject that evidence but felt that the judge
could only do so if he explained why he was doing so. One could
reasonably suggest that the sworn evidence was rejected because the
judge interpreted the first report as suggesting that the house had
a design defect. However, there was no explicit statement made by
the motion judge rejecting the sworn affidavit evidence for that
reason. As a result, presumably the Court of Appeal could not be
certain that the judge had taken the affidavit into account.
Accordingly, the summary judgment order was set aside and the
matter was ordered to proceed to trial to deal with the limitation
This case is a useful reminder to both contractors involved in
design and construction, and purchasers of newly constructed
properties, of their respective obligations and rights. It is also
a useful warning to purchasers becoming aware of potential design
problems of the need to obtain expert advice and act on that advice
as quickly as possible.
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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Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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