The Manitoba Court of Appeal has held that a defendants'
motion for summary judgment should be dismissed, rejecting their
argument that claims for pure economic loss for patent defects that
are not imminently dangerous should not proceed to trial. This is
yet another in a long line of cases interpreting the seminal
Supreme Court of Canada decision in Winnipeg Condominium Corp.
No. 36 v. Bird Construction Co.,1 where the Court
held a defendant liable for a dangerous defect even though there
had been no damage to persons or property (i.e. a pure economic
In Winnipeg Condominium Corp. No. 613 v. Raymond S.C. Wan
Architect Inc.,2 the defendant architectural firm
and its principal had provided architectural services for the
design and construction of a condominium. The condominium suffered
from defects including water pooling in the lower levels of the
building's parkade. The plaintiff's expert opined that the
parkade was not in danger of imminent collapse, and that it might
take decades before it would be in danger of collapse. Moreover,
there would be indications of a pending collapse before it
The defendant architects stated that there were two principles
arising out of the Bird Construction3 case
referred to above. First, that the reasoning in that case only
applies to latent defects. Second, that recovery is limited to
situations where the defect causes a real and substantial danger to
persons or other property, or the imminent possibility of danger.
They argued that the defect in the case at bar is patent, not
latent, and that any potential danger arising out of the defect was
years away from becoming dangerous, if at all.
The motion was heard by a Master at first instance.4
The Master determined that although there was a latent defect at
issue in Bird Construction, there is no mention of a
latency requirement in the rest of the decision. Moreover, the
Court referred to another decision of the Manitoba Court of
Appeal5 that permitted a claim for pure economic loss to
proceed to trial even though it involved a patent defect (although
the issue of a patent vs. latent defect was not argued before that
court). With respect to the claim of an imminency requirement, the
Court noted that this issue had been mentioned in Bird
Construction and litigated in other decisions, and the courts
have regularly permitted claims for non-imminent dangerous defects
to proceed to trial. The Court noted that it would encourage
reckless and hazardous behaviour if a defect was allowed to develop
into an imminent defect before it could be the subject of a claim.
It was more appropriate to permit the plaintiff to take steps to
repair the defect before it cause injury. Thus, the Court denied
the defendants' motion and permitted the claim to proceed to
This case was appealed to a judge in an unreported decision who
adopted the Master's decision and dismissed the appeal in a
short endorsement. The defendants appealed to the Manitoba Court of
Appeal, which dismissed the appeal. The Court agreed that since the
law on liability for pure economic losses was still developing, it
would be inappropriate to dismiss the claim before trial.
This case is an accurate statement of the law of pure economic
loss, and protects the advances made in the Bird
Construction decision. It makes little sense to require that a
defect be imminently dangerous and/or a latent defect before a
plaintiff could be entitled to claim for pure economic loss. We
expect that if and when these issues are ultimately determined at
trial, the Court will agree with the reasoning of the Court
The recent decision of the Ontario Court of Appeal in BMW Financial Services Canada, a Division of BMW Canada Inc. v. McLean provides some useful insight into the relationship between automobile dealers and the financing arms of the manufacturers for whom those dealers are franchisees.
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