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Defending Developers In Condominium Litigation – Special Considerations
By Christine Matthews
With the increasing number of condominiums across Toronto’s skyline, condominium litigation cases are crossing the desks of many lawyers. Often such cases involve numerous parties and require the production of thousands of documents. The ensuing litigation can be expensive and time consuming, even for those parties with minimal exposure.
Where you are retained to defend the developer of a condominium in claims involving the costs of rectifying deficiencies, you will want to be alive to a few special characteristics of condominium litigation.
First – be alive as to the identity of the plaintiff in the litigation. Where the litigation is brought by the condominium itself, you will want to know whether the condominium provided the required notice to the condominium owners prior to commencing the litigation. Without such notice, the claim may be found to be a nullity.
Second – you will want to note whether the claims against the developer sound in contract. Keeping in mind that condominium corporations come into existence at the time of declaration, and therefore are not parties to the construction contracts, and that the condominium owners are subsequent purchasers of the condominium units, the contractual claims are often limited to those provided for under the Ontario New Home Warranties Plan Act. Such warranties expire after one and two years. You will want to review the agreements of purchase and sale with the condominium owners for any language that may suggest a broader warranty period.
Third – where the claim is for rectifying deficiencies, any tort claim will need to be viewed in light of the limitations of recoverability for pure economic loss. The starting place for such an analysis is Winnipeg Condominium Corporation No. 36 v Bird Construction Co. [1995] 1 SCR 85. Where there is no element of danger caused by the deficient work, the courts have been unwilling to find liability in tort against the developer.
Fourth – consideration should be given to whether a wrap up liability insurance policy was issued. Wrap-up liability policies are intended to be primary coverage and often insure owners, contractors and subcontractors. Where the claim is for deficient work, the relevant time period for insurance purposes may be when the faulty work was done. Bringing the wrap up policy insurer to the table at the beginning will cut down on the potential for hostilities among the various contractors and can procedurally simplify the case.
Considering the above points at the outset will save you and your client valuable time and expense and may limit your client’s exposure.
DISCLAIMER
This blog entry has been placed on our website to inform readers in a general way of the authors’ view of the law at the time of its presentation. It is not intended as legal advice and no reliance may be placed on its contents. Some principles of law or procedure may have changed and may no longer be applicable since its publication. The authors and our firm disclaim any liability arising from reliance on any part of this blog entry.