Alberta Court of Appeal overturns court decision in construction deficiency dispute by condominium against developer

June 28, 2022

2022 ABCA 193

In a May 25, 2022 decision, the Honourable Justices Slatter, Strekaf and Hughes of the Alberta Court of Appeal overturned a summary judgment, which dismissed a condominium corporation’s (the “Appellant”) claim against its developer (the “Respondent”). The Court decision will allow for the Condominium to pursue its tort claim alleging that the Respondent was liable for certain costs as a result of a construction deficiency during development.

In late 2004 or early 2005, the Respondent constructed a 215-unit condominium, the units of which were sold to members of the public. In or around 2012, significant damage to the balconies was discovered due to deficiencies in the waterproof membranes, and the Appellant replaced all the balconies. The Appellant subsequently sued the Respondent for the cost of repairing the deficiencies, framing the claim in tort and breach of fiduciary duty. In their defence, the Respondent asserted that a developer, which is a defined term under the Condominium Property Act, RSA 2000, c-22, could not be liable in tort if it was not involved in the physical construction of the building. In the chambers judge’s decision, it was held that  “a developer who is not actively involved in the construction has no duty of care to detect or prevent defects in construction, and is not vicariously liable for any breaches by the contractor or subcontracts.”

In an appeal of the summary judgment, the Court ultimately overturned the chambers’ judge’s decision, concluding that it was not possible to dispose of the Appellant’s claim on a summary basis, as the developer’s liability in tort for repairing construction deficiencies that pose a real and substantial risk of harm is unclear. The Court subsequently ordered the action to proceed to trial.

Roberto Noce and Michael Gibson (Condominium & Strata Law) are representing the Appellant in ongoing proceedings.

Miller Thomson’s Condominium & Strata Group advise condominium corporations on the host of legal issues that accompany condominium and strata living, including but not limited to matters concerning by-law enforcement, construction disputes, human rights issues and everything in between. Read more about our full suite of services.