Construction deficiencies are more than just cracks in the walls; they can have significant legal implications. If defects appear, how can owners address them, and what does the law require regarding repairs?
In this article, we will discuss these deficiencies under the law. Above all, you can consult a construction lawyer for more information on how to handle such issues.
What are construction deficiencies?
Construction deficiencies are issues found in the finished building or site. They may be dangerous or not. These are usually discovered either during construction or after the project’s turnover to the owner.
Laws governing construction deficiencies
Construction law in Canada is governed by common law and provincial and territorial statutes as there is no single federal law addressing construction deficiencies.
The liability of a party for a construction defect may be determined through the following:
- common law principles
- a specific provincial or territorial law
- contract between the parties, in relation to the law on contracts
All construction arrangements are executed through contracts, whether written or oral. As such, there is more emphasis on construing what the contract between the parties says to resolve their dispute when there’s a defect.
The law also imposes a certain standard of care that contractors should abide by. Watch this video to learn more about this standard:
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Definition of “construction deficiencies”
A construction defect is usually defined in the parties’ contract. This definition helps determine whether a party has a potential claim against the other.
In addition, each province or territory may define “construction defects” or “hidden defects” similarly or differently. For example, Ontario’s case of Kingspan Insulated Panels Ltd. v. Brantford (City), 2010 ONSC 6859 defines “latent defect” regarding construction as “...a defect that cannot be discovered by inspection and ordinary vigilance.” In British Columbia, the Homeowner Protection Act Regulation also defines “defect” differently, which is applicable to residential homes.
These different definitions of “construction defects” will matter when filing a case for negligence or breach of contract.
Examples of construction defects
Construction deficiencies can be classified either as hidden or dangerous. Although this distinction is often minor, the cause of action for construction defects may depend on this classification.
Hidden defects
Liability for hidden defects is placed on a builder or a broker when they intentionally or fraudulently conceal a defect from the buyer or owner. This results in the following:
- the buyer or owner is entitled to the costs of repair
- the court may order the builder to do the repair
- damages may be awarded in favour of the owner
This applies when the builder or the broker guaranteed the building against any defects, hidden or obvious, either:
- at the time before the sale (for a broker)
- during a “construction walk-through” (for a builder)
Watch this video to learn more about hidden construction deficiencies:
Consult the Lexpert-ranked best Canadian law firms for construction law if you want a construction defect addressed, whether it is in your home or the building of your business.
Dangerous defects
Previous common law doctrine states that a defect is attributable to the builder only when the construction defect is dangerous. If it’s not dangerous to the owner, an action for damages or a claim for repairs may be dismissed by the court.
However, current common law doctrine now states that the defense of a non-dangerous construction defect is not sufficient to evade liability on the part of the builder. The reason for this is that they owe a duty of care in negligence to the buildings they construct.
This liability may even extend to purchasers who were unknown to the builders at the time of construction.
Who is liable for construction deficiencies?
Parties to a construction project may be liable for construction deficiencies in different ways:
- owner of the project: if the owner delays payment to the builder, this causes problems to the actual construction and result in construction defects
- the builder (contractor or subcontractor): while negligence is usually the reason for a builder’s liability, it can also be for violation of a law (e.g., provincial building code) or the breach of the contract itself
- real estate broker: although they are not involved in the construction itself, a broker can be held liable for misrepresentations about the building
Negligence as a cause of action applies whether or not the parties have a contract. In addition, breach of contract can also be a cause of action for either party.
Liability for negligence under tort law
One important case that shows how contractors can be held liable is Winnipeg Condominium Corporation No. 36 v. Bird Construction Co., [1995] 1 SCR 85.
Here, the Supreme Court said that contractors who designed and constructed a building can be held liable under tort law if they fail to take reasonable care in constructing the building, creating a substantial danger to its occupants. This liability also extends to the subcontractors, architects, and engineers.
So how much would they be liable for? This case held that it would be for the costs of “repairing the defects and putting the building back into a non-dangerous state.”
Establishing liability for construction defects
To impose liability on the other party, either party must establish their claims and defences through convincing evidence. These pieces of evidence may show or disprove any of the following:
- the construction defect is present before (or after) the construction
- there is fraud or gross negligence on the part of the other party
- the other party is estopped from claiming damages
Estoppel occurs when the buyer or owner was properly informed of the defect but still accepted the construction project as completed.
Caveat emptor: A defense against liability
One of the defences against liability in a construction deficiency case is caveat emptor. This can be used by either the owner or the builder to shift liability to the other party.
Under caveat emptor, which is a Latin phrase that means “let the buyer beware,” it is the duty of the buyer to check the product for any defects. In the context of construction, it is the owner of the construction project who must inspect the building for any defect once it is completed.
Builders would usually use caveat emptor as their defense. After the turnover of the building to the owner, especially after full payment or after satisfaction of any lien, any construction defect would be the owner’s responsibility.
However, there are exceptions to the doctrine of caveat emptor, which may be used by an owner. If the builder already knows about the construction deficiency when the project is finished or turned over, this may constitute fraud or negligence on their part. This, in turn, can hold the builder liable for the defect.
What are the ways to address construction defects in Canada?
There are two ways to handle construction deficiencies, which are either a court battle or an out-of-court settlement. It is best to consult your construction lawyer to determine which option suits your situation.
Alternative dispute resolution (ADR)
Before proceeding with court litigation, a construction deficiency can be addressed without court intervention through any of the ADR modes, such as:
- negotiation
- mediation
- conciliation
- arbitration
Parties may be compelled to use an ADR method first before proceeding to litigation, especially if it is required under their construction contract.
Time limitations for construction lawsuits
Court cases must be filed within the applicable provincial or territorial limitation period. This period usually starts when the owner (or buyer) discovers the construction defect. If not filed within the specified time, any action based on the construction deficiency may be barred.
How can lawyers help clients in case of construction deficiencies?
Lawyers for construction defects may represent either party in a lawsuit. This can either be:
- the plaintiff: typically, the owner of the building or the buyer
- the defendant: the contractor, its subcontractor, or the real estate broker or agent
However, it is highly recommended to consult first with construction lawyers for the appropriate law to file a case on, since each province and territory has different laws and regulations on construction and brokerage.
Construction deficiencies: Building confidence with legal help
Spotting construction deficiencies is only the first step. The law offers ways for owners to seek repairs or compensation, but the process can be complex. To ensure your claim for defects is addressed, a construction lawyer can guide you through claims, negotiations, or court proceedings if needed.
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