July 15, 2022

Additional Risk in Condo Construction: Could the Principles in Winnipeg Condos Be Extended to Developers? By Catriona Otto-Johnston and Carter Czaikowski


It’s well established that a general contractor can be found liable to subsequent condo owners for latent defects posing a real and substantial danger to occupants, but can a developer be liable to subsequent condo owners for these same defects? This was the issue before the Alberta Court of Appeal in Condominium Corporation No. 0522151 (Somerset Condominium) v JV Somerset Development Inc, 2022 ABCA 193. While the Court did not make a determination on this issue, it left the door open to expand the scope of Winnipeg Condominium Corporation No. 36 v Bird Construction Co., 1995 CanLII 146 (SCC), [1995] 1 SCR 85, 121 DLR (4th) 193 (“Winnipeg Condos”). The Court also gives guidance on what circumstances might give rise to developer liability in this context.

We are all aware of the Supreme Court of Canada’s decision in Winnipeg Condos, where it was recognized that a contractor could owe a duty of care to subsequent building owners where a failure to take reasonable care during construction could create latent defects posing a real and substantial danger to occupants. If the danger is identified before a manifestation of harm, the cost of repairs is recoverable. The Supreme Court of Canada did not address the issue of developer liability in Winnipeg Condos.

The Background

In late 2004 and early 2005, JV Somerset Development Inc. (“JV Somerset”) developed a 215-unit condominium. Fast forward to 2012: discovery of extensive damage caused by water infiltration, compromising the structural integrity of the balconies. The Condo Corp replaced all of the balconies in 2014 and, in turn, sued JV Somerset and others for the repair costs, alleging that as the developer, JV Somerset owed a duty of care to both the unit holders and the Condo Corp.

JV Somerset did not deny the balconies were deficiently designed or constructed or that they posed a real danger. They did not dispute the necessity of repairs. Instead, they took the position that a developer could not be liable for latent defects unless it was involved in the physical construction. JV Somerset applied for summary dismissal, and Justice Nielson agreed with their position, dismissing the case against the developer. Justice Nielson noted that even if a duty was established, there was no evidence before the Court that JV Somerset breached such a duty.

The Condo Corp appealed. The Court of Appeal unanimously overturned the decision, finding a lack of clarity as to whether a developer owes a duty to subsequent owners in this context and concluding that summary judgment was inappropriate. The Court further noted that any duty established in tort would only impact projects built before 2014 when the New Home Buyer Protection Act came into force. The statutory duty would supersede any tort law obligations for condos built post-2014.

Duty of Care

The Court of Appeal opined that a necessary precondition to finding a duty between a developer and subsequent owner was establishing a duty between a contractor and subsequent owner. Where there is sufficient proximity between a contractor and subsequent owners, it is arguable that an analogous relationship exists between the developer and subsequent owners. The Court noted that the contractor’s hands-on role and the original contractual terms are also relevant to ascertaining whether a developer is in an analogous position to the contractor. While refusing to establish an explicit duty, the application of the principles from Winnipeg Condos led to the Court’s observation that the prospect of a structurally compromised balcony failing with someone on it was not an implausible inference. Thus, the facts at issue presented a real and substantial danger.

Standard of Care

As Justice Nielson alluded to in chambers, establishing a duty does not in and of itself constitute liability—there must be a breach. The Court of Appeal reiterated that JV Somerset’s lack of involvement in the physical construction is relevant to the standard of care analysis. Going further, the Court posed the following queries to illustrate how such a duty may be discharged:

  • Is it sufficient for the developer to hire competent and responsible architects and contractors?
  • Must the developer also retain skilled and experienced professionals to monitor the contractor’s work?
  • Conversely, must the developer itself oversee the contractor’s work to ensure that there are no dangerous defects?

While these questions do not provide an explicit determination, they provide guidance on what the Court has turned its mind to in considering whether a developer could be held liable in this context. In doing so, the Court set out indicia that developers and the construction industry at large should be aware of to mitigate liability exposure for latent defects.


The Court of Appeal suggested the principles from Winnipeg Condos could arguably extend to developers. Accordingly, developers should employ reasonable checks and balances to prevent real and substantial dangers that are foreseeable when constructing condos. The guideposts provided in connection with the duty and standard of care analyses are a good starting point. If you have any questions or want to discuss this further, please do not hesitate to contact Catriona Otto-Johnston, Partner, at Catriona.Otto@RoseLLP.com.

*By Catriona Otto-Johnston, Partner at Rose LLP, and Carter Czaikowski, Summer Student at Rose LLP