Hands-off developer liable for tort if condo defects pose real danger: Alberta Court of Appeal

The Alberta Court of Appeal has ruled that a tort action against a developer who was not involved in the physical construction of a condominium building must show that the construction defects pose a real and present danger to the occupants – an issue which cannot be disposed of summarily and may require trial.

In Condominium Corporation No. 0522151 (Somerset Condominium) v. JV Somerset Development Inc, 2022 ABCA 193, JV Somerset Development Inc., along with two others, built the Somerset Condominium building, which was sold to the public around 2004.

In 2012, problems with the building’s balconies arose, which were allegedly caused by rot due to water infiltration. The condominium had to replace all the balconies.

In 2014, Condominium Corporation 0522151 (052) sued JV Somerset for the cost of repairs, framed in tort and breach of fiduciary duty. 052 alleged that JV Somerset was a “developer” under the Condominium Property Act, RSA 2000, c C-22 and thus owed a duty of care to the unit owners and the condominium corporation.

While not specifically denying that it was a “developer,” JV Somerset alleged that it was merely a general contractor and did not have any role in the design or construction of the condominium. It argued that a developer is not liable in tort for deficiencies unless it was actually involved in the physical construction itself.

The chambers judge accepted JV Somerset’s arguments and summarily dismissed the claim. 052 appealed.

The appellate court allowed the appeal.

The potential liability of a developer for construction deficiencies may arise under contractual duties, breach of tort, or statutory duties, said the court.

The appellate court ruled that while the relationship between the parties is primarily contract, an action in tort can still succeed where the failure to take reasonable care in construction led to defects that posed a real and present danger to the occupants.

However, there were several unresolved issues in the case, like if JV Somerset had such a duty of care, what the standard of care should be considering it was not involved in the physical construction of the building, and the measure of damages in replacing the balconies, said the court.

Ultimately, the appellate court found that JV Somerset’s liability for deficiencies that pose a real and substantial risk of harm is unclear. Therefore, it was not possible to dispose of the claim summarily, said the court.