Legal Blog

Bird in the Hand

Some people just cannot win. Bird Construction was sued by a Winnipeg condominium corporation for construction work that had been completed well over 20 years ago. It seems that the cladding was falling off the building. The Condominium decided that this presented a safety risk and spent a substantial amount of money to fix the problem.

The Condominium sued Bird Construction. Bird Construction had entered into its original contract with the developer, not the Condominium. It therefore brought a motion to dismiss the action on the grounds that there was no cause of action at law against it.

The motion proceeded up to the Supreme Court of Canada. The Court held, in 1995, that, although there was no contract between Bird Construction and the Condominium, there was a cause of action in negligence. The Court held that a  cause of action existed, even though the damages incurred were strictly economic and did not arise out of personal injury or damage to property. The Court decided that since a dangerous condition had to be rectified, the Condominium should have a right to sue Bird Construction for negligence. Had the deficiencies not resulted in a potential danger, the Condominium would have had no right to sue Bird Construction and would have been limited to looking to the original developer for redress. 

Back to Court

Bird Construction now finds itself defending an action for negligence. What is the first thing it does? It looks to its insurer. Does the insurer voluntarily defend the action? Not a chance.

Bird Construction then commences an application to obtain an order of the court declaring that its insurer must defend it. It loses and appeals to the Manitoba Court of Appeal.

The insurance policy covers Bird for bodily injury and property damage. The Court held that the claim against Bird was not for damages due to personal injury; no one was actually hurt. It held further that the claim was not one for property damage; the cladding did not fall and damage property. The only claim was for economic damages and this claim was not covered under the insurance policy.

Bird lost again. It now has to spend money fighting the claim and, if unsuccessful, will have no insurance coverage available to it.