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Pure Economic Loss

Ottawa Carleton Standard Corporation No. 838 v. Redevelopment Group 2019 Ont SCJ (Div Ct)

Condo brought an action against the developer for construction deficiencies and negligent repair of them, including allegations of damages to the exterior of the building from water infiltration and corrosion. The developer commenced a third party action against the condo’s management corporation, alleging that the management corp was charged with keeping the building in a proper state of repair and negligently failed to follow proper maintenance procedures that would have prevented the damages from occurring or would have minimised that damage. The developer did not claim that it had an independent cause of action against the management corp; rather, it claimed that the management corp had a duty of care to the condo such that the condo could have joined the management corp in its action. The management corp moved to strike the third party action against it. The court rejected its arguments. The court held that the damages that the management corp may have caused would not have allowed the developer to claim contributory negligence against the condo; no one pleaded that the management corp was the condo’s agent and, even if it were, the management corp never advised the condo of the water problems.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.