Dangerous+Liaisons+-+New+Developments+in+the+Law+of+Defective+Premises

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Stychin argues that U.K. courts should adopt the approach taken by the SCC towards the liability on the part of builders who have constructed defective premises. Canada and Australia have both recognized liability for economic loss to this effect. However, the SCC has limited such recovery to the cost of repair for dangerous defects, as opposed to Australia which has moved to also allow recovery for defects of quality alone. Stychin uses La Forest J.'s judgment in //Winnipeg// to demonstrate the former approach and its basis in principle and policy.====== 

//**__ The Canadian Approach: Winnipeg Condominium Corporation v. Bird.__**//
 · The SCC has increasingly focused on the category of economic loss at issue, and on whether underlying policy concerns justify a more restricted approach than the general theory of negligence. · In //Winnipeg//, the SCC supported recovery for economic loss caused by a negligently produced good that had proven dangerous and was consequently repaired. The category to which La Forest J assigned the claim was the “negligent supply of shoddy goods or structures” which are dangerous. This a policy distinction between simply shoddy construction and construction that includes dangerous defects. · The test of liability applied was whether there was a “sufficiently close relationship between the parties so that, in the reasonable contemplation of Bird, carelessness… might cause damage to a subsequent purchaser of the building”. · The duty of care in //Winnipeg// was limited by not creating a risk of liability for an indeterminate class (persons for whom the building was constructed), quantum (cost limited to reasonable cost of repair) or time (the life of the building). The burden of proof falls upon the plaintiff to demonstrate the danger.  The trial judge found in Maloney’s favour and awarded the cost of repair and the cost of damages. The appeal was dismissed, and a subsequent appeal was made to the High Court of Australia.  · The court reiterates a duty of care as arising only where a relationship of proximity exists with respect to the type of act or damage. · Did proximity exist? Yes – a contractual relationship does not preclude tortuous liability and could even be considered to strengthen the proximity of the parties. · Policy reasons, such as the presence of reliance and assumption of responsibility, favour the finding of proximity in this case. · Foreseeability: inadequate foundations are a foreseeable basis for economic loss, particularly with regard to diminution of value. · Liability should first be determined through inquiry as to the type of damage suffered (physical damage to the house in this case). · The subsequent question is: was the defendant under a duty of care to prevent that type of damage? --) **No, ** as there was **no “substantial risk of damage ** to person or property”. · The House of Lords is now an exception to an increasingly apparent pattern of recovery for economic loss in the courts of other CML jurisdictions (Australia, New Zealand and Canada in particular). · “Cross fertilization” on the subject… Laskin J’s dissent in //Rivtow// influenced Lord Wilberforce’s rejection of the broad, exclusionary principle in Anns; the Laskin dissent was subsequently rejected by the HoL in D&F Estates, but continues to be accepted in other jurisdictions. · Both approaches claim loyalty to the //Anns// test. The HoL interpretation of the test is conservative, while it receives more liberal treatment by courts elsewhere. · **Liberal interpretation **: no foreclosure of liability in any category of claim. Identification of relevant category of a decided case. “The flexible use of proximity as a control mechanism is an application of the general theory of negligence“ (134). - Proximity is an organizing concept that justifies the finding of liability for defects. - The inevitable danger (or not – Aus, NZ) of physical damage creates a proximate relationship. · **Conservative interpretation **<span style="font-family: Arial,Helvetica,sans-serif;">: damage to the offending article itself is not within the ambit of duty of care, and DoC in negligence only extends to articles to be used before a reasonable chance for inspection. - Proximity serves to constrain the scope of recovery for negligence. <span style="font-family: Arial,Helvetica,sans-serif;"> <span style="font-family: Arial,Helvetica,sans-serif;">· Extending the scope of recovery to negligently produced dangerous premises can occur through examination of analogous cases (where proximity was demonstrated). · **<span style="font-family: Arial,Helvetica,sans-serif;">Impossible distinction **<span style="font-family: Arial,Helvetica,sans-serif;">: in the relationship between the situation where the defect materializes and the case where the owner averts the danger through repairs. BUT: · Policy argument for accident deterrence: “there is a particular need to discourage negligence which is likely to create a situation of sudden accident and consequent damage, rather than the situation of a deteriorating product with an increasingly detectable danger (and ultimately no damage)”. · //<span style="font-family: Arial,Helvetica,sans-serif;">Winnipeg //<span style="font-family: Arial,Helvetica,sans-serif;"> overcomes an unprincipled distinction between danger and damage.
 * __<span style="font-family: Arial,Helvetica,sans-serif;">The Australian Alternative: //<span style="font-family: Arial,Helvetica,sans-serif;">Bryan v. Maloney //<span style="font-family: Arial,Helvetica,sans-serif;"> __**
 * <span style="font-family: Arial,Helvetica,sans-serif;">Facts: **<span style="font-family: Arial,Helvetica,sans-serif;"> Maloney sued the builder, Bryan, for inadequate footings and the consequent damage this caused to her house. Maloney was not the original purchaser of the house.
 * <span style="font-family: Arial,Helvetica,sans-serif;">Issue: **<span style="font-family: Arial,Helvetica,sans-serif;"> Does the builder owe a duty of care to the subsequent purchaser of a house?
 * <span style="font-family: Arial,Helvetica,sans-serif;">Held: Yes – appeal dismissed. **
 * <span style="font-family: Arial,Helvetica,sans-serif;">Reasoning (majority): **
 * <span style="font-family: Arial,Helvetica,sans-serif;">Dissent (Brennan J): **
 * <span style="font-family: Arial,Helvetica,sans-serif;">__The decline of a uniform Common Law__ **
 * //<span style="font-family: Arial,Helvetica,sans-serif;">Interpreting the scope of liability as established in Donoghue v. Stevenson //**
 * <span style="font-family: Arial,Helvetica,sans-serif;">__Policy issues – liberal interpretation__ **
 * <span style="font-family: Arial,Helvetica,sans-serif;">1. Impossible distinctions **

<span style="font-family: Arial,Helvetica,sans-serif;">· Builders, city council, manufacturers are better able to insure against risks. · But, insurance as a basis for determining liability leads to indeterminate outcomes as it unfairly compares insurance costs against the risk of a tort causing damage. · Ascribing loss to the plaintiff and first party insurance undermines policy considerations of deterrence, compensation by negligent actors and the carrying out of safety measures by builders and inspectors. <span style="font-family: Arial,Helvetica,sans-serif;"> __A) Liability in negligence would create a warranty of quality__ · **<span style="font-family: Arial,Helvetica,sans-serif;">Response **<span style="font-family: Arial,Helvetica,sans-serif;">: Courts in Australia, NZ and Canada have recognized concurrent duty of care and contractual duty. La Forest J in //<span style="font-family: Arial,Helvetica,sans-serif;">Winnipeg //<span style="font-family: Arial,Helvetica,sans-serif;"> emphasizes the coexistence of tort and contract duties, provided tort duties arises independently of contract duties. · The tort duty is lesser than a warranty of merchantability and extends to a wider class than the contracting parties.
 * <span style="font-family: Arial,Helvetica,sans-serif;">2. Loss Bearing Capacity **
 * <span style="font-family: Arial,Helvetica,sans-serif;">3. Bridging the Contract-Tort Divide. **

__B) Liability in tort would allow parties to circumvent a contractual allocation of risk.__ · **<span style="font-family: Arial,Helvetica,sans-serif;">Response: **<span style="font-family: Arial,Helvetica,sans-serif;"> This concern can be set aside if recovery is limited to //<span style="font-family: Arial,Helvetica,sans-serif;">dangerous //<span style="font-family: Arial,Helvetica,sans-serif;"> defects only (as in //<span style="font-family: Arial,Helvetica,sans-serif;">Winnipeg //<span style="font-family: Arial,Helvetica,sans-serif;"> and not //<span style="font-family: Arial,Helvetica,sans-serif;">Bryan //<span style="font-family: Arial,Helvetica,sans-serif;">). There is a distinction between a safe but shoddy product, which represents disappointed expectation, and a dangerous one. · The price mechanisms of a contract should not be used for parties to bargain over points of dangerous defect; they represent a limit to the doctrine of //<span style="font-family: Arial,Helvetica,sans-serif;">caveat emptor //<span style="font-family: Arial,Helvetica,sans-serif;">. A contractual bargain that reflects a dangerous defect endangers subsequent purchasers. · Clauses that exclude liability should not, in the case of dangerous defects, release a builder for liability in tort. <span style="font-family: Arial,Helvetica,sans-serif;">· Shoddy, but not dangerous: the defect makes the product less valuable to the owner, or causes internal damage to the product itself. · Dangerous: the defect threatens injury or damage, or actually causes external damage. - **La Forest outlines controls** on the indeterminacy of liability in //<span style="font-family: Arial,Helvetica,sans-serif;">Winnipeg //<span style="font-family: Arial,Helvetica,sans-serif;">: a) the defect must represent a “real and substantial danger to the inhabitants of the building” b) plaintiff has the burden of proof to “demonstrate serious risk to safety, that risk was caused by the contractor’s negligence, and that repairs are required to alleviate the risk” (138). c) “it will become increasingly difficult for owners to prove that deterioration is attributable to the initial negligence” with the passage of time.
 * <span style="font-family: Arial,Helvetica,sans-serif;">4. Maintaining the Distinction between Dangerous and Quality Defects **

· Danger fulfils underlying policy objectives and is a tangible and manageable control mechanism.

<span style="font-family: Arial,Helvetica,sans-serif;">Damages = cost of repairing a defect to the extent that it is no longer dangerous. · These damages to not extend to repairs that improve //<span style="font-family: Arial,Helvetica,sans-serif;">quality //<span style="font-family: Arial,Helvetica,sans-serif;"> and not //<span style="font-family: Arial,Helvetica,sans-serif;">safety //<span style="font-family: Arial,Helvetica,sans-serif;">. · Diminution in value may be an appropriate measure of damages. <span style="font-family: Arial,Helvetica,sans-serif;">· //Winnipeg:// the liability of manufacturers or builders and public authority fall into separate categories. They therefore represent discrete categories of claim. <span style="font-family: Arial,Helvetica,sans-serif;">· //Bryan:// there is no explicit attempt to distinguish between these types of claims. The dissent suggests revisiting the issue. · Stychin: builders' liability serves the goal of deterrence (against construction of dangerous buildings/articles). Liability is imposed on public authorities in order to ensure they are carrying out their own tasks on which buyers rely. However, the latter __does not relieve builders of central liability__, and the strongest reasons for application of liability.
 * <span style="font-family: Arial,Helvetica,sans-serif;">5. Measuring damages **
 * 6. Liability of Builders v. Public Authorities**

<span style="font-family: Arial,Helvetica,sans-serif;">· In order to avoid arbitrary distinction and as a matter of principle, there is not reason to restrain application to moveable property.
 * <span style="font-family: Arial,Helvetica,sans-serif;">7. Buildings v. Chattels **