Carleton Condominium Corporation No. 32 v. Camdev Corporation

Carleton Condominium Corporation No. 32 v. Camdev Corporation Collection Decisions of the Court of Appeal Date 1999-09-22 Docket numbers C32384 Judges Osborne, Coulter Arthur Anthony; Catzman, Marvin Adrian; Charron, Louise Vivianne Subject Civil Decision Content DATE: 19990922 DOCKET: C32384 COURT OF APPEAL FOR ONTARIO OSBORNE A.C.J.O., CATZMAN and CHARRON JJ.A. BETWEEN: ) ) CARLETON CONDOMINIUM ) James Davidson, CORPORATION NO. 32 ) for the appellant ) Appellant ) ) Nancy Brooks and - and - ) Gordon Cameron, ) for the respondents CAMDEV CORPORATION, ADJELEIAN, ) ALLEN, RUBELI LIMITED, and THE ) CORPORATION OF THE CITY OF ) OTTAWA and ROSTO CONSTRUCTION ) LTD. ) ) Heard: September 7, 1999 Respondents ) ) ) BY THE COURT: [1] The appeal turns on whether the exclusionary clause, contained in the Agreements of Purchase and Sale of unfinished condominium units, is sufficiently clear to exclude the common law warranty of construction implied by law in the sale of uncompleted housing property. [2] Forget J., on a motion brought pursuant to Rule 21.01(1)(a) of the Rules of Civil Procedure for the determination of certain questions of law, held that the clause was sufficiently wide to exclude the common law implied warranty. Consequently, he held that the appellant, Carleton Condominium Corporation No. 32 (“C.C.C. No. 32”), did not have the benefit of the common law implied warranty of construction with respect to common elements in its action against the respondent developer and builder, Camdev Corporation, for damages for defects in construction of the common elements. [3] We agree with this conclusion. In light of this finding, it was not necessary for the motions judge to determine the question of duration of any liability under an implied common law warranty and we do not propose to deal with this additional issue. We also find it unnecessary to determine the second question of law raised on the motion as to whether C.C.C. No. 32 could assert the common law implied warranty with respect to all units, including those to which the warranty did not extend because the units were completed when sold, so as to allow for full recovery of damages to the common elements. [4] It is clear there is no implied warranty of fitness for human habitation upon the purchase of housing property that is already completed at the time of sale. The common law doctrine of caveat emptor governs with respect to the sale of real property and the purchaser must generally seek protection either by express warranty or by independent examination of the premises. However, in the case of unfinished premises, the common law implies a warranty of construction since there is no opportunity for inspection of the finished premises at the time of sale. See Fraser-Reid v. Droumtsekas, [1980] 1 S.C.R. 720. [5] The parties to an agreement of purchase and sale of unfinished housing property are nonetheless free to make their own bargain. Hence, they are at liberty to exclude the application of any common law implied warranty by the terms of their contract. And, as stated by this court in Fraser Jewellers (1982) Ltd. v. Dominion Electric Protection Co. (1997), 34 O.R. (3d) 1 at 10, an exclusionary clause should prima facie be enforced according to its true meaning, with relief being granted only if the test in Hunter Engineering Company Inc. v. Syncrude, [1989] 1 S.C.R. 427 is met: Relief should be granted only if the clause, seen in the light of the entire agreement, can be said, on Dickson C.J.C.’s test to be “unconscionable” or, on Wilson J.’s test, to be “unfair or unreasonable”. The difference in practice between these alternatives, as Professor Waddams has observed, “is unlikely to be large”: Waddams, The Law of Contract 3rd. (1993), at p.323 [6] In this case, the agreement of purchase and sale contained the following clause: It is hereby expressly understood and agreed that other than a written one-year guarantee to be issued by the Vendor to the Purchaser, which guarantee shall be personal to the Purchaser and shall be non-assignable to any subsequent Purchaser, there are no warranties or conditions either oral or written save those expressed in this Agreement. [7] In performance of this clause, a written one-year guarantee was delivered to the purchasers on closing. It contained, amongst other provisions, the following clause: This is the only guarantee made or authorized with respect to your home and is in lieu of all other guarantees expressed or implied and of all other obligations and liabilities on part whether with respect to materials or workmanship in the home, damages suffered by the purchaser or others or to his or their effects or otherwise. No guarantee is made beyond the time limited above even though the claimed defect does not become apparent within such period. [8] The appellant argues that the clause contained in the agreement of purchase and sale is not wide enough to exclude the common law implied warranty since it refers only to “oral” or “written” warranties. While it is conceded that the further written warranty delivered on closing is wide enough to exclude “implied” warranties, it is argued that this clause is unenforceable against the purchasers since it was given unilaterally by the vendor without consideration. [9] We see no merit to the appellant’s latter argument. In our view, it is clear under the terms of the Agreement of Purchase and Sale that the parties agreed that the only warranty given by the vendor was the written one-year guarantee to be issued by the vendor. The written guarantee in question was issued in accordance with the terms of the agreement and accepted by the purchasers upon closing the transaction. Indeed, claims were made under this guarantee. Hence the written guarantee forms part of the bargain between the parties and, by its terms, it clearly excludes any implied warranty of construction. [10] Finally, we agree with the motions judge that there is no reason why the exclusionary clause in the written guarantee should not be enforced according to its plain meaning. It is not unconscionable, unfair or unreasonable. [11] We would dismiss the appeal, confirm the motions judge’s answer to the first question of law, and make no comment on the second question. [12] On consent of the parties, the costs of the motion and the appeal (including airfare) are in the cause. (signed) "C. A. Osborne A.C.J.O." (signed) "M. A. Catzman J.A." (signed) "Louise Charron J.A." RELEASED: September 22, 1999