What is the test for determining whether a latent defect in a building can be found to be a "latent defect" in a construction contract?

Ontario, Canada


The following excerpt is from Capel v. Martin, 2008 CanLII 13612 (ON SC):

I am satisfied that the reasoning in Mautner v. Metcalfe, [2008] O.J. No. 424 coincidentally decided by me, applies to this case. Therein I quoted Laforme J. in Swayze v. Robertson [2001] O.J. No. 968 where he stated: A “latent defect” as it relates to the case at bar is in effect some fault in the structure that is not readily apparent to an ordinary purchaser during a routine inspection. And ordinarily, if a vendor actively conceals a latent defect, the rule of caveat emptor no longer applies and the purchaser is entitled, at their option, to ask for a rescission of the contract or compensation for damages.

This must also be considered in the context of the purchaser hiring an inspector. Again citing Swayze v. Robertson I accepted the following principles: 6. In summary, these are the extracted principles I intend to apply: (a) the vendor is not bound to call attention to patent defects; the rule is “caveat emptor”; (b) where there is active concealment of an otherwise patent defect, the general rule of caveat emptor will not apply; (c) if the vendor actively conceals a latent defect, the rule of caveat emptor no longer applies and the purchaser is entitled, at their option, to ask for a rescission of the contract or compensation for damages; (d) a vendor may be liable to a purchaser with respect to premises which are not new if he knows of a latent defect which renders the premises unfit for habitation. But, as is pointed out in the lecture above referred to, in such a case it is incumbent upon the purchaser to establish that the latent defect was known to the vendor, or that the circumstances were such that it could be said that the vendor was guilty of concealment or a reckless disregard of the truth or falsity of any representations made by him; and (e) where there are no “clues” and no reasonable means of testing for defects that liability for actively concealing defects, whether patent or latent, actively not disclosing latent defects, or fraudulently misrepresenting facts relating to latent defects, remains with the seller, subject to the requirement with respect to active concealment or active non-disclosure that the same constitute a fraud on the purchaser the same as a fraudulent misrepresentation would.

Other Questions


What are the factors used to determine whether a party who has not made full disclosure under a contract signed a contract with another party would have signed the contract even if the disclosure had not been made? (Ontario, Canada)
What is the test for determining whether there has been economic duress in a contract where a party entered into the contract at the time of execution? (Ontario, Canada)
What is the test for determining whether a defect is latent? (Ontario, Canada)
What is the test for interpretation of a commercial contract where the contract states that the contract is not a "contract with respect to the context or factual matrix"? (Ontario, Canada)
Is a determination made by the engineer in charge of a construction contract final? (Ontario, Canada)
What is the test for determining whether a risk is material and whether there has been a breach of the duty of disclosure? (Ontario, Canada)
What is the test for determining the quantum of damages in a construction contract? (Ontario, Canada)
What factors are considered in determining whether a person with severe depression should be found dead? (Ontario, Canada)
How have courts dealt with a breach of a contract of suretyship under seal where a principal has been found to have breached the contract? (Ontario, Canada)
What is the test for determining whether a defendant’s jurisdiction has to be determined by the Court of Appeal? (Ontario, Canada)
X



Alexi white


"The most advanced legal research software ever built."

Trusted by top litigators from across North America.