Builder’s Standard Form Blocks Recovery for Personal Injuries

Draft Limitation or Exclusion of Liability Clauses - TermsFeed

There is an interesting case of Capelet v. Brookfield decided by the Ontario Superior Court on 8 December 2017.

This was a claim for personal injuries, both physical and psychological, arising by reason of the presence of moisture and mould in a newly constructed house.

The Court examined the contract and said this:

[30]           The February 1997 agreement of purchase and sale between Mr. Capelet and Brookfield incorporated the warranty provided at that time under the Ontario New Home Warranty, and provided that this warranty constituted the full extent of the purchaser’s right to recover for “damage, loss or injury of any sort.”[17]  Accordingly, it was not within the contemplation of the parties at the time of the entering into of the APS that Mr. Capelet would have a right to claim for emotional or psychiatric losses resulting from defects in construction of the Property.

Rather surprisingly, the lawsuit dragged on for years, but there was one important clause contained in the Agreement of Purchase and Sale which precluded recovery.

A Tarion Warranty was provided by Brookfield and that was to have been the only remedy available to a Buyer.

The parties to that agreement had effectively ruled out the possibility of claim for injuries such as this right from the outset.

Unfortunately, there is no similar provision to this effect in the OTREA Standard Form Agreement of Purchase and Sale between ordinary Sellers and ordinary Buyers. Surely, Brookfield would be in a better position to protect itself in a matter such as this than an ordinary Seller. In fact, it did so, in the Agreement itself.

Nevertheless, Brookfield did still find itself involved in a lawsuit some 20 years and 10 months later.

It would be helpful to have a similar clause added to Schedule A or B or even included in the pre-printed clauses which would be intended to limit the right of recovery for personal injuries.

Brian Madigan LL.B., Broker

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