Croft v. Prendergast [1949] Ontario Court of Appeal
Key Issue
The main question before the Court was whether there is an implied warranty of quality or fitness for habitation when a builder-vendor sells a completed new house.
Ruling and Significance
The Ontario Court of Appeal held that no implied warranty exists in such circumstances. The decision reaffirmed the common law principle of caveatemptor (buyer beware), meaning that, unless an express warranty or contract term provides otherwise, the purchaser bears the risk of construction defects.
Even if the builder was negligent or aware of defects, the buyer had no remedy under implied warranty law.
This decision reflected the strict traditional common law approach to property sales and limited liability for builder-vendors.
Subsequent Legal Developments
The rule in Croft v. Prendergast was later criticized and softened by subsequent cases and legislation.
In particular, the Supreme Court of Canada in Fraser-Reid v. Droumtsekas (1979) recognized an implied warranty of fitness for habitation in the sale of a new, unoccupied home built and sold by a builder-vendor with special construction knowledge.
Modern statutes and case law now provide greater protection to homebuyers, effectively superseding the strict rule established in Croft v. Prendergast.
Naturally, Consumer Protection legislation and Tarion warranties are currently in effect for new home purchasers.
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com