Imminence of Harm is Not Required for Recovering Pure Economic Loss for Dangerous Defects

by Bennett Jones LLP

Lack of “imminent risk” does not bar recovery for economic loss arising from a dangerously defective structure, the Alberta Court of Appeal recently held. Typically, courts are reluctant to award lost profits or other economic damages in a negligence or other tort case unless those damages are causally consequent on an injury to a person or property. Thus recovery for “pure economic loss”, as these damages are known, is generally limited to certain recognized categories of cases. One such category is the negligent supply of defective products or structures that are dangerous. In Winnipeg Condominium Corporation No 36 v Bird Construction Co, [1995] 1 SCR 85 [Winnipeg Condo], the Supreme Court of Canada indicated that recovery of pure economic loss in cases of this nature requires the presence of a defect that poses a “real and substantial danger” to the occupants of the building. In Vargo v. Hughes, 2013 ABCA 96 [Vargo], the Alberta Court of Appeal considered whether recovery in such cases necessitates that the risk of harm be classified as “imminent” and decided, contrary to its previous indication, that imminence of harm is not required for recovery in cases of dangerous defects.

At trial (2011 ABQB 649), Hawco J. allowed an action in negligence against a builder for pure economic loss suffered by subsequent purchasers of a house as a result of the builder’s negligent construction that had resulted in dangerous defects. On appeal, the Court of Appeal affirmed Hawco J.’s finding of negligence against the builder and his rejection of an imminence requirement proffered by the builder based on an earlier non-binding statement by the Court of Appeal in Blacklaws v Morrow, 2000 ABCA 175 [Blacklaws]. In Blacklaws, the majority of the Court stated in passing that Winnipeg Condo required “physical harm to the plaintiffs or their chattels, or imminent risk of it”. In rejecting an imminence requirement, the Court in Vargo reasoned that the policy justifications given in Winnipeg Condo for allowing subsequent purchasers to recover the cost of repairing dangerous defects would not be served by imposing such a requirement. The policy justifications given in Winnipeg Condo were: 1) to encourage subsequent owners to take preventative steps before physical damage to persons or property results; and 2) to encourage the timely repair of defects before the occurrence of damage, when costs of repair tend to be lower. To the extent that Blacklaws suggested that the risk must always be imminent, the Court in Vargo disagreed, and noted that a similar result was reached by appellate courts in Ontario and Saskatchewan.

Finally, the Court of Appeal reiterated that an employer is generally not vicariously liable for the negligent actions of an independent contractor (based on the Supreme Court of Canada’s decision in 671122 Ontario Ltd v. Sagaz Industries Canada Inc, 2001 SCC 59). The Court of Appeal held that the builder was an independent contractor rather than an employee of the original home owner, and as a result, allowed the original owner’s appeal from the trial judge’s determination of negligence, which had been based on a finding of vicarious liability for the builder’s actions.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Bennett Jones LLP | Attorney Advertising

Written by:

Bennett Jones LLP

Bennett Jones LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.