Can a Property Owner Sue For Stress Arising From Defective Work By a Contractor?

In Situations Where a Contractor Performs Defective Work Within a Construction or Renovation Project, the Contractor May Become Liable For Both the Cost to Correct the Work As Well As For Disappointment and the Loss of Enjoyment That Was Expected By the Property Owner.

Understanding Various Issues Within the Law of Defective Workmanship Including Loss of Expected Emotional Benefits

Model house with major crack in exterior wall covered with bandaid. When a property owner and a contractor are negotiating the terms of a deal, both the property owner and the contractor are usually, albeit silently, contemplating that the property owner is expecting to receive proper workmanship as well as the pleasures of proper workmanship including increased pride of property ownership.

General Damages, stress injury

A point of interest involving defective workmanship litigation involves the possibility of claims for general damages, meaning compensation for emotional concerns.  Specifically, when defects occur, the property owner, if the property owner is a human person rather than a corporate entity, endures some level of annoyance, inconvenience, distress, and upset, as well as the loss of the anticipated benefits of emotional pleasures such as increased enjoyment, increased pride ow ownership, and more.  However, age-old principles of law from the past have held that claims for general damages (pains and sufferings) are improper in breach of contract cases.  Accordingly, many old school legal practitioners, and even some current textbooks, suggest that only the actual losses incurred in correcting defective workmanship may be claimed.  Essentially, the old law states that if a contractor creates a defect that a property owner must spend $1,000 to correct, then the property owner may seek only the actual loss of the $1,000 from the contractor.

Today, the tide is changing.  As per the case of Fidler v. Sun Life Assurance Company of Canada[2006] 2 S.C.R. 3, the Supreme Court of Canada has said that when the parties to a contract had "reasonable contemplation" at the time a contract was formed that the purpose of the contract included some peace of mind benefits and that mental distress might occur if the contract was breached, then an award for general damages may be proper.  Specifically, in Fidler, the Supreme Court said:

Fidler v. Sun Life Assurance Co.  of Canada, [2006] 2 S.C.R.  3

[44]   We conclude that damages for mental distress for breach of contract may, in appropriate cases, be awarded as an application of the principle in Hadley v. Baxendale:  see Vorvis.  The court should ask “what did the contract promise?” and provide compensation for those promises.  The aim of compensatory damages is to restore the wronged party to the position he or she would have been in had the contract not been broken.  As the Privy Council stated in Wertheim v. Chicoutimi Pulp Co., [1911] A.C.  301, at p.  307: “the party complaining should, so far as it can be done by money, be placed in the same position as he would have been in if the contract had been performed”.  The measure of these damages is, of course, subject to remoteness principles.  There is no reason why this should not include damages for mental distress, where such damages were in the reasonable contemplation of the parties at the time the contract was made.  This conclusion follows from the basic principle of compensatory contractual damages:  that the parties are to be restored to the position they contracted for, whether tangible or intangible.  The law’s task is simply to provide the benefits contracted for, whatever their nature, if they were in the reasonable contemplation of the parties.

[45]   It does not follow, however, that all mental distress associated with a breach of contract is compensable.  In normal commercial contracts, the likelihood of a breach of contract causing mental distress is not ordinarily within the reasonable contemplation of the parties.  It is not unusual that a breach of contract will leave the wronged party feeling frustrated or angry.  The law does not award damages for such incidental frustration.  The matter is otherwise, however, when the parties enter into a contract, an object of which is to secure a particular psychological benefit.  In such a case, damages arising from such mental distress should in principle be recoverable where they are established on the evidence and shown to have been within the reasonable contemplation of the parties at the time the contract was made.  The basic principles of contract damages do not cease to operate merely because what is promised is an intangible, like mental security.

Since the Fidler decision (a case involving disability insurance benefits), the principle of expanding awards to include mental distress as general damages in breach of contract cases continues to evolve and, in some situations, now includes breach of contract by defective workmanship where the defects resulted in a loss of enjoyment that was "reasonably contemplated" when the project contract was established between the property owner and contractor.  The cases of Wesley v. Geneau, 2020 ONSC 868White v. Bracebridge (Town), et al, 2020 ONSC 3060Van Duren v. Chandler Marine Inc.2010 NSSC 139, Fakih v. Palmer Homes Inc.2013 CanLII 76930, Denis v. Bertrand & Frère Construction Company, 2008 CanLII 14537, and Somerville v. Ashcroft Development Inc., 2005 CanLII 27894, among others, addressed the awarding of general damages for mental harm arising from defects to property whereas such cases stated:

[203]  I find the Wesleys’ use of their home (they moved there permanently in 2016) was limited during repairs and they incurred needless distress, inconvenience, and frustration associated with this loss and with the required repairs.

[204]  At trial, Mr. Wesley testified that the cost of repairs was paid from their retirement funds, altering their income, and affecting their ability to enjoy their retirement as planned.  The repair work, which proceeded between September 2015 (temporary shoring), and July 2017, meant a lot of noise, and heavy machinery on their property which affected their use and enjoyment.  Mr. Wesley could not use his boat.  As Mrs. Wesley testified, they lost 2 years.  Their family did not come up to visit as it was not enjoyable with all the construction outside and there was a time when scaffolding inside limited their access to parts of the interior of their home.

[205]  Mr. and Mrs. Wesley both testified as to the distress, inconvenience and frustration and loss of use of their home.  Their uncontroverted evidence was that for an extended period of time their home and property was a construction site.  I accept the credible evidence of both Mr. and Mrs. Wesley regarding their claims for general damages.  Their testimony was not overstated.  If anything, it was the opposite.  In the circumstances of this case, I award general damages to Mr. and Mrs. Wesley jointly in the amount of $5000.

[232]  For the following reasons, I find Mr. White is entitled to an award for general damages in the amount of $5000, for which the Town and Mr. Grand are jointly and severally liable.

[233]  The Town takes the position that Mr. White should not be awarded any amount for general damages for mental injury as there was insufficient evidence put forward to support a serious and prolonged mental disturbance that rises above ordinary stress and injury.  Mr. White admitted that his stress and embarrassment once this litigation was over.  The Town submits his evidence related to embarrassment more than anything else.

[234]  The Town agrees that Mr. White need not adduce medical evidence in order to be awarded general damages for mental injury.  However, Mr. White has not established that he sustained a serious and prolonged mental disturbance above ordinary emotional upset or distress to trigger an award for general damages.

[235]  I disagree for the following reasons.

[236]  There is more to Mr. White’s claim for general damages than mere embarrassment.  If it was only that, his claim would fail.

[237]  However, I find the evidence establishes and supports his claim.

[238]  The fact is that Mr. White has suffered inconvenience, distress, and a loss of enjoyment of his home for a prolonged period of time.  He has been living in a partially finished house since 2014.  He explained at trial that he finds it difficult to feel relaxed at home.  He is embarrassed to have guests over given the continued presence of unfinished drywall and low temperatures.

[239]  Mr. White testified that he is living in a house that is still very cold and has lots of drafts on both sides of the house.  He explained that there is mold on both sides of the house, and his spouse has to use apple cider vinegar to clean the floors on a daily basis.  Mice and snakes are getting into the house through the garage wall.

[240]  Mr. White further testified that he feels that he has failed to provide his wife with a safe home. When he first learned of the unsafe lintel, he said it was difficult to leave the house and wondered if it would still be standing when he returned.  He feared for his and his wife’s safety until the lintel was repaired.  He has now learned – and Mr. Smith agreed at trial – that the over-spanned floor joists above the recreation room could cause that floor to collapse, which in turn could cause injury or even death.  Six years after purchase, Mr. White is still burdened by the knowledge that his family is facing severe, potentially life-threatening risks every day they live at home.

[241]  Mr. White testified he expected to purchase an all but new home whose construction had been overseen and inspected by the municipality.  He did not want to buy a “fixer upper”.  He was not a builder and was not looking for a building project.  Nevertheless, he has spent countless hours conducting urgent repairs.

[242]  I find Mr. White to be a credible witness regarding his claim for general damages.  He did not overstate his claim and even to the date of trial continued to be disturbed by the safety issue regarding the structural integrity of his home.  I accept his testimony and find that it has established that he has sustained a serious and prolonged mental disturbance above ordinary emotional upset and stress.  Mr. White is awarded the sum of $5000 for general damages, for which Mr. Grand and the Town are jointly and severally liable.

[106]  Van Duren seeks general damages for the “aggravation, frustration and anguish resulting from the unseaworthiness of their dream boat, as well as by the Defendant’s negligent design and construction of the vessel.”  In assessing this head of damages I have listened carefully to Dr. Van Duren’s evidence to assess the personal impact on he and his family.

[107]  Dr. Van Duren testified that the ongoing, unrelenting failings caused he and his wife much mental distress.  He stated that this was to be a dream boat for them yet they never had “a good secure feeling.”  He stated they now have no confidence in this vessel and that they can not afford another boat.  He testified that they are seeking damages for the dreams they had for retirement.

[108]  In Fidler v Sun Life Assurance of Canada 2006 SCC 30 (CanLII), 2006 CarswellBC 1596 the court discussed damages for mental distress in breach of contract cases:

44  We conclude that damages for mental distress for breach of contract may, in appropriate cases, be awarded as an application of the principle in Hadley v. Baxendale: The court should ask “what did the contract promise?” and provide compensation for those promises.  The aim of compensatory damages is to restore the wronged party to the position he or she would have been in had the contract not been broken.  As the Privy Council stated in Wertheim v. Chicoutimi Pulp Co., [1911] A.C. 301, at p. 307: “the party complaining should, so far as it can be done by money, be placed in the same position as he would have been in if the contract had been performed.”  The measure of these damages is, of course, subject to remoteness principles.  There is no reason why this should not include damages for mental distress, where such damages were in the reasonable contemplation of the parties at the time the contract was made.  This conclusion follows from the basic principle of compensatory contractual damages: that the parties are to be restored to the position they contracted for, whether tangible or intangible.  The law’s task is simply to provide the benefits contracted for, whatever their nature, if they were in the reasonable contemplation of the parties.

47  This does not obviate the requirement that a plaintiff prove his or her loss.  The court must be satisfied: (1) that an object of the contract was to secure a psychological benefit that brings mental distress upon breach within the reasonable contemplation of the parties; and (2) that the degree of mental suffering caused by the breach was of a degree sufficient to warrant compensation.  These questions require sensitivity to the particular facts of each case.

[109]  In Stoddard v. Atwill Enterprises Ltd., 1991 CarswellNS 315 Saunders J. (as he then was) stated at paragraph 13:

[113]  I am satisfied that Mr. and Mrs. Stoddard have suffered mental distress by virtue of the defendant’s negligence and breach of contract.  This anxiety was first occasioned by continuous leakage from the time they moved in and was aggravated when their experts disclosed how dangerous their house was.

[114]  These damages are compensable.  I need not repeat my analysis in the case of Gourlay v. Osmond (1991), 1991 CanLII 4335 (NS SC), 104 N.S.R. (2d) 155, 283 A.P.R. 155 (T.D.)  Damages in this case for mental distress lie both in negligence and breach of contract.  While the Stoddards’ stress could not be compared to the acute depression suffered by Mrs. Eileen Gourlay (which necessitated medication and professional therapy) it was real and continuous nonetheless.  I award the plaintiffs $3,000 nonpecuniary damages for mental suffering.

[110]  In Force Construction Ltd. v. Campbell 2008 CarswellNS 249 this court canvassed the evolution of the law in this area:

124  I believe it is fair comment that these type of general damages are the exception in building contract cases.  It is only in the most egregious cases that such awards are ordered.  In Gourlay v. Osmond (1991), 1991 CanLII 4335 (NS SC), 104 N.S.R. (2d) 155 (N.S.T.D.) Saunders, J. (as he then was) stated at page 163:

[28]  The law has changed and continues to evolve.  At common law damages for breach of contract were traditionally limited to those related to compensation.  The absolute rule was set out in Addis v. Gramophone Co. Ltd., [1909] A.C. 488 (H.L.), and Peso Silver Mines Ltd. (N.P.L.) v. Cropper, 1966 CanLII 75 (SCC), [1966] S.C.R. 673, 58 D.L.R. (2d) I, to the effect that damages for mental distress were not available in breach of contract cases because contractual damages must be tangible, estimable and compensatory.

[29] New ground was broken in Jarvis v. Swans Tours Ltd., [1973] Q.B. 233, [1973] 1 All E.R. 71, when Lord Denning awarded compensatory damages for “the disappointment, the distress, the upset and frustration” occasioned by a ruined holiday.  He dismissed the argument that because such damages were difficult to quantify they ought be declined.  He recalled the principle that difficulty of assessment is no deterrent to a legitimate claim.  Lord Denning found that such damages were proper in breach of contract cases provided they conformed to the standard test for remoteness and foresee-ability.  As long as it could be said that the parties should reasonably have foreseen mental distress as a consequence of their breach at the time the contract was entered into, damages for such mental suffering will be awarded.

[111]  The Van Durens suffered a great deal of anxiety and distress as a direct result of Chandler’s breach of their contract and as a result of their negligence.  While the vessel is not a “write off” they experienced nothing but failure and disappointment from the day they sailed away from Nova Scotia.  The problems in total may not make the boat unsalvageable but it has kept them out of the water since 2006.  I award general damages of $15,000.

I have found that the plaintiffs are entitled to recover against the defendant general damages for inconvenience, loss of enjoyment, and stress during construction and for many months following taking possession. No doubt, there are other cases of more egregious conduct by a builder. But the plaintiffs are clearly entitled. I assess the general damages at $5,000.

[25]  The hardship and inconvenience suffered by these homeowners differs from one individual and one property to the next.  However, the parties are appropriately in agreement that a formuliac approach to this issue would be preferable so that it can be applied to all category 1 homeowners.

[26]  There is no medical evidence before the Court.  Nevertheless, I have no hesitation in accepting that these foundation problems have been an ongoing source of worry and stress to the plaintiffs.  The knowledge that the foundations of one’s house are crumbling and that the property is virtually unsaleable, are matters that are beyond disconcerting.  This situation has understandably been the source of marital stress and other family pressures to some of the plaintiffs.  Some of the plaintiffs have made minimal use of their basements because they are damp, mildewy and unpleasant.  Others, such as the Youngs and Mrs. McLaughlin’s late husband have used the basement and simply put up with dampness and odours.  The plaintiffs have refrained from improving their property in some cases because the major construction associated with the foundation replacement has been sensibly considered to be a project that has to be taken care of first.  In short, these homeowners have been partially deprived of the enjoyment of their homes and of the peace of mind that most homeowners derive from the occupation of what is likely their principal asset.

[27]  Mr. Rasmussen submits that I should follow the decision of Roy J. in the Alie action in which he awarded to each household the sum of $1,000.00 per year of ownership.  He submits that the Court might fairly award the sum of $1,200.00 per year from the date the class action was commenced (May 1999) to date.  In addition, he acknowledged pre-judgment interest is applicable (9 years at 5% annually).  The total suggested is approximately $15,660.00.

[28]  Counsel drew several other relevant cases to the Court’s attention.  In Somerville v. Ashcroft Development Inc. (2005), 35 R.P.R. (4th) 102 Maranger J. awarded the sum of $15,000.00 to husband and wife plaintiffs “for the stress, emotional upset and difficulties they had to endure as a result of the poor construction of … [their] home.”  This was a case in which the female plaintiff suffered severe respiratory problems during her four year occupation of a defective home.  The Court described its award as being at the “higher end” of this type of award.  In Wood v. Hungerford (Township), [2004] O.J. No. 4472, I awarded $12,000.00 to a plaintiff who suffered mental distress, resulting in a clinical depression, from living in a house with rapidly crumbling foundations.  However, in both the Somerville and Wood cases, there was medical evidence before the Court and much more significant loss of enjoyment of the property than in the present action.

[29]  In Karampatos v. Torabipour, 2004 CarswellOnt 8191, a decision of the Ontario Small Claims Court, a vendor breached the terms of an agreement of purchase and sale, leaving the house in such a bad condition that the purchasers could not move in until three weeks after closing, thereby suffering considerable inconvenience. The Court awarded the plaintiffs $3,000.00 for their inconvenience.

[30]  I agree with the approach taken by Roy J. in the Alie action which recognizes the amount of time these homeowners have had the stress and inconvenience of putting up with unpleasant conditions in their basements and the partial loss of enjoyment of their properties.  I also wish to recognize under this heading of general damages the additional stress and inconvenience which the homeowners are about to experience when they move out for the two month period of repair work.  While somewhat arbitrary, I would award each household the sum of $1,500.00 per year over the 9 years from the date of the commencement of this class action to this date and I will award the additional sum of $3,000.00 to each household for the stress and inconvenience of soon having to vacate their homes during the foundation replacement and associated work.  Accordingly, each of the plaintiffs will be awarded general damages in the sum of $16,500.00.

[80]  In this case, the plaintiffs are entitled to some compensation under this head of damage. In my view, the plaintiffs are entitled to the higher end of this type of award of damages. In the circumstances of this case, I award  $15,000 in general damages for the stress, emotional upset and difficulties they had to endure as a result of the poor construction of this home.


Page 1 - Defect Issues, introduction Page 2 - Cause of Action, contract law or tort law Page 3 - Mitigation Requirement, reduce losses Page 4 - Mitigation, future risk of harm defect Page 5 - Who to Sue, privity of contract and vicarious liability Page 6 - Mandate to Produce, expectations overule specifications Page 7 - General Damages, aggravation and disappoinment

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