Palmer Bird
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Bird: A Confusion between Property Rules and Liability Rules
[2]
[1],
John P. Palmer
"It just doesn't matter." Bill Murray in the movie, Meatballs
In Bird [Winnipeg Condominium Corporation No. 36 v. Bird Construction Co. Ltd.]
[3]
, the members of the Supreme Court of Canada made three points quite clear. First, they do not understand the distinction between property rules and liability rules.
Second, they do not understand how incentive effects operate in the economy. Third, they do not understand what is meant by economic efficiency. Their decision represents an attempt to take a moral high ground, to stake out a policy position, without recognizing that their attempt will almost certainly have large short-run redistribution effects, will in all likelihood be very costly for potential litigants in the future, and is for the most part unnecessary.
Background
Bird is a case in what has come to be known as "economic loss". The respondent, Bird
Construction Co. Ltd., contracted in 1972 to build a high-rise apartment building which was subsequently (in 1978) sold to the appellant, Winnipeg Condominium Corporation No. 36.
Four years after the sale, in 1982, the appellant noticed potential problems with the mortar and masonry work on the exterior cladding of the building and hired an engineering firm, along with the original architects, to inspect the building and advise them. The appellant was assured the mortar cracks were not serious and could be fixed for a comparatively small http://economics.uwo.ca/faculty/jpalmer/ (1 of 13)24/05/2007 9:56:22 AM
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amount of money. The appellant made the repairs.
Seven years later, in 1989, a large piece of the cladding approximately three meters high by thirteen meters wide fell to the ground from the ninth floor of the building. Fortunately, no one was injured and no third-party property damage resulted. Unfortunately, upon further inspection, it became clear that the only safe and feasible repair
Bird: A Confusion between Property Rules and Liability Rules
[2]
[1],
John P. Palmer
"It just doesn't matter." Bill Murray in the movie, Meatballs
In Bird [Winnipeg Condominium Corporation No. 36 v. Bird Construction Co. Ltd.]
[3]
, the members of the Supreme Court of Canada made three points quite clear. First, they do not understand the distinction between property rules and liability rules.
Second, they do not understand how incentive effects operate in the economy. Third, they do not understand what is meant by economic efficiency. Their decision represents an attempt to take a moral high ground, to stake out a policy position, without recognizing that their attempt will almost certainly have large short-run redistribution effects, will in all likelihood be very costly for potential litigants in the future, and is for the most part unnecessary.
Background
Bird is a case in what has come to be known as "economic loss". The respondent, Bird
Construction Co. Ltd., contracted in 1972 to build a high-rise apartment building which was subsequently (in 1978) sold to the appellant, Winnipeg Condominium Corporation No. 36.
Four years after the sale, in 1982, the appellant noticed potential problems with the mortar and masonry work on the exterior cladding of the building and hired an engineering firm, along with the original architects, to inspect the building and advise them. The appellant was assured the mortar cracks were not serious and could be fixed for a comparatively small http://economics.uwo.ca/faculty/jpalmer/ (1 of 13)24/05/2007 9:56:22 AM
Index Frame
amount of money. The appellant made the repairs.
Seven years later, in 1989, a large piece of the cladding approximately three meters high by thirteen meters wide fell to the ground from the ninth floor of the building. Fortunately, no one was injured and no third-party property damage resulted. Unfortunately, upon further inspection, it became clear that the only safe and feasible repair