Vancouver, Galleria II: Court case reveals details of leaky condo complex developed by Molnar

                                        Date:  19980203
Docket: C956420
Registry: Vancouver

IN THE SUPREME COURT OF BRITISH COLUMBIA

BETWEEN:

THE OWNERS, STRATA PLAN NO. VR 1720


PLAINTIFF
AND:

BART DEVELOPMENTS LTD., GALLERIA II DEVELOPMENTS LTD.
PARTNERSHIP, MOLNAR CONSTRUCTION LTD., SPACEWORKS
ARCHITECTS (A PARTNERSHIP), PETER REESE, THADDEUS YOUNG,
GORDON SPRATT & ASSOCIATES LTD., TAMM/TACY AND ASSOCIATES
LTD., SCOTT CALVERT, SPECTRUM INDUSTRIES LTD. (FORMERLY
WESTER WATERPROOFING & MEMBRANES LTD.), CSA BUILDING
SCIENCES LTD., CSA BUILDING SCIENCES WESTERN LTD., RALPH
JECK, MURRAY FRANK AND CHRISTIAN SKENE

DEFENDANTS


REASONS FOR JUDGMENT

OF THE

HONOURABLE MADAM JUSTICE HUMPHRIES

(IN CHAMBERS)


Counsel for the Plaintiff: D.P. Church & I.G. Schildt


Counsel for the Defendants: C.A. Wallace
Spaceworks Architects (A Partnership), M. Leung,
Peter Reese and Thaddeus Young Articled Student


Counsel for the Defendant: D.A. Garner
Gordon Spratt & Associates Ltd. W. Woloshyn,
Articled Student


Counsel for the Defendants: L.B. Gerow
Bart Developments Ltd., Galleria
II Developments Ltd. Partnership,
Molnar Construction Ltd.


Date and Place of Hearing: December 15 & 16, 1997
Vancouver, B.C.

[1] The defendants appearing on this application bring a
motion pursuant to Rule 18A for dismissal of the action as
being out of time. For the purposes of this application, they
accept as proven the allegations contained in the Statement of
Claim, and although the issue is postponement of the
commencement of a period of limitation all parties agree that
the issue is capable of determination under Rule 18A. During
the hearing, I raised with counsel for the plaintiff the
possibility that I might find facts at trial which could differ
from the allegations in the Statement of Claim, but all have
agreed I could hear and determine this application pursuant to
Rule 18A, and could proceed on the basis that the allegations
in the Statement of Claim were true for the purposes of this
application. I have since become aware of cases saying that
questions of postponement should be dealt with at trial, and
not on an interlocutory motion. Of course, an application
pursuant to Rule 18A is a trial, not an interlocutory motion,
even one such as this which is proceeding on assumed facts. As
a trial involves finding facts, and not assuming them, I had
further concerns, but refer to the Court of Appeal decision in
Steyns v. Manitoba Public Insurance Corporation et al., [1995] 7 W.W.R.
507 (B.C.C.A.), which recognizes the ability to proceed on
assumed facts when limitations is the issue, and to Cominco v.
Canadian General Electric (1983), 45 B.C.L.R. 35 (C.A.) which
suggests that it is possible to proceed on consent when the
issue is postponement of limitations. In any event, on the
factual issues addressed before me, I am of the view that the
matter can fairly be decided on this application, at least in
part.

[2] This action involves a condominium project named "Galleria
II" on West 8th Avenue in Vancouver, B.C. which was constructed
in 1985 and 1986, and which developed severe problems with
leakage and siding. The land upon which it was built was owned
by Bart Developments Ltd. (BDL), and development and
construction of the project was undertaken by Galleria II
Developments, (a limited partnership of which BDL was the
general partner), and Molnar Construction Ltd (MCL).
Spaceworks, Reese and Thaddeus were the architects, and were
also involved in inspections during construction; Gordon Spratt
Associates were the consulting engineers involved in the
roofing applications and inspections.

[3] The construction of the complex was finished in 1986 and
strata lots were sold throughout 1986 and 1987. There are 77
owners in the building, four of them commercial, the rest
residential. Their property management entity is Essential
Property Management Ltd. (EPM).

[4] The Writ in this action was filed on November 7, 1995,
nine years after the project was completed. Professional
negligence and breach of warranty is alleged against all of the
defendants. The defendants say the action was commenced
outside the general six year limitation period provided for in
section 3(5) of the Limitation Act, R.S.B.C. 1996, c. 266 and the
plaintiff has not proven that the commencement of the period
should be postponed. The plaintiff says time should not begin
to run before November 6, 1989 at the earliest (a date which
has no significance apart from being six years before the writ
was filed), and it is therefore within time to bring the
action.

FACTS

[5] The strata council minutes and documents reveal the
following:

1. The possession date of the condominium units was October -
December of 1986.

2. In a letter of October 9, 1987 from EPM to BDL, EPM
questioned BDL's decision to remove the warranty on the
roof, pointed out that West Waterproofing refused to cover
the warranty on the roof due to its improper construction,
and referred to problems "arising from the developer's
design or lack of it."

3. On November 18, 1987, serious water damage was noted in
two suites.

4. On January 2, 1988, EPM wrote to BDL about the serious
leakage and requested an immediate response by January 6,
1989 (sic) or the matter would be turned over to their
lawyers.

5. At the Annual General Meeting on March 23, 1988, the
issues of the roof warranty and the slope of the walkway
on the third floor were discussed.

6. At an Extraordinary General Meeting on April 27, 1988,
problems with water in the walkways were discussed and the
owners were encouraged to bring common area concerns to
the strata council and EPM.

7. On November 9, 1988, EPM wrote to BDL about the serious
leakage problem at Galleria II, advising that Peterson's
Waterproofing had been contracted to repair the leaks.

8. On November 23, 1988, EPM wrote to BDL about the serious
water leak problems at Galleria II, advising them that
Peterson's Waterproofing was of the opinion that the water
was leaking into the suites because the stucco was
defective, not because of problems with the flooring or
planter walls, as the BDL repairers had thought.

9. On November 10, 1988, EPM advised the New Home Warranty
Program of the serious leaks that had been experienced
since construction three years before, saying the
developer had tried to fix it four times. They also noted
cracks in the parkade.

10. On November 17, 1988, the New Home Warranty Program
replied that the one-year workmanship and material
warranty had expired on December 2, 1984, and the Major
Structural Defects Warranty continued for five years, and
asking EPM to complete a questionnaire if they felt the
complex had major structural defects, although they said
water seepage would not be considered to be such a defect.

11. At a strata council meeting on December 13, 1988, the
council reiterated concerns about leakage in the parkade,
and discussed having a second estimate done respecting
water leaks generally, with followup to be done with BDL.

12. On December 15, 1988, EPM wrote to BDL thanking them for
their continued efforts to fix the leaks, and confirming
their undertaking to try again.

13. On January 24, 1989, the strata council discussed what
would be done about leaks that were not going to be
handled by BDL because they had been discovered after the
warranty period. The stucco problem was also discussed.

14. On January 25, 1989, the strata owners filled out a Major
Structural Defect questionnaire alleging cracking and
separation in the foundation due to the size of planters
and trees.

15. On February 13, 1989, EPM sent the New Home Warranty
Program copies of its correspondence with BDL regarding
the leaks and the general deficiencies.

16. On March 21, 1989, the strata council instructed EPM to
ask their repairers, M&C Enterprises, to explain the
nature of the repairs and what caused them to be
necessary. Repairs for leakage were discussed.

17. On April 19, 1989 the strata council discussed possible
civil action against BDL, and one member was to research
the legal field for an experienced lawyer. An ongoing
building inspection was mentioned.

18. At an Extraordinary General Meeting on June 6, 1989, a
representative from CSA Building Sciences Ltd. attended.
He was prepared to complete an independent building survey
of Galleria II for $5,400. He was asked if the document
"would stand up in court." The CSA report was to provide
"an in-depth evaluation of the 'as-built' condition of the
components of construction utilized in La Galleria II"
with a view to corrective and preventive building
maintenance.

19. CSA submitted its report in July of 1989. The roof was
found to be seriously inadequate and replacement of it and
the large balcony decks was recommended, at a cost of
$112,750.00. The stucco was deficient and repairs
recommended at a cost of $18,360.00. Many other defects
were noted, and upgrading to the ventilation, roof
drainage system and sprinkler systems was recommended at a
cost of $77,600.

20. At a strata council meeting on August 2, 1989, the strata
council decided to ask a representative of CSA to come to
their next meeting on August 30, and they also scheduled
an Extraordinary General Meeting for September 7, 1989 to
discuss the survey.

21. On August 30, 1989, the CSA representative explained the
difficulties with the roof and suggested it be replaced as
soon as funding could be obtained.

22. On September 14, 1989 the owners resolved to implement the
recommendations in the CSA report and to obtain the
appropriate estimates.

23. On September 29, 1989, the council received a second
opinion from a consulting engineer at the Council of
Forest Industries of British Columbia indicating agreement
with the CSA assessment.

24. On September 25, 1990, lawyers for the strata corporation
wrote a letter to Spaceworks Architects demanding
replacement of the roof and threatening legal proceedings.

25. On November 7, 1995, the plaintiffs filed their Writ,
followed by the Statement of Claim on May 21, 1996. The
Statement of Claim contains particulars of damage as
follows:

a) failure to provide a properly constructed
roof system in accordance with the plans and
specifications;

b) failure to provide a properly constructed
building sufficient to prevent water leakage;

c) failure to provide a properly constructed
building sufficient to allow proper drainage of
water;

d) failure to provide a properly constructed
foundation to the building;

e) failure to provide a properly constructed
building free of structural defects (south wall
insufficiently supported);

f) failure to provide a properly constructed
building with adequate application and
installation of stucco;

g) failure to install: adequate gypsum board,
proper guards and barriers along the south
walkway, balcony handrails, proper sprinkler
lines, properly constructed fountain which
caused leakage, and proper emergency lighting.


[6] Mrs. Marion Robson, who filed an affidavit on behalf of
the plaintiff, deposes that by March 1989, she was aware of
water problems, but her impression was that the strata
corporation had been approaching the leakage incidents as
separate discrete problems and was dealing with BDL on that
basis. Some of the leakage problems were dealt with
individually.

[7] Mrs. Robson was elected to the strata council in March of
1989 and, being of the view that the council needed a fresh
objective appraisal of the building, took steps to hire CSA.
Although one of the members of the strata council was to
investigate the possibility of obtaining a lawyer, she says
legal action was just one of a number of possibilities they
wished to contemplate.

[8] Mrs. Robson says the council was shocked at the CSA
survey. They perceived the main problems to be with the roof
and the stucco and focussed on installation of a new roof,
stucco repair and repainting the building. She says this
perception was confirmed by Mr. Frank, the CSA representative
at the August 30, 1989 council meeting, who said that, apart
from the roof system, the workmanship and materials in Galleria
II was generally above average. Mr. Frank told her personally
that the building was "as solid as the rock of Gibraltar" and
she conveyed this to the other members.

[9] Mrs. Robson says that on September 7, 1989, at the
Extraordinary General Meeting, the membership resolved to
remedy the deficiencies identified in the survey, and their
immediate efforts included maintenance to prevent further
deterioration while the necessary funds were raised.

[10] Mrs. Robson says they first contacted a lawyer in February
or March of 1990. The stucco repair work took place in the
summer of 1990. The roof and deck system were replaced in
1992. Leakage lessened but has not been eliminated.

[11] Mrs. Robson deposes that in April of 1995, the strata
corporation retained James Neill & Associates to investigate
the walkway. Deficiencies and extensive deterioration was
identified, and the replacement of the entire walkway was
recommended. This has been largely completed, at a cost of
$800,000. In May of 1997, a further survey of the entire
building was done, with more defects and deterioration
identified, with costs estimated at $2.1 to $2.7 million,
according to Mrs. Robson's affidavit, although during argument
counsel raised that estimate to between $3 and $4 million.
The Neill report has not yet been produced so I am not aware of
the nature of the defects that would give rise to those costs.
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