Vancouver, Earles Station, 4590 Earles St.: Condo owners battle strata corporation; arbitration bogged down; court provides direction

Date: 19991231




Registry: Vancouver














Counsel for the Petitioner:

Patrick A. Williams

Counsel for the Respondents:

Brian W.F. McLoughlin, Q.C.

Place and Date of Hearing:

Vancouver, British Columbia

November 4, 1999



[1] Lee Jensen has been the owner of a strata title property at 4590 Earles Street, Vancouver since 1994. The building is a former B.C. Hydro substation which was converted into a twelve unit, three floor condominium in about 1990.

[2] By May, 1997, Lee Jensen and his wife Debra Jensen were expressing numerous concerns about the way things were done in the building. These concerns led to formal complaints, and to requests for access to the Strata Corporation's files. The level of concern escalated to the point that, on May 11, 1998, Debra Jensen wrote to the Strata Council indicating that she and her husband were seriously considering legal action. The Strata Council replied on June 3, 1998 with a letter that reviewed a number of matters and concluded:

Should you not agree with any of the foregoing, we suggest you pursue any of the following remedies available to you. These are (1) gaining the support of the majority of strata lot owners; (2) arbitration; and (3) court. Outside of these remedies the strata will not take any further action on these issues.

[3] Mr. Jensen replied on June 4, 1998 advising that he would pursue arbitration pursuant to s. 44 of the Condominium Act, R.S.B.C. 1996, c. 64. He proposed Sharon Kelly as sole arbitrator and the Strata Council agreed. Sharon Kelly accepted the appointment.

[4] Since June, 1998, when the arbitration process began, there have been three and one-half days of hearing during which seven witnesses have been called and hundreds of documents have been entered in relation to 23 issues set out by the respondents. The arbitration is far from complete.

[5] Under the Judicial Review Procedure Act, R.S.B.C. 1996, c. 240, the petitioners seek an order that the arbitration be dismissed due to the delay in bringing it to a conclusion. In the alternative, the petitioners seek an order giving directions to the arbitrator with the purpose of bringing the matter to a conclusion. Notice of the Petition was provided to the arbitrator.


[6] The issues I must determine are:

1. Do I have jurisdiction to make either of the orders sought?
2. To what extent have the respondents been responsible for the delay in proceeding with the arbitration?
3. Has the delay in proceeding with the arbitration been such that there has been non-compliance with s. 45(1) of the Condominium Act?
4. If so, should the arbitration be dismissed or should directions be given to expedite the arbitration?


[7] I note at the outset that I have disregarded paragraphs 16, 24, 28, 34, 56, 62 and 89 of the affidavit of Lance Nose which, as counsel for the respondents pointed out, are based on information and belief and inadmissible in these proceedings due to Rule 51(10) (a).

[8] Although the disputes between the Jensens and the Strata Council have become wide ranging and comprehensive, some of the core issues relate to the Jensens' disagreement with the allocation of certain roof deck space to individual tenants, with the manner in which the building is maintained and operated, and with the Strata Corporation's manner of dealing with deficiencies in the original construction of the building. This latter point particularly is related to their concern that the Strata Council is dominated by persons who were part of, or are friends of, the original developer of the building and that costs the developer should have covered have been off-loaded to the strata lot owners.

[9] One of the arbitrator's first acts was to request a statement of facts and issues from each party. The original deadline for the Jensens was July 21, 1998. They received an extension of that deadline and produced their statement of facts and issues on about August 14, 1998. The comprehensiveness of the issues which they raised is evident in a review of their statement, which is reproduced here in its entirety in Appendix "A" to these Reasons.

[10] The Strata Corporation retained Patrick Williams of Clark, Wilson on August 18, 1998 to represent it in the arbitration. The respondents objected to this on the basis that Mr. Williams was in conflict of interest. They alleged that Debra Jensen had left a message on Mr. Williams's voice mail prior to his retainer by the Strata Corporation, and that Ms. Jensen's voice mail message had not only conveyed her interest in retaining Mr. Williams but also had related confidential information. The arbitrator took time to consider this objection and in an interim award dated September 30, 1998 found that Mr. Williams was not in conflict.

[11] The Strata Corporation's statement of facts and issues for the arbitration was submitted on October 5, 1998. After a conference call and as required by the arbitrator the Strata Corporation provided a table of contents of the Strata Corporation's documents.

[12] On November 25, 1998 the arbitrator wrote to the parties pointing out that changing spokespersons caused delays. This was in response to a communication from Lee Jensen that the respondents had chosen to appoint legal counsel because he could no longer represent himself and he was concerned that Debra Jensen could not be the spokesperson. (A lawyer, Rose Bender, who had represented the Jensens to a limited extent, had ceased to be involved.) The arbitrator advised that Debra Jensen could be the spokesperson if the Jensens decided they would not appoint legal counsel, and asked for dates for a further conference call. In her letter Ms. Kelly commented:

This arbitration commenced in June 1998, and usually by now a hearing has been held and an award rendered. I have a mandate to hold the arbitration in a timely manner.

[13] The petitioners began to express increasing concern about the delay, and this was conveyed to the arbitrator.

[14] In early January 1999 the petitioners were advised that Sandra Benson would be acting as the Jensens' lawyer. However, Ms. Benson did not represent the respondents on the next conference call on January 11, 1999. This conference call involved Mr. Williams, Debra Jensen and the arbitrator and was over 90 minutes in length. The arbitrator set a number of deadlines and requirements for the proceedings, including that the Jensens were to provide their list of documents by January 26, 1999 and that other information would be exchanged and dates for the hearing set.

[15] One particular issue that arose was the request by Lee and Debra Jensen to have access to all Strata Corporation files for review. They had had one hour with the files in February, 1998 but no access since then. (The respondents had been told they could have access to the files for two hours on July 16, 1998, a date on which it happened they were to be on vacation. For various reasons a new date was not arranged.) The request was taken under consideration by the petitioner's counsel, Mr. Williams.  On January 15, 1999, he wrote a letter to the arbitrator with a copy to Debra Jensen stating that the position of the Strata Corporation was that the Jensens could not be given the opportunity to review all documents in the possession of the Strata Corporation. He gave several reasons for this position:

1. The complainant has the onus of proof yet had not produced documents.
2. It would be unfair and a violation of natural justice to order the Strata Corporation to allow the Jensens complete discretion to review every document in its possession.
3. The document production should be conducted in a manner similar to court type proceedings, and if Debra Jensen is aware of a specific document that should be in the Strata Corporation's files because it is relevant to the arbitration and has not been disclosed, then she should identify that document.

[16] Mr. Williams expressed a concern that there could be enormous prejudice to the Strata Corporation if the Jensens were allowed to review every document. He provided two examples of Ms. Jensen following up with persons and organizations who happened to be named in or involved in the proceedings and bringing what he characterized to be personal attacks. One example was the architect who had designed the redevelopment. This point was summarized in the following:

... What is material is the very real concern the Strata Corporation has that the past conduct of Debra Jensen is consistent with an attempt to negatively influence all those who come in contact with the Strata Corporation. It is for that reason that it is submitted the document exchange must be a more formal one, more akin to Court proceedings and the Rules of Court of British Columbia and that only documents that are relevant to the arbitration or available to the Jensens under the Condominium Act should be produced.

[17] The arbitrator made a number of specific rulings regarding document requests that came forward as matters progressed. It appears that the Strata Corporation complied with all the arbitrator's rulings regarding production of documents relevant to the proceedings. Some 395 documents have been produced from both sides.

[18] It also appears that, with the exception of minutes of Strata Council meetings prior to the date when the Jensens moved into the building, the Jensens did receive all documents they were entitled to under s. 122 of the Condominium Act (although they object to the fact that they received only draft minutes of the 1999 annual general meeting). However, minutes of the period pre-1994 and the draft minutes for the 1999 annual general meeting were not provided until September 1999.

[19] The arbitrator continued to try to move the matter along but by April 1999, the hearing had not yet begun. In a letter of March 31, 1999 Ms. Kelly confirmed hearing dates of April 23rd and 24th, and required that all documents be exchanged between the parties no later than April 8, 1999.

[20] On April 5, 1999, Lee Jensen confirmed that he had assumed conduct of the matter.

[21] The Strata Corporation provided the balance of the documents it had been required to produce by April 6, 1999. Debra Jensen delivered some documents to the office of counsel for the Strata Corporation on April 7, 1999 and indicated more would be delivered as soon as they could do so. On April 14, 1999, Debra Jensen noted that the Jensens would be requesting more documents from the Strata Corporation and that they would be providing additional lists of their own documents. The arbitrator required that each party provide a list of witnesses that it intended to call and might call. The president of the Strata Council and another member worked past midnight on the evening of April 22, 1999 in order to respond to a requirement for production of documents in the arbitrator's April 21, 1999 letter flowing from further requests from the Jensens.

[22] The hearing was to begin on April 23, 1999. After two hours and fifteen minutes, during which only the procedural matter of numbering documents had been dealt with, there was a break. During the break, Debra Jensen told Mr. Williams that Lee Jensen had become ill and was unable to continue. Later, during the lunch break, Debra Jensen called the arbitrator and asked for an adjournment for the balance of that day and the next. The arbitrator granted the adjournment with no input from the Strata Corporation.

[23] On April 26, 1999 Debra Jensen provided further documents which were accepted by the arbitrator. The arbitration continued on May 3, 1999, over Ms. Jensen's objections, from 1:00 p.m. to 9:00 p.m. Further documents were numbered and three witnesses called. On May 25, 1999 four witnesses were called and further new documents produced.

[24] Lance Nose, the chair of the Strata Council, deposes that:

Throughout the hearing dates of May 3, 1999 and May 25, 1999 Sharon Kelly admonished Debra Jensen for asking irrelevant and improper questions of the witnesses, duplicating evidence and not complying with requests of Sharon Kelly. It became apparent to me that Debra Jensen was incapable of conducting the arbitration. She would cry when admonished, ask questions even after being told not to ask the questions and spoke out of turn despite being repeatedly told by Sharon Kelly not to do so.

[25] Mr. Nose states that he formed the opinion "that the arbitration would never stop, that Debra Jensen would continue to call witnesses who would provide irrelevant testimony, that costs would continue to escalate, correspondence and documents would continue to be delivered and produced, all in a planned objective to stall the proceeding."

[26] On the other hand, Ms. Jensen deposes that "Had I been permitted to see the Strata Corporation documents we requested in 1997, 1998 or even in early 1999, I would have been able to select the documents relevant to the issues and save a substantial amount of time, as well as narrowing the issues between the parties. The continuing and deliberate efforts of the Strata Council to prevent my examination has been the real cause of delay in this matter."

[27] There were some 64 names on Ms. Jensen's list of proposed witnesses. Her explanation is that she listed a number of witnesses also on the Strata Corporation's list because she was not sure they would be called and because she had been unable to obtain the documents that would prove the matters in question.

[28] As of June 1, 1999 the Strata Corporation had been billed $62,424.64 by its counsel.

[29] At the June 1, 1999 hearing, counsel for the Strata Corporation applied to the arbitrator for an order that the arbitration be adjourned until Debra Jensen was represented by legal counsel or other competent representation. Ms. Kelly made that order. She sent a letter on June 2, 1999 to the parties as follows:

Re: Arbitration
This letter serves to address some outstanding procedural matters respecting the arbitration hearing yesterday. To clarify my direction, I do not wish to receive any new exhibits. All exhibits were to be exchanged prior to the commencement of the arbitration. While some exceptions have been provided for, in particular the request by the Jensen's for additional documents, this exception was not intended to provide a flood gate for additional documents. It is noted that there are currently hundreds of documents to address during the course of this arbitration.
I wish to clarify in writing my direction at the hearing regarding any correspondence that is sent to my office. Correspondence is limited to addressing any procedural matters relating to this arbitration. For efficiency, I would prefer that procedural matters are addressed at the hearing instead of by letter.
I direct that the Jensen's advise my office as soon as possible in respect to obtaining representation for the purposes of the hearing so that a further hearing date can be set.
In reference to the respondent's interim submission I wish to clarify that my letter of May 27th did not summarize the issues before me, only the relief sought. I direct that the Jensen's ensure that they provide clarity respecting the relief sought on the date that the arbitration continues.
In reference to Debra Jensen's letter that was faxed to my office today, I am not aware of any "arbitration act". There is a Commercial Arbitration Act, however that Act does not apply to condominium arbitrations. In respect to Debra Jensen's question regarding B.C.A.M.I., I am not aware of who governs the practices of associations. As to who governs myself, if this question relates to any challenge in respect to my arbitrating this dispute, I refer Debra Jensen to my letter dated April 21st that outlines a procedure.
I wish both parties to be aware that I will be on holidays effective tomorrow and will not return until June 9th.

[30] Since that date, neither party has moved to re-set the arbitration for hearing.

[31] On July 13, 1999, Mr. Williams received a phone message indicating that Brian McLoughlin, Q.C., had had an interview with Debra Jensen, that he might act for her and would contact Mr. Williams in due course.

[32] On July 15, 1999, these proceedings were commenced.

[33] Mr. McLoughlin did agree to act for the Jensens on a "limited pro bono" basis, and appeared for them at the hearing of this petition.

[34] In her affidavit sworn in response to this petition on September 14, 1999, Debra Jensen set out a list of the conduct of the Strata Council which she alleges to have been oppressive or prejudicial. The list has 26 items, and includes most of the matters in the respondents' original Statement of Facts and Issues.



Vancouver, Harbourside Park: Cost to repair dangerous leaky condo towers estimated at $12.5 million; Judge refers matters to trial

                                                Date:  19991224
Docket: C967345
Registry: Vancouver












Docket: C974151
Registry: Vancouver




Counsel for:

Noel Developments Ltd. Mr. J. Logan
and SPF Properties Inc.: Mr. B. Jordon

Metro-Can Construction and Mr. B. Cramer
Metro-Can Construction (HS) Ltd.: Mr. F. Lamer

Baker McGarva Hart Inc.: Ms. L. Gerow, Q.C.

Allan Window Systems Inc.: Mr. G. Jones

The Owners, Strata Plan No. LMS2064: Ms. R. Basham, Q.C.
Ms. L. Olsen

Intertek Testing Services NA Ltd.: Ms. W. Baker
Ms. L. Fong

Yoneda & Associates Consultants Ltd.: Mr. R. McFee

Guarantee Co. of North America: Ms. K. Pierce

Place and Dates of Hearing: Vancouver,B.C.
December 13 - 17, 1999

[1] This is an application for a summary trial pursuant to
Rule 18A of the Rules of Court on certain issues of law.

[2] There are two Notices of Motion to be dealt with, one in
Action No. C967345, and the other in Action No. C974151. Both
motions are brought by Metro-Can Construction Ltd. and its
subsidiary, Metro-Can Construction (HS) Ltd. I will call the
parent company "Metro-Can" or "the parent" and I will call the
subsidiary company "Metro-Can (HS)" or the "subsidiary".

[3] The two present actions and several other actions involve
the construction of two residential towers on the waterfront of
Vancouver. The residential towers contain a total of 382
condominiums. The development is called Harbourside Park. All
the actions are set to be tried together, commencing in May,

[4] The project was undertaken by Noel Developments Ltd. and
SPF Properties Inc. I will call these two companies "Noel".

[5] Noel entered into a construction contract with Metro-Can
(HS) as head contractor.

[6] During the latter stages of the construction, Noel
notified Metro-Can (HS) to cease work and Noel took over the

[7] Metro-Can (HS) then sued Noel for breach of contract.
That action is No. C946747. The present Notices of Motion are
not in that action, but it is set to be heard at trial at the
same time as the other two actions.

[8] Noel then sued Metro-Can and Metro-Can (HS) in Action No.
C967345. The first Notice of Motion is in that action.

[9] The Owners, Strata Plan No. LMS2064 (the condominium
owners, who I will call the "Owners") have taken a separate
action against Noel and against Metro-Can and Metro-Can (HS).
That action is No. C974151. The second Notice of Motion is in
that action.

[10] The Owners' action is for damages to repair deficiencies
in the two towers. The main allegation is that the window-
walls in the towers leak water. In that action, Noel has taken
third party proceedings against Metro-Can and Metro-Can (HS)
alleging that the claimed deficiencies were their fault.

[11] In these three actions, numerous other parties have been
joined, including various contractors and sub-contractors,
architects, engineers and sureties. As well, there are many
other related actions by parties claiming that they have not
yet been paid for their services and/or materials.

[12] In both Notices of Motion, Metro-Can (the parent company)
asks that the proceedings against it be dismissed.
Specifically, Metro-Can asks that Noel's Action No. C967345 be
dismissed as against Metro-Can and that the Owners' claim and
Noel's third party proceedings in Action No. C974151 be
dismissed as against Metro-Can.

[13] The first ground of each motion is the same: that insofar
as the claims of Noel and the Owners against Metro-Can are
based upon the construction contract between Noel and Metro-Can
(HS), there can be no claim by Noel or the Owners against
Metro-Can because Metro-Can is not a party to that contract.

[14] The principal position of Noel and the Owners is that
Metro-Can (HS) is no more than the "alter-ego" of Metro-Can Ä
that the real contracting party is the parent company Metro-

[15] The Notice of Motion in the Noel action, No. C967345, also
asks for a declaration that Noel was contractually bound to
accord Metro-Can (HS) 90 days after substantial performance to
correct deficiencies and complete outstanding work. However,
by agreement of the parties, this point was adjourned to be
addressed at the trial.

[16] The Notice of Motion in the Owners' action, No. C974151,
Metro-Can (HS) also raises the following points for decision:

That the Owners' action against Metro-Can and Metro-
Can (HS) be dismissed on the ground that the Owners
cannot recover general damages for the future cost of
repairing defects in the design or construction of
the Harbourside Park project;

A declaration that Noel has no right of indemnity or
contribution as against Metro-Can (HS) other than as
provided in paragraph 19.1 of the construction

A declaration that Noel's third party proceedings
claiming indemnity against Metro-Can (HS) are subject
to a plea of contributory fault pursuant to s.1 of
the Negligence Act, R.S.B.C. 1996, c.333, and that,
if contributory fault is found, the liability of
Metro-Can (HS) to Noel is limited to the degree to
which Metro-Can (HS) is found to be at fault;

In respect of Metro-Can (HS)'s plea of contributory
fault by Noel, a declaration that any fault found
against the independent contractors retained by Noel
in regard to the loss or damage for which Noel claims
for indemnity against Metro-Can (HS), is attributable
to Noel.

[17] The construction contract is, on its face, between Noel
and Metro-Can (HS). The principal of Noel, Mr. John Laxton,
expressly did not wish to contract with the parent Metro-Can
because Metro-Can had a certain union affiliation which Mr.
Laxton wished to avoid. The use of the subsidiary was also
convenient to the principal of Metro-Can, Mr. Don Voth, as he
wished to protect the parent company from liability. It was
his practice to have separate subsidiary companies incorporated
for separate projects, such as the Harbourside Park project.

[18] Noel now wishes to pierce the corporate veil of Metro-Can
(HS) to make Metro-Can a contracting party. The reason is
patent: Noel considers that it is the parent company that has
financial substance, not the subsidiary.

[19] Noel relies upon evidence that demonstrates that in
practically every conceivable way, the subsidiary was run by
the parent. The vehicle for this was a management contract
between the parent and the subsidiary. The contract reads:

Whereas MC is the parent company, and MCHS is a subsidiary
of MC, it is agreed that MC will perform management
services to MCHS at such time as MCHS prepares for, enters
into, performs, and completes building contracts for third
party clients.

MC agrees to perform the following management services for
MCHS as follows:
1. Securement of the Contract, including all estimating
and related services.
2. Contract Management of the project from start to
3. Lending of the necessary start up capital.

In consideration of MC performing the above mentioned
services for MCHS, MCHS agrees to:
1. Pay management fees to MC upon completion and/or upon
the receipt of all contract monies collected for a
sum to be mutually agreed upon by both corporations.
2. Purchase, lease, or rent all the necessary "small
tools and small equipment".

[20] The evidence indicates that all the personnel of the
subsidiary were officers or employees of the parent, including
Mr. Don Voth as principal of the parent. The parent owned
100% of the shares of the subsidiary. The parent provided the
initial financing required by the subsidiary for the project.

[21] Metro-Can frankly admits that all this evidence is true.
It contends, however, that Noel was well aware that it was
contracting with the subsidiary and that this should end the
matter. Metro-Can argues that Noel cannot now take the
position that the contract was really with the parent, without
some evidence of Noel being misled as to the company with which
it was contracting. There was no evidence that this had

[22] Noel argues, however, that case law supports the
proposition that no such misconduct is needed. Alternatively,
Noel contends that it can make a case that Metro-Can was guilty
of misconduct in several respects in the carrying out of the
contract. For example, Noel submits that there is evidence
that Metro-Can was part of a conspiracy to extort extra
remuneration under the construction contract and that it
deliberately caused breaches or potential breaches of the
contract in order to gain certain advantages. These issues,
says Noel, require detailed exploration of the evidence which
can only be fairly done at trial. Accordingly, Noel submits
that the alter-ego issue cannot be fairly resolved on a Rule
18A motion.

[23] While Metro-Can denies the alleged misconduct, it argues
that, in any event, the allegations relate to the carrying out
of the contract and cannot make Metro-Can a party to the
contract. At most, Metro-Can submits, such conduct might give
rise to a separate cause of action (fraud, for example), but
does not suffice to make Metro-Can a party to the contract.

[24] Noel cites corporate veil cases involving taxation and
expropriation. Noel contends that these cases do not include
fraud or something like fraud in the considerations that are
taken into account in lifting the corporate veil. These cases
include: Smith, Stone & Knight Ltd. v. Birmingham Corp. (1939),
4 All E.R. 116 (K.B.); Palmolive Manufacturing Co. (Ontario)
Ltd. v. Canada, [1933] S.C.R. 131 (S.C.C.); City of Halifax v.
Halifax Harbour Commissioner, [1935] S.C.R. 215 (S.C.C.); Re
The City of Toronto and the Famous Players' Canadian Corp.,
[1935] O.R. 314 (Ont.C.A.), aff'd [1936] S.C.R. 141 (S.C.C.);
Aluminum Company of Canada Ltd. v. City of Toronto, [1944]
S.C.R. 267 (S.C.C.); De Salaberry Realties Ltd. v. Minister of
National Revenue (1974), 46 D.L.R. (3d) 100 (Fed.Ct.T.D.),
aff'd (1976), 70 D.L.R. (3d) 706 (Fed.C.A.); Buanderie Centrale
de Montreal Inc. v. Montreal (City), [1994] 3 S.C.R. 29

[25] While there may be some instances where a form of
misconduct akin to fraud has not been an essential element to
lifting the corporate veil, no case has been cited which would
justify lifting the veil in the circumstances of the present

[26] In my opinion, the law applicable to the present case was
settled in B.G. Preeco 1 (Pacific Coast) Limited v. Bon Street
Holdings Ltd. (1989), 37 B.C.L.R. (2d) 258 (C.A.). An attempt
was made to make the principals of a company liable on a
contract the company had entered into. The Court of Appeal
refused to lift the corporate veil to make the principals of
the company liable on the contract. Based upon a finding that
the principals had engaged in fraudulent conduct, the Court of
Appeal held the principals liable in fraud. The Court
considered "fraud or improper conduct" as a basis for lifting
the corporate veil, but confined it to situations where "a
corporation is used to effect a purpose or commit an act which
the shareholder could not effect or commit", (supra, p.268).
The fraud that the principals had committed was to permit the
plaintiff to believe that the company had financial substance,
whereas it did not. On those facts, the Court of Appeal
refused to lift the corporate veil. Seaton J.A., for the
Court, said at pp.266-267:
I do not subscribe to the "Deep Rock doctrine" that
permits the corporate veil to be lifted whenever to do
otherwise is not fair: see Pepper v. Litton, 308 U.S. 295,
84 L.Ed.281 (1939). That doctrine and the doctrine laid
down in Salomon v. Salomon & Co., [1897] A.C. 22 (H.L.),
cannot co-exist. If it were possible to ignore the
principles of corporate entity when a judge thought it
unfair not to do so, Salomon's case would have afforded a
good example for the application of that approach.

Further, at pp.267-268:

Cases in which courts have ignored the corporate entity
fall under a number of headings only one of which could
warrant consideration here.
. . .

The cases in which the corporate veil is pierced on the
ground of "fraud or improper conduct" deal with instances
where a corporation is used to effect a purpose or commit
an act which the shareholder could not effect or commit.

And, at p.269:

In this case the plaintiff knew it was dealing with a
company. The fraud found by the trial judge caused the
plaintiff to believe that the company had assets that it,
in fact, did not have. That has nothing to do with the
corporate veil. The use of a company as a means of
avoiding bearing business losses is neither unusual nor a
basis for lifting the veil.

In my view, the proper remedy is not to lift the corporate
veil, but to award damages for fraud against the
individuals and the company that committed the fraud. That
is what the trial judge did.

[27] On the assumption that Noel's allegations of wrongdoing by
Metro-Can can be proven, Noel is still faced with the obstacle
of the Preeco decision. It appears to me that, at best, Noel
might be able to allege a claim against Metro-Can for a
separate cause of action, such as fraud, but it cannot make out
a claim for breach of contract.

[28] In arguing the alter-ego issue, Noel places reliance upon
the management agreement between Metro-Can and Metro-Can (HS).
I see no difference in substance between it and an agreement,
express or implied, between the principal of a "one man"
company and the company itself pursuant to which the man runs
the company. He may be the company's sole shareholder, sole
officer, sole employee, its sole source of financing and
indeed, the very reason for that company having anything to
offer anyone doing business with the company, but when someone
knowingly enters into a contract with that company, the
corporate protection afforded to the principal against personal
liability must apply. The policy of limited liability is the
very essence of the legislation that provides for the
incorporation of limited liability companies. In Salomon v.
Salomon & Co., [1897] A.C. 22 (H.L.), Lord Halsbury said, at
My Lords, the truth is that the learned judges have never
allowed in their own minds the proposition that the
company has a real existence. They have been struck by
what they have considered the inexpediency of permitting
one man to be in influence and authority the whole
company; and, assuming that such a thing could not have
been intended by the Legislature, they have sought various
grounds upon which they might insert into the Act some
prohibition of such a result. Whether such a result be
right or wrong, politic or impolitic, I say, with the
utmost deference to the learned judges, that we have
nothing to do with that question if this company has been
duly constituted by law; and, whatever may be the motives
of those who constitute it, I must decline to insert into
that Act of Parliament limitations which are not to be
found there.

Lord Herschell said, at pp.42-43:

It is to be observed that both Courts treated the company
as a legal entity distinct from Salomon and the then
members who composed it, and therefore as a validly
constituted corporation. This is, indeed, necessarily
involved in the judgment which declared that the company
was entitled to certain rights as against Salomon. Under
these circumstances, I am at a loss to understand what is
meant by saying that A. Salomon & Co., Limited, is but an
"alias" for A. Salomon. It is not another name for the
same person; the company is ex hypothesi a distinct legal
persona. As little am I able to adopt the view that the
company was the agent of Salomon to carry on his business
for him. In a popular sense, a company may in every case
be said to carry on business for and on behalf of its
shareholders; but this certainly does not in point of law
constitute the relation of principal and agent between
them or render the shareholders liable to indemnify the
company against the debts which it incurs.

[29] The Preeco case applies the Salomon doctrine and, in my
opinion, for reasons which I have stated, Preeco closes the
door to the parent being made a party to the subsidiary's
contract on the facts of this case.

[30] As another approach, Noel argues that Metro-Can and Metro-
Can (HS) were involved in a joint venture and, as such, Metro-
Can is equally liable with Metro-Can (HS) for any contracts
entered into by Metro-Can (HS). In my opinion, this argument
cannot be made out on the facts.

[31] In Canlan Investment Corp. v. Gettling (1997), Can. Rep.
B.C. 1380 (B.C.C.A.), Goldie J.A. for the Court, at paragraph
31 of his judgment, adopted as "a reasonable and compendious
statement of the characteristics of a joint venture", the
following excerpt from Williston on Contracts, 3rd ed., (N.Y.,
1959) at p.563:
Besides the requirement that a joint venture must have a
contractual basis, the courts have laid down certain
additional requisites deemed essential for the existence
of a joint venture. Although its existence depends on the
facts and circumstances of each particular case, and while
no definite rules have been promulgated which will apply
generally to all situations, the decisions are in
substantial agreement that the following factors must be

(a) A contribution by the parties of money, property,
effort, knowledge, skill or other asset to a common
(b) A joint property interest in the subject matter of
the venture;
(c) A right of mutual control or management of the
(d) Expectation of profit, or the presence of
"adventure", as it is sometimes called;
(e) A right to participate in the profits;
(f) Most usually, limitation of the objective to a single
undertaking or ad hoc enterprise. (emphasis added)

[32] In the present case, the facts simply do not warrant the
finding of a contract, express or implied, between Metro-Can
and Metro-Can (HS) of the nature described above. Certainly
the management contract does not supply the requisite factors.
There is no "joint interest" in the construction contract.
"Mutual control" is not provided for, and Metro-Can (HS) cannot
be said to have a right to "participate in the profits"
because, according to the evidence, they are to be paid to
Metro-Can as remuneration for its management services. In no
sense can I term this a joint venture.

[33] Noel argues that there was a partnership between Metro-Can
and Metro-Can (HS). If there was a partnership, Noel contends
that this would give rise to joint liability of Metro-Can and
Metro-Can (HS) on the construction contract pursuant to ss.7(1)
and 11 of the Partnership Act, R.S.B.C. 1996, c.348, as
7(1) A partner is an agent of the firm and the other
partners for the purpose of the business of the

11 A partner in a firm is liable jointly with the other
partners for all debts and obligations of the firm
incurred while he or she is a partner, and after his
or her death his or her estate is also severally
liable in a due course of administration for those
debts and obligations, so far as they remain
unsatisfied, but subject to the prior payment of his
or her separate debts.

[34] I cannot accede to Noel's submission because, in my view,
the evidence does not warrant a finding of a partnership
between Metro-Can and Metro-Can (HS).

[35] A partnership is defined in s.2 of the Partnership Act, as
2 Partnership is the relation which subsists between
persons carrying on business in common with a view of

[36] As noted earlier in respect of the "joint venture"
argument, the only profit from the construction contract was to
be paid to Metro-Can as remuneration under the management
contract. In my opinion, two related companies cannot be a
partnership when all of the profit is to be received by one of

[37] The words "carrying on business in common with a view of
profit" in s.2 of the Partnership Act connote a sharing of the
profit. This is evident from s.4(c) which reads in relevant
4 In determining whether a partnership does or does not
exist, regard must be had to the following rules:
. . .
(c) the receipt by a person of a share of the
profits of a business is proof in the absence of
evidence to the contrary that he or she is a
partner in the business ...

[38] I will now deal with the Owners' position. They adopt the
submissions made by Noel. In addition, they submit that their
situation is different from that of Noel. They point out that
they were not party to Mr. Laxton's desire to deal with a
subsidiary. In my opinion, this difference in the facts does
not assist the Owners. There is no evidence to suggest that
the parent company, Metro-Can, did anything which would cause
the Owners to believe that the contractor was other than Metro-
Can (HS), nor is there any evidence of such belief held by the

[39] Next is the question of remedies. I will deal first with
Noel's claims against Metro-Can for damages for breach of the
construction contract. This claim must be and is dismissed.
This ruling is based upon my finding that Metro-Can was not a
party to the construction contract. This decision applies to
Noel's action against Metro-Can in proceeding No. C967345 and
its third party claims against Metro-Can in No. C974151.

[40] I will leave it to Noel to apply for whatever amendments
it deems advisable to crystallize any claims it may see fit to
pursue against Metro-Can for claims apart from breach of
contract. Of course, it is open to Metro-Can to oppose any
amendments Noel may propose.

[41] Turning next to the Owners' claims against Metro-Can,
Action No. C974151, any claim based upon Metro-Can being a
party to the construction contract is dismissed. However, I
decline to dismiss the whole of the Owners' claims against
Metro-Can for reasons I deal with under the next heading below.


[42] The Owners' most significant allegation is that the
window-walls of the residential towers leak. The Owners point
to evidence that the water which leaks into the towers causes
toxic molds to form and that these molds pose a danger to the
occupants. The Owners contend that the window-wall systems
must be repaired or replaced and they claim that the cost could
run as high as $12.5 million. The Owners also claim that there
are other defects which need to be repaired at a cost of
approximately $1.3 million.

[43] The Owners contend that the dangerous state of their
premises was caused by the fault of various parties, including
the architects, the engineers, the developers, the contractors,
the sub-contractors and the suppliers. In short, anyone who
played a responsible part in the construction of the
residential towers. The Owners' claims against Metro-Can and
Metro-Can (HS) are solely for economic damages.

Vancouver, Laurel Bridge: Leaky condo owners lose suit against realtor and developer


Fee v. Currie et al.



1999 BCPC 0004

File No:













SANDRA FEE (a.k.a. Sandra Lago) and GARRY FEE























Counsel for the Claimants:

Appeared in Person

Counsel for Defendants Currie & Bell-Olsen Realty Ltd.:

C. Spratt

Representative of Defendant Laurel Bridge:

Jim Wyse

Place of Hearing:

Vancouver, B.C.

Dates of Hearing:

March 4, May 27 & October 21, 1999

Date of Judgment:

December 17, 1999



The judgment is amended to reflect the correct name of Bell-Olsen Realty Ltd and to show the Claimants appeared in person and C. Spratt appeared as counsel for the Defendants Currie and Bell-Olsen Realty Ltd., and J. Wyse appeared as representative of the Defendant Laurel Bridge.


By way of background, Strata Plan LMS 1909 is a strata corporation formed in September 1995. Its sole asset is a strata building, known as Laurel Point, at 908 West 7th Avenue in Vancouver. The developer of Laurel Point was the Defendant, Laurel Bridge Projects Ltd. Scott Canada constructed the Strata building for Laurel Bridge. Laurel Bridge retained the Defendants Marilyn Currie and Bell-Olsen Realty to sell the units in the strata building.

In June 1996, the Claimants, Sandra Fee and Gary Fee, attended at an open house at the building, and made certain enquiries of Ms.Currie. They made an offer to purchase a unit on June 16, 1996 and took possession of it on July 13, 1996. Within a year, the building began to show had significant water damage problems.

The Claimants' pleadings do not particularize a specific cause of action. The defendants have conducted the defence on the footing of a claim in damages for negligent misrepresentation.

The Claimants seek an award of damages against the Defendants, Marilyn Currie and Bell Olsen Realty Ltd., and against the developer, Laurel Bridge Projects Ltd. for their alleged failure to disclose water penetration into the strata building before they purchased a unit in it. It is not disputed that the strata building was eventually found to have membrane problems resulting in it becoming a "leaky condo". The Claimants paid special assessments exceeding $10,000 to repair the building membrane. They seek recovery of these payments, in the amount of $10,000, consistent with the upper limit of recovery in this Court.

The Claimants say that these water problems were known or ought to have been known to the Defendants at the time of their purchase. Accordingly, their discussions with Ms. Currie in June 1996, the extent of her knowledge of what was occurring in the building, and what was disclosed to the Claimants is a central point of the dispute between the parties.


Evidence of the Claimants

Mr. and Mrs. Fee both testified at trial.

Mr. Fee is an experienced buyer and seller of real estate. Previous to his involvement in Laurel Point, he owned a condominium unit in Surrey purchased in 1984, two detached houses in the 1980s, and another condominium in purchased in 1993. In each purchase he used the services of a realtor. In each sale of real property, he used a salesperson. He was familiar with strata councils and was aware that strata minutes existed.

In March 1996, Mr. Fee and his wife, Sandra, were looking to buy a strata unit in the Vancouver area. They intended this unit to be owned by Mrs. Fee, who was then known as Sandra Lago. They attended at a viewing of a display suite at Laurel Point, a recently constructed building, in early June 1996. Of the 26 units, only 3 remained unsold at that time. They liked the building and made three or four visits to view unit 302 in which they were interested. On at least two of the visits, they were dealing with Ms. Currie.

The Claimants testified that Ms. Currie told them that she was a very experienced realtor. She said she had dealt with the construction company, Scott Canada, on other developments. She described Scott Canada as a top-notch builder and that the quality of construction of the building was excellent.

The Fees testified that they asked Ms. Currie about the potential for leaks. According to them, she advised them that the building would never leak as it had a "space age acrylic finish."

The Fees looked at the exterior but did not look specifically for signs of water leaks. Both testified that there was nothing visible such as water stains, algae growth, or any cracking of the stucco to indicate a problem with leakage in the building.

Mr. and Mrs. Fee each agreed in cross-examination that Ms. Currie did not represent herself as having any special skill or training with respect to engineering matters or building envelopes.

The Fees agree that Ms. Currie gave them a document called Working with a Real Estate Agent in which it was recommended that for special or expert advice, the buyer should seek professionals such as home inspectors, contractors, engineers or surveyors.

The Fees did not speak to any owner or the chairperson of the Strata Corporation before agreeing to purchase their unit. They did not have the building inspected. The only subject clause in the offer is with respect to financing which was a concern as they were seeking high mortgage financing. Mr. Fee agreed that it was possible that this subject was extended.

The Fees made an offer on June 16, 1996, the vendor accepted it on June 17, the sale was completed on July 12 and the Fees moved in on July 13, 1996.

Mr. Fee said initially that he got a copy of the Strata Council minutes after the offer was made. Later in cross-examination he said that he believed that the minutes were provided before the offer was made. He admitted that he did not recall exactly when he asked for the minutes but he is certain that he saw them before the offer was accepted.

Mrs. Fee believed that the Strata Council minutes were provided to them before their offer dated June 16, 1996 was made.

Mrs. Fee examined the minutes of the Strata Council and asked Ms. Currie about complaints of condensation by some owners noted in the minutes, as well as about a letter from one owner complaining about water seepage in her unit.

Mr. Fee testified they told Ms. Currie that they did not want a condo that leaked. He recalls having a specific conversation with Ms. Curry about the reference to a water leak in the minutes.

Mrs. Fee said that Ms. Currie explained that the condensation was likely due to too much fireplace usage and that the water seepage was due to a plumbing leak that had been fixed. Ms. Currie wrote a note along side the leak reference in the minutes, indicating that the water leakage in unit 208, owned by Elizabeth Gubin, was related to a bathroom pipe and that it had been corrected.

Mrs. Fee did not recall if, after they took possession of their unit in July 1996, there were any further references to leakage problems in any of the Strata Council minutes for that year.

Mrs. Fee was elected to the Strata Council in January 1997 and became Chair of the Council later in 1997. After becoming Chair, Mrs. Fee discovered a letter in the Council file from the owner of unit 208, Mrs. Gubin, dated April 24, 1996, in which Mrs. Gubin had first complained about water leakage. This letter had been sent to Mr. Wyse of Laurel Bridge Projects and to the Strata Council. Ms. Currie was not sent a copy of this letter.

Mrs. Fee agreed that Council began to document a concern about leakage problems in Spring 1997 and sought help thereafter from engineering and building envelope specialists.

In early 1998 the owners of the Strata Building filed a writ in the Supreme Court against New Home Warranty, and in June 1998 they filed a writ against the City of Vancouver, and the Strata Building architects and engineers, claiming damages for the costs of remedying the cause of the leaks and for the loss of value of the property.

In July 1998, the Fees purchased a second unit, #204, because the vendor agreed to pay the large special assessment which made the purchase affordable for them.


Elizabeth Gubin

Ms. Elizabeth Gubin, owner of unit #208, testified that she first experienced wet spots in her living room in March 1996. She telephoned Ms. Currie on April 5, 1996 to complain about the water in her unit. Ms. Currie referred the matter to Jeff Ryan of Scott Canada for follow-up. Ms. Gubin complained again to Ms. Currie on April 10, 1996 after which she had no further direct dealings with Ms. Currie. Ms. Currie never entered the Gubin unit to look at the problem. Ms. Gubin saw Ms. Currie speak with a worker on Ms. Gubin's patio in around mid-April but Ms. Gubin was not privy to that conversation.

Ms. Gubin agreed that workers did attend at her unit to investigate the leak problem in May and June 1996. She agreed that one of the leaks was caused by a failed bath connection, due to a missing clamp along a seam. This problem was fixed. The second source of the leak was also fixed. The walls in her unit were fully repaired in June 1996.

Ms. Gubin received and reviewed the June 12, 1996 Strata minutes which noted that the water leakage in her unit had been "resolved". In her own mind, she did not think the problem had been totally resolved. She thought that there was no evidence of water in June because it was not raining. She thought the problem would surface again when the rainy season restarted. Ms. Gubin did not attend the June Strata Council meeting to raise this concern. As she expected, the water problems arose again with the return of rainy weather in September 1996.


Jim Wyse

Mr. Jim Wyse testified on behalf of Laurel Bridge Projects Ltd. He was a part owner, along with John Scott of Scott Canada, the construction contractor. Laurel Bridge hired the architects and relied on them to design a building that met the building standards at that time. They did not intend to build a leaky condo. There were three series of inspections, and all inspectors stated that the building met the standards in place. Mr. Wyse's own children purchased units in the building and were elected to the Strata Council.

Mr. Wyse first retained Ms. Currie in 1994 to sell units in another building and called on her again for the Laurel Bridge project. Mr. Wyse testified that he recalled the complaint by Ms. Gubin in the Spring of 1996. Mr. Jeff Ryan of Scott Canada attended to the complaint.

Various investigations were carried out to determine the cause of the leak problem. As a result of those investigation in May and June 1996, it was thought that the problem was unique to the Gubin unit. At that time, Mr. Ryan did not indicate there was a systemic leak problem or that the building had an envelope problem.

In the Spring and Summer of 1996, there were no complaints about leaks other than the one from Ms. Gubin. Laurel Bridge believed this to be an isolated incident. After investigating the Gubin complaints, and performing the repairs, their deficiency contractor sprayed the repaired area with a waterhose to simulate a rainstorm. No leaks were noted and the problem was thought to be resolved.

Mr. Wyse stated that Scott Canada would have handled the Gubin complaints as a deficiency, and it was not his usual practice to discuss deficiencies with Ms. Currie.

Up until late 1996, Laurel Bridge thought the problem was isolated and particular to the Gubin unit. When, in 1997, other complaints surfaced, it became apparent that the problem was systemic. Laurel Bridge retained Gordon Spratt & Associates, building envelope specialists, who reported on the cause of the problem in the summer of 1997. Laurel Bridge spent about $40,000 in investigating and repairing the leaks.


Pierre Gallant

Mr. Gallant testified as an expert on building envelopes on behalf of the claimants. His company, Morrison Hirshfeld, investigated the leaks for the Strata Council in 1997 and provided a report that recommended the total removal of the building cladding and the installation of a rain screen system.

Mr. Gallant was of the opinion the leaks he saw in 1997 are caused by a systemic problem in the construction of the building in that a face seal stucco wall cladding was used. However, he agreed that when the building was being constructed in 1994-95, this type of construction would have been approved by the City of Vancouver. Such cladding would not be acceptable today.

In cross- examination, Mr. Gallant agreed that he gave an opinion on the Gubin unit based on its condition in the fall of 1997. He did not give an opinion on its state before that time. He also agreed that a leak could be a one-time event. His testimony was that the leaks he saw in 1997 in the Gubin unit likely stem from the end of construction and are linked to building design and construction issues.


John Hilderly

Mr. Hilderly had been a resident of the Strata building since July 1995. He is the son-in-law of Ms. Currie. He testified that, as an owner, he was not concerned about a leakage problem with the building in the Spring of 1996. The problem with the Gubin unit was reported as resolved in June 1996. It was not until March or April 1997 that the owners became concerned and agreed to form a three-person committee to review the leak issue.


Marilyn Currie

Ms. Currie has been a licensed realtor for 29 years. In 1996, 75% of her sales were condominium units. She believed the Laurel Point building to be an excellent one, and sold a unit to her daughter and son-in-law. She knew that Mr. Wyse's family had purchased a unit. She considered buying a unit herself. When she met the Fees in June 1996, three units remained unsold.

Ms. Currie had no knowledge about building construction or envelope design in 1996. She noted nothing about the building exterior that would have caused her to question if there was a systemic leak problem in the building.

The first knowledge she had of a problem with the Gubin unit was in April 1996 when she received a phone call about a water leak in the wall. Ms. Currie contacted Mr. Ryan of Scott Construction who agreed to remedy the problem.

According to Ms. Currie, the fact of a deficiency is not unusual in the first year of a new construction. The complaint of a water problem was unusual and it was investigated immediately. Ms. Currie testified that she had a discussion with Al, the deficiency worker, who advised her that the source of the Gubin leak had been found. Al was very excited to have found the cause of the problem, which he explained was related to a plumbing connection in the wall. Al advised her that the leak in the Gubin unit had been fixed.

At the time Ms. Currie dealt with the Fees in June 1996, she did not see the detailed letter by Ms. Gubin dated April 24, 1996 outlining the water penetration in her unit . The Gubin letter was not copied to her. Ms. Currie did not see this letter until after this litigation arose.

Ms. Currie admitted that it was her practice to obtain a copy of the Strata Council minutes and to place the minutes in the information packages she prepared for purchasers. Her practice is to provide the minutes after there is an accepted offer to purchase but before the subject clauses are removed. She considers the minutes to be personal and does not give them to prospective purchasers before acceptance.

Ms. Currie agrees that she made the notation about the leak being resolved in the copy of the April 1996 minutes which the Fees reviewed in June 1996. She disagrees that it was done in front of the Fees because she did not sign the note. She states she provided a copy of the minutes with her endorsement of the problem being rectified to the Fees.

Ms. Currie disclosed her limited dual agency role to the Fees. From her discussions about financing and price negotiations with them, she felt that they were experienced real estate investors.

Ms. Currie understood that under the limited agency, she had an obligation to the Fees to provide accurate information and to advise of any defects known to her at the time the offer to purchase was made.

Ms. Currie denies that the Fees said anything about leak concerns to her. She also disagrees that she used the words "space age" when describing the stucco finish or advising that it was guaranteed not to leak. She stated this was not her usual wording.


Minutes and Correspondence

Several of the Minutes of the Strata Council and other relevant correspondence were tendered into evidence. I propose to summarize the salient facts from them.