Pacifica (Vancouver): Owners delayed too long to claim against roof inspector



Strata Plan LMS597 v. Camsix Developments,


2004 BCSC 312

Date: 20040308
Docket: C973918
Registry: Vancouver


The Owners, Strata Plan LMS 597



Camsix Development Ltd.,
Marine Roofing & Sheet Metal Ltd.,
Doug Johnston d.b.a. Johnston Barrington & Davidson Architects
And the said Johnston Barrington & Davidson Architects,
Scott Construction Ltd., Scott Management Ltd.



Before: The Honourable Mr. Justice McKinnon

(In Chambers)

Reasons for Judgment

Counsel for the Plaintiff:

A.I. Zasada

Counsel for the Defendants:

P.G. Altridge

Date and Place of Hearing:

January 6, 2004


New Westminster, B.C.

[1]            The plaintiff in this matter, The Owners, Strata Plan LMS 597, is a strata corporation comprised of the owners of a condominium complex known as “The Pacifica” in the City of Vancouver.  On July 15, 1997, the plaintiff commenced an action for damages against various parties involved in the design, construction and inspection of The Pacifica which can be described in the vernacular as a “leaky condo.”  In this application, the plaintiff seeks to add Metro Testing Laboratories Ltd. (“Metro”) as a defendant in the action as the party responsible for the roof inspections at The Pacifica.  Metro opposes the application by asserting that; they were not responsible for any roof inspections, that the limitation period for bringing an action against them has lapsed and that there has been inexcusable and unexplained delay in bringing the action causing Metro prejudice in this matter.

[2]            On August 12, 2003 counsel for the plaintiff advised Metro of their intention to commence legal proceedings.  On October 21, 2003, the plaintiff filed its notice of motion to add Metro as a defendant to the action commenced in July of 1997. 

[3]            The seven buildings that collectively form The Pacifica were constructed between 1991 and 1994 with the final occupancy permit being issued in April of 1994.  Within one year of the final permit being issued, the plaintiff encountered problems with water entering the building envelope.  The plaintiff alleges that by November 1995, 31 of the 207 suites were reported to have problems with water ingress and were undergoing some form of repair.

[4]            The plaintiff retained the services of a building envelope specialist, McArthur Vantell Ltd., who provided the plaintiff with reports regarding water ingress as they pertained to the doors and windows, the brick cladding of the buildings and the roofing of The Pacifica.  The plaintiff received these reports on April 25, 1996.

[5]            Sometime in July 1997, the same month in which the action was commenced, a “comprehensive roof survey” (the “Roof Survey”) was conducted by Inter-Provincial Inspectors (1982) Ltd.  Though the court was not provided with a copy of this report by the plaintiff, a December 1999 Building Envelope Assessment Report (the “Envelope Assessment Report”) completed by CSA Building Sciences Western Ltd. relies heavily upon the Roof Survey and makes extensive reference to its contents.  The Roof Survey apparently identified several deficiencies in the roofing system.  Repairs were undertaken by the plaintiff in response to the survey which were supervised by Inter-Provincial.

[6]            As indicated, the Envelope Assessment Report was delivered to the plaintiff on December 3, 1999.  This is the most extensive report on the condition of The Pacifica to date.  The plaintiff claims that it was not until receipt of this report that it became aware that the damage to The Pacifica was described as “dangerous”.

[7]            Following the Envelope Assessment Report, extensive repairs were undertaken at The Pacifica between December 1999 and May 2000.  Unfortunately, leakage problems persisted at the townhome section of The Pacifica and consequently further repairs were required which were completed between March and October of 2002.

[8]            On May 28, 2003, Interrogatories were delivered to the general contractor and architect regarding the identity of sub-contractors who performed work on The Pacifica.  The general contractor and architect provided their responses to the Interrogatories on August 18 and 7, 2003, respectively.  Both responses to these Interrogatories identified Metro as responsible for roofing inspections at The Pacifica.  The plaintiff claims this is the point at which it first became aware of the identity of Metro.

[9]            I have concluded that the plaintiff’s application to add Metro as a defendant pursuant to Rule 15(5)(a)(iii) should be dismissed as it would not be just nor convenient to do so in the circumstances.  Specifically, the unexplained and inexcusable delay of the plaintiff in bringing this application and the attendant prejudice Metro would suffer were it granted, mandate that it not be added as a defendant.

Reasons for this Conclusion

[10]        The plaintiff’s application to add Metro as a defendant is made pursuant to Rule 15(5)(a)(iii) of the Rules of Court.  The Rule states:

15(5) (a)   At any stage of a proceeding, the court on application by any person may

(iii)       order that a person be added as a party where there may exist, between the person and any party to the proceeding, a question or issue relating to or connected

(A)   with any relief claimed in the proceeding, or

(B)   with the subject matter of the proceeding,

which in the opinion of the court it would be just and convenient to determine as between the person and that party.

[11]        To secure an order adding a party under Rule 15(5)(a)(iii), the onus is on the plaintiff to demonstrate to the Court that (1) there is a degree of connection between the parties that relates to either the relief claimed or the subject-matter of the proceeding, and (2) it is just and convenient that the party be added. 

[12]        The Court’s discretion to add a party under this Rule is unfettered but the discretion must be exercised judicially in accordance with the evidence and case authorities (see: Teal Cedar Products (1977) Ltd. v. Dale Intermediaries Ltd. (1996), 19 B.C.L.R. (3d) 282 at 291 (C.A.) per Finch J.A.).

Is There a Question or Issue to be Tried?

[13]        In assessing whether to add a party under Rule 15(5), the first matter to be determined is whether the plaintiff has demonstrated that there is a question or issue to be tried between the parties that is sufficiently related to the relief sought or the subject-matter of the proceeding.  McFarlane J.A. of the B.C. Court of Appeal addressed the question to be answered in MacMillan Bloedel Ltd. v. Binstead et al. (1981), 59 B.C.L.R. 73 (C.A.) where he noted at ¶12:

It seems to me clear that one of the functions of the chambers judge hearing an application under this rule must be to decide whether there may exist between the appropriate parties a question which can be answered or an issue which can be decided by a court of law or by a judge exercising jurisdiction in a judicial capacity and to see, through whatever means, and not necessarily affidavits, that the question or issue is a real one in the sense that it is not entirely frivolous and would result in courts wasting judicial time. It is not the function, in my opinion, to decide whether on any kind of a balance it is likely that the plaintiff would be able to prove its allegations on a balance of probabilities or to any other degree beyond showing that there may exist such a question or such an issue.

[14]        Thus it is important that the court bear in mind that the plaintiff need only demonstrate a sufficient degree of connection between the parties such that the issue or question can be described as “real” and “not entirely frivolous.”  The plaintiff need not show it will be successful in having that issue finally determined.

[15]        The above-cited passage from McFarlane J.A. also raises an important issue debated at this hearing.  Specifically, the evidentiary burden placed on the plaintiff to show that the issues they allege as existing between the parties are real.  The plaintiff submits that evidence of a cause of action between the parties is not necessary and that pleadings to that effect are sufficient.  In support of this contention the plaintiff points to Binstead, supra, which it claims establishes that there is no specific evidentiary requirement to meet the threshold of whether or not the issues between the parties are real.  This is not an entirely accurate assessment of the law. 

[16]        The decision in Binstead was interpreted with regard to the evidentiary burden set out by Esson J.A. in Letvad v. Fenwick, 2000 BCCA 630.  At ¶37, Esson J.A. wrote the following:

…that case [Binstead] is not authority for the proposition that the burden of demonstrating a real issue can be discharged other than by affidavit evidence.  In that case, there was affidavit evidence, the principal purpose of which was to prove that sworn evidence had been given in a criminal proceeding which went to that issue.  On the other hand, I see no reason to doubt that McFarlane J.A. was right in saying in obiter that the burden could be discharged "through whatever means, and not necessarily affidavits."  In this case, the hospital records which were produced to the plaintiff by the initial defendants probably could have been placed before the chambers judge without being exhibited to an affidavit of plaintiff's counsel.  But there should be few exceptions to the ordinary rule that on chambers applications evidence is placed before the judge by affidavits which comply with the requirements of the rules.

[17]        In my view, contrary to the submissions of plaintiff’s counsel, it is clear that save for exceptional circumstances, the evidentiary burden on the plaintiff to demonstrate that there is a “real” issue to be tried can only be discharged through affidavit evidence.  I am supported in this interpretation of the authorities by a decision of Burnyeat J. of this court.  In Strata Plan LMS 1410 v. Surrey (City), 2003 BCSC 635, Burnyeat J. considered what the evidence was required to show that issues were sufficiently “real.”  At ¶9-10, Burnyeat J. wrote:

While the burden of demonstrating that there is a real issue which should be tried can be discharged other than by affidavit evidence, there should be few exceptions to the ordinary rule that the evidence which is placed before the Court should be by affidavits which comply with the requirements of the Rules of Court.  In this regard, Esson J.A. on behalf of the Court in Letvad v. Fenwick [2000] B.C.J. No. 2369 (B.C.C.A.) stated:


... [Binstead] is not authority for the proposition that the burden of demonstrating a real issue can be discharged other than by affidavit evidence. In that case, there was affidavit evidence, the principal purpose of which was to prove that sworn evidence had been given in a criminal proceeding which went to that issue. On the other hand, I see no reason to doubt that McFarlane, J.A. was right in saying in obiter that the burden could be discharged "through whatever means, not necessarily affidavits". ... But there should be few exceptions to the ordinary rule that on Chambers applications evidence is placed before the Judge by affidavits which comply with the requirements of the Rules. (at para. 37).


I distinguish the contrary views expressed in Strata Plan LMS 2869 v. Redekop Properties (Lonsdale) Inc. [2002] B.C.J. No. 2599 (B.C.S.C.) and in Strata Plan LMS 1816 v. North Fraser Holdings Ltd. [2002] B.C.J. No. 2210 (B.C.S.C.) on the basis that the decision in Letvad was not drawn to the attention of the learned Chambers Judges.  Ordinarily, the allegations set out in a proposed amended statement of claim will not be enough.  The burden on the plaintiff to show that there is a real issue to be determined can only be discharged by affidavit evidence.

[18]        I adopt the reasoning of Burnyeat J. and agree with his decision to distinguish the Redekop and North Fraser decisions (both of which formed part of the plaintiff’s argument).  Absent compelling reasons otherwise, the burden on the plaintiff to show that there is a “real” issue to be tried can only be satisfied by affidavit evidence.

[19]        Notwithstanding this conclusion respecting the evidentiary burden, I find that the plaintiff has adduced sufficient evidence to show that the issues are real and are not entirely frivolous.  Specifically, the affidavit evidence of the President of The Pacifica Strata Council, Judy Lee, supplies the requisite evidentiary basis.

[20]        Exhibits “J” and “K” of the Lee affidavit are the letters received by the plaintiff from the general contractor on August 18 and from the architect on August 7.  These documents specifically identify Metro as the party at least partially responsible for the roofing inspections at The Pacifica.  Furthermore, exhibit “JJ” to the Lee affidavit is a letter dated March 25, 1992 from Metro to the developer (c/o the general contractor) wherein Mr. Harry Watson, principal of Metro, appears to acknowledge some role for Metro in the roof inspection process.  In this letter, which is marked “RE: ROOFING INSPECTION 16TH/CAMBIE – VANCOUVER”, Mr. Watson writes:

We understand that Trow Consulting Engineers have advised you that they will no longer be providing Testing and Inspection Services on the above project effective March 31, 1992.  Further to discussion with the Project Senior Consultant, Mr. George Wilson, previously of Trow Consulting, and yourself, Metro Testing Laboratories Ltd. wishes to confirm that we are prepared to undertake to complete this project with Mr. George Wilson…

Metro Testing Laboratories Ltd. looks forward to working with you and maintaining the continuity already established with Mr. George Wilson and yourself on this project.

[21]        In my view, this documentation is enough to show that there does exist a real, not entirely frivolous issue between the parties to be determined.  That is, what role, if any, did Metro play in the testing and inspection of the roofing system at The Pacifica? 

[22]        In making this determination, I am aware of the affidavit evidence of Mr. Harry Watson, principal for Metro, wherein he explains the role of Metro as being merely a gratuitous, administrative favour to the general contractor to allow a defunct roofing inspection contractor to submit invoices through Metro.  While the evidence of Mr. Watson may be accurate and serve to relieve Metro of any liability, at this stage of the process (i.e., determining whether Metro should be added as a party) I am cognizant of the words of McFarlane J.A. in Binstead, supra.

It is not the function [of a chambers judge], in my opinion, to decide whether on any kind of a balance it is likely that the plaintiff would be able to prove its allegations on a balance of probabilities or to any other degree beyond showing that there may exist such a question or such an issue.

[23]        In short, the burden of showing that a real issue exists between the parties is the plaintiff’s and in the circumstances of this application, that burden has been successfully discharged.

Is It Just and Convenient to Add Metro?

[24]        The determination as to whether Metro should be added as a party does not, however, end with the plaintiff successfully demonstrating that there is an issue to be determined.  The next stage of the inquiry mandated by Rule 15(5)(a)(iii) is to determine whether it would be “just and convenient” for this court to allow the issue to be determined finally by adding Metro to the action already commenced by the plaintiff.  In this regard, whether the applicable limitation period has expired is of paramount importance.

[25]        The possibility of the passage of a limitation period with respect to the plaintiff’s claim against Metro was the topic of much debate at this hearing.  The approach to be taken in applications under Rule 15(5) where there is a potential limitation defence was succinctly outlined by Master Joyce (as he then was) in Britco (Guardian ad litem of) v. Wooley (1997), 15 C.P.C. (4th) 255 (B.C.S.C.) at ¶11:

In my view, the proper approach to applications such as this is as follows:

If it is conceded that there is no accrued limitation defence or if the court can determine that fact on the interlocutory application, then the question is really limited to one of convenience since the party can always commence a separate action in which there will be no limitation issue.  The question is whether it is more convenient to have one action or two?

If it is conceded that there is an accrued limitation defence or if the court can determine that fact on the interlocutory application, then the question is whether or not it would be just and convenient to add the party notwithstanding that by doing so the defendant will lose the benefit of the limitation defence.  If the answer to that question is yes, then the order should be made.  If the answer is no, then the order should not be made.

If the defendant alleges that there is an accrued limitation defence and the plaintiff denies that fact and the court cannot determine that issue on the interlocutory application, then the court should proceed by asking this question: assuming that there is a limitation defence, would it nonetheless be just and convenient to add the party even though by doing so the defence is taken away?  If the answer to that question is yes then the order should be made.  In that event it does not matter whether or not, in fact, a limitation period has expired because in either case it would be just and convenient to add the party and any limitation defence will be gone.

[26]        I accept this approach which has been adopted in several subsequent decisions (see: Lawrence Construction Ltd. v. Fong, 2001 BCSC 813; Strata Plan LMS 2824 v. New Westminster (City), 2003 BCSC 713).

[27]        Firstly, I must determine whether a limitation defence has or has not accrued to Metro.  It is common ground that the applicable limitation period under the Limitation Act, R.S.B.C. 1996, c. 266, is 6 years.  What is not settled, however, is when time begins to run. 

[28]        The plaintiff submits that the commencement of the applicable limitation period should be postponed pursuant to s. 6(4) of the Limitation Act, R.S.B.C. 1996, c. 266.

6(4)  Time does not begin to run against a plaintiff with respect to an action referred to in subsection (3) until the identity of the defendant is known to the plaintiff and those facts within the plaintiff's means of knowledge are such that a reasonable person, knowing those facts and having taken the appropriate advice a reasonable person would seek on those facts, would regard those facts as showing that

(a)   an action on the cause of action would, apart from the effect of the expiration of a limitation period, have a reasonable prospect of success, and

(b)   the person whose means of knowledge is in question ought, in the person’s own interests and taking the person’s circumstances into account, to be able to bring an action.

[29]        Specifically, the plaintiff submits that (1) it did not know the nature and extent of the damage to The Pacifica until receipt of the Building Envelope Assessment Report on December 3, 1999, and (2) it did not learn the identity of Metro until August 7, 2003 when it received the response to their Interrogatories from the architect.  For either of these reasons, argues the plaintiff, the commencement of the six-year limitation period should be postponed.

[30]        The evidence provided by the plaintiff pertaining to when it knew about roofing problems is fundamentally flawed.  In particular, the plaintiff relies extensively upon the Building Envelope Assessment Report of December 3, 1999.  In the section of that report that deals with the roofing problems at The Pacifica, the authors of the report mention and appear to rely heavily on “a comprehensive roof survey conducted in July 1997 by Inter-Provincial Inspectors (1982) Ltd.” after which roof repairs were conducted on several of the buildings at The Pacifica.  The plaintiff has not furnished the Court with a copy of this earlier report.

[31]        I am unable to determine, on reading the 1999 report, what information, if any, was not previously known by the plaintiff as a result of the 1997 roof survey.  In the absence of the 1997 report, I am unable to accept the plaintiff’s argument that it only learned the true extent of the roofing deficiencies in December of 1999.

[32]        The uncertainty created by the dearth of information about the first roofing survey in 1997 is also fatal to the plaintiff’s argument that it did not learn of the identity of the proposed defendant, Metro, until August of 2003.  This is not to say I necessarily disbelieve the evidence of the plaintiff that they were not provided with the identity of Metro until that date, but complementary to the right of the plaintiff to assert that a limitation period should be postponed until it learned the identity of a possible defendant is the responsibility of the plaintiff to exercise reasonable diligence to discover the name of that defendant within the applicable limitation period (see Krusel v. Firth (1991), 58 B.C.L.R. (2d) 145 (C.A.)).  As I am unable to determine whether the plaintiff knew of the alleged roofing deficiencies contained in the December 3, 1999 Building Envelope Assessment Report in 1999 or 1997, I cannot accurately assess whether the diligence (or lack thereof) exercised by the plaintiff was reasonable.  Thus, the plaintiff is unable to satisfy the evidentiary burden imposed upon it in arguing that the running of time should be postponed.

[33]        Thus, in my assessment of whether it is just and convenient to add Metro as a defendant I must proceed on the basis that the issue of whether the applicable limitation period has expired is at best uncertain.  In short, I am unable to determine whether the limitation period has expired based on the evidence before me.  This conclusion, following the reasoning found in the third branch of the above-cited test in Britco, requires that I ask: “assuming that there is a limitation defence, would it nonetheless be just and convenient to add the party even though by doing so the defence is taken away?”

[34]        The relevant criteria to assess in relation to the issue of whether it is just and convenient to add a party are: the extent of the delay, the reasons for the delay, any explanation put forward to account for the delay, the prejudice caused by the delay and the extent of the connection between the existing claims and the proposed new cause of action (see: Teal Cedar Products (1977) Ltd. v. Dale Intermediaries Ltd., supra, and Letvad v. Fenwick, supra).  None of these factors are to be considered in isolation and none are individually determinative.

[35]        I am satisfied there has been significant delay.  The first period of delay starts from when counsel for Metro submits the cause of action first arose (i.e., water ingress first noted between August 1993 and April 1994) to the time the action was commenced in July of 1997 –- a gap of more than 3 years.  During that three-year span, repairs were conducted on several of the buildings at The Pacifica and the first of three roofing reports was delivered to the plaintiff.

[36]        The second period of delay is from the time this action was commenced in July 1997 to the time Metro received notice from the plaintiff in August of 2003, a span of more than 6 years.  I note that during this time the plaintiff had the full array of pre-trial discovery mechanisms available to it one of which, Interrogatories, eventually led to the discovery of the identity of Metro.

[37]        Also during this second period of delay, the plaintiff received the “comprehensive roofing survey” completed in 1997 and conducted repairs in response to its findings also in 1997.  Despite receipt of this report and the subsequent repairs, the plaintiff did not issue a demand for discovery of documents for another two years.

[38]        Furthermore, after receipt in December, 1999 of what the plaintiff considers the most comprehensive assessment of the damage done to The Pacifica in December 1999 (i.e., the Building Envelope Assessment Report), a demand for discovery of documents was not issued to the general contractor for another six months – nearly three years since the action was commenced.  The Interrogatories which eventually led to the identification of Metro were not issued until May of 2003 –- nearly six years after the action was commenced.

[39]        I have no hesitation in describing the accumulated delay in this matter as considerable and clearly significant.

[40]        The affidavit evidence before the court does not disclose any acceptable reason for the delay or explanation for it.  The plaintiff’s reasons and/or explanation for the delay are threefold: (1) the litigation is complex involving many individual parties; (2) the plaintiff was repairing and/or investigating problems with The Pacifica for approximately seven years, and; (3) it was not until May of 2003 when the plaintiff received additional expert advice from the author of the 1999 building envelope report that it undertook to deliver the Interrogatories that subsequently revealed the identity of Metro as a roofing inspector.  All of these reasons, considered individually and collectively, do not adequately explain the significant delays in this matter.

[41]        Firstly, all litigation involving large construction projects is complex and involves many parties.  The plaintiff has not adduced any evidence to show this case is particularly complex or difficult to manage.

[42]        Second, that the plaintiff was involved in the repair and investigation of problems with the buildings is no explanation for why more than six years has elapsed between the time the action was commenced and the time Interrogatories led to the identification of Metro and other parties.  This is especially so considering that extensive roof repairs were identified and remedial action was completed in 1997.  Certainly, six years of opportunity to exercise relevant discovery rights should be sufficient.

[43]        Finally, the plaintiff’s argument that it did not know where to send the appropriate Interrogatories until receipt of additional expert information in May of 2003 is also inadequate to explain the delay in this matter.  In essence, the plaintiff says that until its expert confirmed the parties against whom it would be willing to provide evidence of liability, it would have been inappropriate to ask the architect and general contractor who inspected the roofing systems at The Pacifica. 

[44]        I do not accept this explanation for two reasons.  First, the plaintiff had, at different times, employed three different experts regarding the condition of the roofing system at The Pacifica.  One of these experts, the author of the 1997 comprehensive roofing survey, actually supervised repairs on the roofing system in 1997.  The expert the plaintiff chose to rely on, however, produced the 1999 building envelope assessment report which, as I have said, relied heavily on the 1997 report.  Based on these facts and the fact that the plaintiff has not produced the “new” information it received in May of 2003, I cannot accept that the delay is sufficiently explained in this regard as there were likely other sources of the long delayed information.  Secondly, even without the expert advice received in May of 2003, the plaintiff was aware of significant roofing problems even before the 1999 envelope report.  That a roofing inspector may bear some responsibility for the defects was not information solely within the purview of the building envelope assessors.

[45]        On the issue of prejudice, I find that Metro would be subjected to significant prejudice if added as a party to the plaintiff’s action.  In this regard, Metro points to the fact that the documents they possessed relevant to this matter were destroyed in 2003 pursuant to their document disposal policy (i.e., 10 years after work is completed) and that their insurance no longer covers the type of damage alleged by the plaintiff due to an exclusion that came into effect via endorsement on May 22, 2003.  The plaintiff alleges that neither of these factors should persuade the court that Metro would experience any prejudice were it to be added to the action.  I disagree.  Both of these factors, the loss of documents and insurance coverage, are directly related to the ability of Metro to respond to the claims made by the plaintiff.  Had the plaintiff not delayed this application so long, Metro would have the relevant documents and insurance coverage.  As the delay of the plaintiff has had such a significant impact on the ability of Metro to respond to the allegations made by the plaintiff, I conclude that the prejudice to Metro, should I consent to their joinder to this action, would be considerable.


[46]        In the circumstances, I conclude that Metro should not be added as a party to the present action as it would not be just nor convenient to do so.  There is significant, unexplained delay on the part of the plaintiff in bringing this application which, were Metro to be added would result in significant prejudice to Metro.  Given these factors, the plaintiff’s application under Rule 15(5)(a)(iii) must be dismissed.  Costs to the respondent.

“R.A. McKinnon, J.”
The Honourable Mr. Justice R.A. McKinnon

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.


Yacht Harbour Pointe: Balconies crack; developer pays; insurance company denies claim

                                                 Date: 19990325
Docket: C976796
Registry: Vancouver











(In Chambers)

Counsel for the Plaintiff Roger D. Lee

Counsel for the Defendant
Axa Pacific Insurance Company Steven F. Lee

Place and Date of Hearing Vancouver, B.C.
November 26, 1998

1. Background
[1] Both the plaintiff and the defendant, Axa Pacific Insurance
Company (Axa), seek judgment under Rule 18A on the part of the
plaintiff's action that relates to Axa. The application calls
for the interpretation and application of portions of a
comprehensive general liability policy issued by the defendant in
which the plaintiff is a named insured.

[2] The plaintiff, as owner, entered into a contract with the
defendant, Scott Construction Ltd., on August 27, 1993, to build
a 10-storey residential building at 1604 Hornby Street. The
defendants, Architectura, were the architects for the project.
The defendant Axa, under its former name of Laurentian Pacific
issued a comprehensive general liability policy to the defendant,
Scott Construction Ltd. on August 4, 1993, in which the plaintiff
was named as an insured. A certificate of substantial completion
of the building was issued on March 21, 1995.

[3] Purchasers of units in the building began occupying their
units in April, 1995. Shortly after, cracks were detected in the
balconies of a number of the units. In time, engineering reports
were obtained giving opinions of the causes of the cracks and of
design and repair procedures that were required to remedy the
problems. After various discussions between the parties over a
number of months, the plaintiff paid for the cost of the
investigative engineering reports and some of the repairs. The
plaintiff states that those costs amount to $46,328.14.

[4] In the contracts of purchase and sale between the plaintiff
and the purchasers of the units in the building, the plaintiff
agreed to repair major structural defects in the units for one
year after the date of substantial completion. The contracts
also contained a provision for deficiency holdbacks until the
repair of the deficiencies was confirmed by the architect.

[5] As a result of these contractual obligations to purchasers,
the plaintiff claims that its cost of investigating and repairing
the balcony defects is a liability imposed upon it by law and is
therefore covered under the policy of insurance issued by the
defendant. The plaintiff seeks a declaration that $46,328.14 is
the amount of that liability. Alternatively, it seeks a
declaration that the sums paid by it are a liability imposed by
law, with the exact sums to be assessed at a later date.

[6] The defendant says that for the policy of insurance to
apply, the sum which the plaintiff is obliged to pay must be for
damages and no claim for damages has been advanced against the
plaintiff. It submits that "damages" as interpreted in a number
of cases means damages that flow from tortious liability. As a
result the defendant says that there has not been any tortious
liability imposed by law upon the plaintiff, the policy of
insurance does not cover the claimed expenses, and the
plaintiff's action against Axa should be dismissed.

[7] In addition, the defendant says that General Condition 4 of
the policy provides that no action lies against the insurer until
the amount of the insured's obligation has been determined by a
judgment against the insured or there is a written agreement of
the insured, the claimant and the insurer. Neither of these
prerequisites exists here and the defendant says this action
against it must be dismissed on this ground as well. In reply,
the plaintiff says that to accede to the defendant's position on
Condition 4 would lead to a permanent ouster of the court's
jurisdiction, such an ouster is contrary to public policy, and
the condition should be declared void.

[8] There are essentially two issues raised in the applications
of the parties:

1) is the plaintiff's contractual obligation to
purchasers of the units a liability covered by the
policy? and

2) is the plaintiff's claim for relief against Axa
barred by General Condition 4, the "no action"

2. Policy Coverage
[9] The policy coverage is set out in 4 paragraphs entitled
"Insuring Agreements" on page 3 of the policy. The relevant
portion for purposes of this application states:

1. The Insurer agrees to pay on behalf of the Insured
all sums (including prejudgment interest) which the
Insured shall become obligated to pay by reason of the
liability imposed by law upon the Insured or assumed by
the insured under contract (as defined herein), for
damages because of:

(c) injury to or destruction of property,
including loss of use thereof, or loss of
use of property which has not been
physically injured or destroyed, due to an
accident or occurrence (as defined herein);

during the Policy period, subject to the limits of
liability, exclusions, conditions and other terms
contained herein.

Section 5 of the Definitions under the policy states:

"Contract" means:

(a) a warranty of fitness or quality of the
Insured's products or a warranty that work
performed by or on behalf of the Insured
will be done in a workmanlike manner.

[10] The plaintiff has referred to paragraph 2(a) of the Course
of Construction Wrap-up Liability Endorsement (CGL 16) of the
policy which states:

2. This policy shall only provide indemnity to:

a) The "Named Insured" in respect to
liability arising from construction
operations described in Item 1 of the
Liability Declarations.

[11] The plaintiff argues that the phrase "in respect to
liability arising from construction operations" enlarges the
policy coverage beyond that set out in the Insuring Agreements
noted above.

[12] In my view, paragraph 2 of the CGL 16 Endorsement deals only
with the description of the insured and the location of the
business operations that are covered by the policy. It does not
expand the scope of coverage beyond that set out in the "Insuring
Agreements" provisions of the policy.

[13] In Capital Regional Dist. v. General Accident Assur. Co. of
Can. (1987), 27 C.C.L.I. 81 (B.C.C.A.) the court considered the
same Insuring Agreements wording as is present in this case. It
held that the phrase, "obligated to pay by reason of the
liability imposed by law upon the Insured ... for damages" means
liability for tortious conduct and did not extend to liability
imposed upon an insured for damages for wrongful dismissal.
Although the wrongful dismissal was found to have its basis in
contract, in this instance there was no "contract" as defined in
the policy and the court was not called upon to consider the
meaning of liability "assumed by the Insured under contract (as
defined herein)".

[14] In Acklands Ltd. v. Canadian Indemnity Co. (1985), 8
C.C.L.I. 163 the Manitoba Court of Appeal considered a similar
but not identical version of those additional words. The
liability in issue arose out of the alleged wrongful dismissal by
Acklands Ltd. of a number of its employees. The Court of Appeal
agreed with the trial judge that the phrase "liability imposed by
law" covered only damages for tortious conduct and not damages
breach of contract. As a result the policy was held not to cover
this claim.

[15] In considering the phrase "or assumed by the insured under
contract or agreement" the trial judge held that it contemplated
a tortious rather than a contractual liability. In agreeing with
that conclusion, Huband J.A. noted at page 21-21:

I therefore agree that liability assumed under contract
or agreement means a liability arising out of tort
which would normally fall upon some other party, but
which the insured assumed under a contract or

[16] In Cultus Lake Park Board v. Gestas Inc. (1992), 12 C.C.L.I.
(2d) 1 (B.C.S.C.) the court was asked to determine whether the
liability insurer was obliged to pay damages and costs of a
defence relating to an action against the insured based on breach
of contract. Shaw J. held that the phrases "legally obligated to
pay" and "liability imposed by law" were not necessarily confined
to tortious claims but could include contract claims unless the
context in which the phrases were used compelled a narrower
interpretation. In so holding he found that in the insurance
policy before him the plain meaning of the policy was such that
it extended to cover damages for breach of contract as well as
tortious damages.

[17] In considering the language of the policy in the case before
me, it is my view its plain meaning leads to a conclusion that
the policy coverage extends to liability assumed by the plaintiff
under its contract with purchasers where the fitness of the units
has been warranted. The Insuring Agreements sections of the
policy clearly contemplate liability "assumed by the Insured
under contract". The definition of "contract" includes "a
warranty of fitness or quality of the Insured's products".
Furthermore, McGregor on Damages, 16th ed. (London: Sweet &
Maxwell, 1997) defines "damages" at pages 3-4:

Damages are the pecuniary compensation, obtainable by
success in an action, for a wrong which is either a
tort or a breach of contract, the compensation being in
the form of a lump sum awarded at one time,
unconditionally ... .

This definition covers the usual and strictly correct
meaning of the term "damages" and excludes claims for
money other than those which are for compensation for
a tort or breach of contract.

3. The Effect of General Condition 4

[18] Before considering the implications of this finding, it is
necessary to consider the application of General Condition 4 of
the policy to the plaintiff's application. General Condition
4 provides:

No action shall lie against the insurer unless as a
condition precedent thereto there shall have been full
compliance with all of the terms of this policy, nor
until the amount of the insured's obligation to pay
shall have been finally determined either by judgment
against the insured after actual trial, or by written
agreement of the insured, the claimant and the insurer.
Every action or proceeding against the insurer shall be
commenced within one year of the date of such judgment
or written agreement and not afterwards. Nothing
contained in this policy shall give any person or
organization any right to join the insurer as a
co-defendant in any action against the insured to
determine the insured's liability.

[19] The plaintiff says that the balconies of the project were
cracking and the cause was unknown. This situation raised
concerns for the potential safety of the occupants of the
building that needed to be addressed immediately. It also raised
liability concerns if the nature of the problem had a serious
structural source. In addition, the plaintiff had contractual
obligations to the purchasers of the units to correct
deficiencies. To have waited for actions to have been commenced
by the potential claimants would have driven up the cost
substantially and the expense claimed in this case by the
plaintiff in remedying the problem would have had to be incurred
in any event. The plaintiff therefore submits that to uphold the
applicability of Condition 4 is to effectively oust the
jurisdiction of the court to determine the defendant, Axa's,
liability to the plaintiff under the policy.

[20] The plaintiff refers to Svetlichny et al v. Overend,
Davidson and Company and Travelers Indemnity Company of Canada
(1982), 33 B.C.L.R. 214 (C.A.) where the Court of Appeal
considered the application of a "no action" clause similar to
Condition 4. The defendant sought to join the insurer as a third
party, the insurer having denied liability and also having
declined to defend the action on behalf of the defendant. The
insurer argued that the "no action" clause barred the third party
joinder, no judgment having been obtained against the defendant.
The chambers judge agreed.

[21] In the Court of Appeal the defendant argued that under Rule
22 of the Rules of Court there were additional considerations
that the chambers judge had to weigh in exercising his discretion
to set aside a third party notice. They included the interests
of other litigants in other proceedings and the resulting
multiplicity of actions that could result. Lambert J.A. stated
at page 222:

There is then a clash between two principles. The
first is freedom of contract. The second is the need
to avoid multiplicity of proceedings and inconsistent
decisions on the same issue. Is it clear that freedom
of contract must always prevail? I do not think so.
Is it clear that freedom of contract must always give
way? I do not think that either. I see no reason why
the "no action" clause should not be a significant
consideration in the decision as to whether to set
aside a third party notice, without being the only

Lambert J.A. went on to consider "reason and principle" at

page 222:

The effect of the "no action" clause is to oust the
jurisdiction of the courts temporarily, with respect to
the issue of indemnity, and permanently, with respect
to third party proceedings. A permanent ouster on the
indemnity issue would, of course, be contrary to
public policy and void. But the two polarities do not
represent the only alternatives in this case. There is
a middle ground between declaring the "no action"
clause void, on the one hand, or enforcing it without
regard to any other consideration, on the other hand.

[22] The middle ground identified by Lambert J.A was that the "no
action" clause would not be declared void but it would not be
enforced. In Svetlichny the decision was to allow the third
party notice to stand in spite of the "no action" clause.

[23] In my view there are significant differences between the
decision in Svetlichny and the case at bar. In Svetlichny the
insured seeking indemnification was already a defendant in the
action. There was also at least a real possibility that if the
third party notice was struck out there would then be another
court action to follow and there was value in avoiding an
additional action before the court. The decision also places
considerable significance upon the fact that the issue was
arising in the context of a third party proceeding.

[24] In the case at bar there is an element of the plaintiff
having made, in part, a business judgment to assume
responsibility for remedying the problem and avoiding law suits,
even though it carried insurance to protect it in the event of
such actions. I do not in any way question the soundness of the
business judgment but recognize it as a factor that was present
in the decision the plaintiff had to make about its contractual
rights under the insurance policy. It may well be, however, that
a different decision would have been taken by the plaintiff had
the loss been substantially higher than the amount claimed in
this action.

[25] I also note that the insuring agreement states that the
insurer agrees to pay for "damages", a term defined earlier in
this decision to entail compensation "obtainable in an action"
(my emphasis). In this action, the plaintiff has not become
obligated to pay "damages" because no action was commenced
against it. While Condition 4 also provides that short of there
being a judgment after trial, a payment under the policy may be
made with the written agreement of the insured, the claimant and
the insurer, no such agreement exists in this case.

[26] It is my conclusion that the circumstances that might give
rise to declaring Condition 4 void or to giving it no application
are not present in this case. Condition 4 is a valid part of the
contract. In my view this action does not present the same
"clash" between freedom of contract and public policy that was
present in Svetlichny. Under Condition 4 the condition precedent
to the plaintiff bringing its action against the insurer has not
been met.

[27] In the result, although I have found that the loss that
arose in this case was a risk covered under the insuring
agreement, the plaintiff cannot succeed in its action against the
defendant, Axa, by reason of the "no action" provision of General
Condition 4. The plaintiff's application for judgment must be
dismissed. The defendant, Axa's, application for judgment
dismissing the action against it must be granted.

[28] Costs follow the event. As the issue was not argued the
parties may make written submissions if they are unable to agree.

"Ralph J."
Ralph J.

Vancouver, British Columbia
March 25, 1999