Port Coquitlam, Chancellor Court LMS 989: BC Court of Appeal grants leave to appeal in Redekop leaky condo case

COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

The Owners, Strata Plan LMS 989 v. Redekop et al.,

 

2003 BCCA 613

Date: 20031114


Docket: CA031293

Between:

The Owners, Strata Plan LMS 989

Respondent

(Plaintiff)

And

John Redekop d.b.a. John Redekop Construction
and Premier Pacific Developments Ltd.

Appellants

(Defendants)

 


 

Before:

The Honourable Mr. Justice Smith

(In Chambers)

 

D. Letkemann

Counsel for the Appellant

M.G. Bawolska

Counsel for the Respondent

Place and Date of Hearing:

Vancouver, British Columbia

31 October 2003

Place and Date of Judgment:

Vancouver, British Columbia

14 November 2003

 


Reasons for Judgment of the Honourable Mr. Justice Smith:

[1]         The appellants seek directions as to whether leave is required to appeal from an order of the Supreme Court adding them as defendants in the action.

[2]         The action is of the type known colloquially as “leaky condo cases.”  The respondents are the owners of a condominium that suffers from water damage allegedly caused by the fault of the defendants.  They commenced action against a number of defendants involved in the project.

[3]         The appellants were, allegedly, members of a joint venture that developed the condominium project.  The respondents brought application to add them as defendants pursuant to Rule 15(5)(a)(iii) of the Supreme Court Rules, which permits the addition of a party if the Chambers judge is satisfied that it would be just and convenient to determine an issue as between the proposed party and an existing party.  The respondents allege breach of contract and negligence in the construction, inspection, and design of the project.

[4]         The appellants opposed the application on the ground that it would not be just and convenient to add them for several reasons, including that the six-year limitation under s. 3(5) of the Limitation Act, R.S.B.C. 1996, c. 266, had expired.  They submitted that the postponement provisions in s. 6(3) of the Act were not applicable in the circumstances.  The Chambers judge concluded:

[20] ...However, it is not necessary for me to determine the precise limitation period as against the Proposed Defendants for the purposes of this application.  I need not go beyond finding – as I do – that even by adopting the position most favourable to the Proposed Defendants, the six year limitation period has not yet elapsed.

In the result, she found that the requirements of Rule 15(5)(a)(iii) had been satisfied and ordered the appellants added as defendants in the action.

[5]         The appellants submit that their addition as a party eliminates any limitation defence that might have been available to it had the respondents sued them in a separate action, relying on Lui v. West Granville Manor Ltd. (1987), 11 B.C.L.R. (2d) 273 at 295 (C.A.).  It follows, in their submission, that the order finally disposes of the rights between the appellants and respondents and is therefore a final order for which leave is not required to appeal.

[6]         Had the application been dismissed, it would have finally disposed of the rights between the parties. However, although the impugned order finally disposes of a right between the parties (the potential limitation defence), it does not finally dispose of the rights between the parties.  The respondents' allegations of breach of contract and negligence remain to be resolved.  Thus, the order is what has been described as a dual nature order.

[7]         The proper approach to such orders has been described recently in Zanetti v. Bonniehon Enterprise Ltd. 2002 BCCA 555 (Ryan J.A., in Chambers):

[9]  Until relatively recently, the “application approach” was favoured.  The application approach dictates that no matter how a dual nature order is determined, it is interlocutory in nature and leave is required.  More recently, the “order approach” has been favoured.   Under the order approach the effect of the order is examined.  If the effect is to finally dispose of the rights of the parties, the order will be held to be a final order, and leave will not be required.  If the order does not finally dispose of the rights between the parties, the order will be considered interlocutory, and leave is required.

[8]         As this order is of the latter class, leave to appeal is required and I so direct.

“The Honourable Mr. Justice Smith”

Chancellor Court (Port Coquitlam): Court approves adding Redekop, Fortress Financial and Premier Pacific Developments as defendants

 

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

The Owners, Strata Plan LMS 989 v. Port Coquitlam (City of), et al ,

 

2003 BCSC 1398

Date: 20030911

Docket: SO10156

Registry: Vancouver

Between:

The Owners, Strata Plan LMS 989

Plaintiff

And

The City of Port Coquitlam, 426256 B.C. Ltd.,

Reddale Enterprises Ltd., David Mark Tyrell, Shane Friars,
Lang Structural Engineering Inc., R.K. Roofing Ltd., Westcoast Stucco Inc.,
Phoenix Commercial (1986) Ltd., Stucco Doctor Corporation, Stucco Doctor Plus Ltd.,
Wismer & Mathieson Projects Ltd., CSA Building Sciences Western Ltd.,
Pro-Tech Stucco Corporation, Ronald Bennewith and Leslie Bennewith
Carrying on Business as Stucco Doctor

Defendants

 

 

 

Before: The Honourable Madam Justice Ballance

Reasons for Judgment

Counsel for the Plaintiff:

J.L. Conkie and

J.P. Millbank

Counsel for the Proposed Defendants: Premier Pacific Developments Ltd. and John Redekop (dba John Redekop Construction):

 

D.J. Letkemann

Date and Place of Hearing:

June 6, 2003

 

Vancouver, B.C.

 

[1]            The plaintiffs, who are the owners of Strata Plan LMS 989 (the “Owners”), have brought this application to add John Redekop dba John Redekop Construction (“Redekop”), Fortress Financial Corporation and Premier Pacific Developments Ltd. (“Premier”) (collectively, the “Proposed Defendants”) as defendants to the within action.  They also seek leave to amend their Statement of Claim to incorporate the Proposed Defendants as parties and to set out the allegations against them.

BACKGROUND

 

[2]            Chancellor Court is a residential condominium development located in Port Coquitlam, British Columbia.  Its construction was completed in late 1993 or early 1994.  As is the case with many similar developments in the lower mainland, Chancellor Court is embroiled in what is commonly referred to as “leaky condo” litigation against several parties allegedly involved in its construction including the City of Port Coquitlam, roofing and stucco firms, architects, engineers and remediators.

[3]            The Owners claim that significant water ingress problems began almost immediately upon the occupation of their units, resulting in rot through the exterior building envelope and the interior structure.  The Owners made numerous attempts to address the water ingress problems over the ensuing years.  Ultimately in 2000, they hired a building envelope remediation firm, which subsequently determined that Chancellor Court had systematic envelope problems requiring comprehensive remediation.

[4]            The amended Statement of Claim reveals several focal points for the Owners’ complaints concerning the construction of Chancellor Court.  These include, but are not limited to, inadequate exterior cladding, inadequate drainage capacity, failure to install watertight joint seals, seam connections and caulking and improperly installed windows and waterproof membranes.  The thrust of the claim against the defendants collectively is that they failed to exercise reasonable skill, care or diligence with regard to the construction, inspection and design of Chancellor Court.

[5]            In this application, the Owners contend that the Proposed Defendants ought to be added as parties to the action by virtue of their independent involvement in a joint venture or partnership to develop Chancellor Court, facilitated through an existing defendant, 426256 B.C. Ltd., which purportedly acted as a bare trustee.

[6]            Redekop and Premier oppose the application.  They argue that not only is the claim against them statute barred, but that there has also been an unexplained and unjustified delay between the plaintiffs’ discovery of the identity of the Proposed Defendants and the bringing of this application.  They argue that it would not be just and convenient to add them as parties.

ANALYSIS

 

[7]            An application to add a defendant is governed by Rule 15(5)(a)(iii) of the Rules of Court.  It provides:

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.

[8]            The power conferred on the court is discretionary and is to be exercised judicially.

[9]            In considering an application under Rule 15(5)(a)(iii), the Court must address the following two criteria.  First, the Court must find that there exists a question or issue between the party sought to be added and an existing party which relates to the relief, remedy or subject matter of the action.  Second, if the Court finds that such an interrelationship exists, it must next decide whether it would be just and convenient to determine that question or issue in the existing proceeding.  (The Owners, Strata Plan LMS 837 v. Abbotsford (City), [2003] B.C.J. No. 889, 2003 BCSC 590; Lawrence Construction Ltd. v. Fong (2001), 18 C.P.C. (5th) 377. 

[10]        To satisfy the interrelationship requirement, the Owners need only show that there may exist an issue or question between an existing party and the Proposed Defendants; they do not have to demonstrate a likelihood that the allegations can be proven against the Proposed Defendants.  The threshold is a low one.  The court need only be satisfied that the claim is not entirely frivolous.  (MacMillan Bloedel Limited et al. v. Binstead et al. (1981), 58 B.C.L.R. 173 (C.A.)).

[11]        In their Amended Statement of Claim, the Owners allege that the Proposed Defendants were participants in a joint venture relationship with the other named defendants in relation to the design and construction of Chancellor Court.  They contend that the core elements required to constitute a joint venture relationship, as enumerated by the Court of Appeal in Canlan Investment Corp. v. Gettling (1997), 37 B.C.L.R. (3d) 140 (C.A.), are present in the case at bar.  The Owners allege breach of contract, negligence and failure to warn against the Proposed Defendants.  These causes of action are well-founded in law.

[12]        I am readily satisfied on this mere threshold issue that there exists a possible issue to be tried between existing parties and the Proposed Defendants, which relates to the same subject matter and seeks similar relief in damages.

[13]        The applicable limitation period is six years (section 3(5) of the Limitation Act, R.S.B.C. 1996, c. 266, and see Strata Plan NW 3341 v. Delta (Corp.) (2002), 5 B.C.L.R. (4th) 250 (C.A.).

[14]        Redekop and Premier point out that the Owners were aware of the water ingress upon taking occupancy of the strata units in late 1993 or early 1994.  They adopt the extreme position that the six year limitation period was triggered at that time and therefore the limitation period expired in January, 2000, or perhaps even earlier in October, 1999.  In this context, I note that the Owners did not know the extent and consequences of the water ingress until the receipt of the building remediation firm’s report on September 29, 2000.  In any event, for the purposes of this application, I am concerned with the limitation period as it relates to the Proposed Defendants.  In my view, that period is impacted by the application of the postponement provisions of the Limitation Act which provide as follows:

 

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