The Palladain/Palladium (Vancouver): Court rules leaky condo case against architects and constuction company can proceed; new owners taken to have the knowledge of previous owners

 

                                                Date:  19980519
Docket: C946094
Registry: Vancouver

IN THE SUPREME COURT OF BRITISH COLUMBIA

BETWEEN:

THE OWNERS, STRATA PLAN VR 2000

PLAINTIFF
AND:

STEPHEN DOUGLAS SHAW, ERIC CAMPBELL, GEORGE REIFEL,
1705 NELSON HOLDINGS LTD., ALLAN MILLIGAN ENGINEERING LTD.,
THADDEUS YOUNG carrying on business as SPACEWORKS ARCHITECTS,
and the said SPACEWORKS ARCHITECTS, MIERAU CONSTRUCTION LTD.,
and PACIFIC NEW HOME SERVICES, INC. carrying on business as
NEW HOME WARRANTY PROGRAM OF BRITISH COLUMBIA AND THE YUKON,
and the said NEW HOME WARRANTY PROGRAM OF BRITISH COLUMBIA
AND THE YUKON

DEFENDANTS


REASONS FOR JUDGMENT

OF THE

HONOURABLE MADAM JUSTICE LEVINE


Counsel for the Plaintiff: D.F. Sutherland


Counsel for the Defendant: S. Coyle
Allan Milligan Engineering Ltd.

Counsel for the Defendants: M. Prohl
Pacific New Home Services Inc.
coba New Home Warranty Program of
B.C. and the Yukon ats New Home
Warranty Program of B.C. and the Yukon

Counsel for the Defendants: K.A. Short
Thaddeus Young coba Spaceworks
Architects ats Spaceworks Architects

Counsel for the Defendant: R.A. Wattie
Mierau Construction Ltd.

Date and Place of Hearing: March 26 & 27, 1998
Vancouver, B.C.

Written Submissions Received: April 20, May 1, 4, 6
& 11, 1998




I. INTRODUCTION

[1] On November 10, 1994, the plaintiff commenced this action
for damages with respect to alleged construction deficiencies
in the condominium development known as the Palladian, located
in Vancouver, B.C. The condominium development was constructed
starting in March 1987 and was declared substantially complete
on December 4, 1987. The defendant contractor, Mierau
Construction Ltd., and the defendant architects, Spaceworks
Architects, plead in their defence that the action is statute-
barred and rely upon the provisions of the Limitation Act,
R.S.B.C. 1996, c. 266.

[2] The plaintiff applies under Rule 34 of the Rules of Court
for the determination of two points of law arising from the
pleadings. These are:
(a) Do the "postponement provisions" in sections 6(3) to
(6) of the Limitation Act apply to this action?
(b) Is the commencement of the limitation period
determined in relation to the strata corporation or
the individual owners of strata units?

[3] Rule 34 provides for the determination of a point of law
before trial with the consent of all parties or by order of the
court. In this case, all of the parties have not formally
consented, but none objected to the procedure. I was invited by
plaintiff's counsel to make an appropriate order after hearing
argument. Having heard the arguments on behalf of the
plaintiff, the architects and the contractor and reviewed
written submissions from these parties and the defendant,
Pacific New Home Services, Inc. (the other defendants not
making submissions), I order that these points of law be heard
and disposed of before trial.

II. POSTPONEMENT
A. The Limitation Act

[4] The provisions of the Act which are relevant to the first
question, whether the postponement provisions apply to this
action, are sections 3(2)(a), 3(5) and 6(3)(b):


3.(2) After the expiration of 2 years after the
date on which the right to do so arose a person may
not bring any of the following actions:

(a) subject to subsection (4)(k), for damages
in respect of injury to person or property,
including economic loss arising from the
injury, whether based on contract, tort, or
statutory duty;

. . .

3.(5) Any other action not specifically provided
for in this Act or any other Act may not be brought
after the expiration of 6 years after the date on
which the right to do so arose.

6.(3) The running of time with respect to the
limitation periods set by this Act for any of the
following actions is postponed as provided in
subsection (4):

. . .

(b) for damage to property;

. . .

[5] Counsel for the defendant architects submits that the
plaintiff's claim against them qualifies for postponement under
section 6(3)(c) of the Act as an action for "professional
negligence". Counsel for the architects submits that section
6(3)(c) also applies to the defendant contractor, which the
contractor disputes. The plaintiff made no submissions with
respect to the application of section 6(3)(c) of the Act to
the architects or the contractor; his submissions were directed
solely to the application of section 6(3)(b). I will limit my
decision to the point raised by the plaintiff: the application
of section 6(3)(b) to this action.

B. The Issue

[6] The question for determination is whether an action for
"damages for injury to...property" is an action for "damage to
property". If it is, there is no postponement available. If it
is not, postponement is available.

[7] Whether the limitation period is two years (under section
3(2)(a)) or six years (under section 3(5)) is not before me on
this application. If no postponement is available under section
6(3)(b), the plaintiff is out of time under both provisions in
respect of those of its claims which are for "damage to
property".

C. Case Law

[8] There is a body of authority in British Columbia that
establishes that "injury to property"


refers to the situation where property is damaged by
some extrinsic act, and not to the situation where a
claim is made for damage occasioned by defects in the
property itself.


(W.C.B. (B.C.) v. Genstar Corp. (1986), 24 B.C.L.R. (2d) 157 at
161-2 (C.A.), citing Alberni Dist. Credit Union v. Cambridge
Properties Ltd. (1985), 65 B.C.L.R. 297 (C.A.)). This reasoning
was adopted in Zurbrugg v. Bowie (1992), 68 B.C.L.R. (2d) 322
(C.A.); Ridley Terminals Inc. v. Mitsubishi Canada Ltd., [1993]
B.C.J. No. 443 (S.C.) (QL); and Privest Properties Ltd. v.
Foundation Co. of Canada, [1995] 10 W.W.R. 385 at 431-3
(B.C.S.C.).

[9] The effect of these decisions is that where the claim does
not relate to direct damage from an extrinsic act or an
identifiable external event, it is not a claim for "injury to
property". The claim does not fall within the two-year
limitation period in section 3(2)(a), but within the six-year
limitation period in section 3(5).

[10] I understand that the plaintiff's claims with respect to
"damage to property" arise not from an external event but from
inherent defects in the construction of the condominium and
will assume that to be the case for the purposes of this
application.

[11] If a claim is not for "injury to property", can it be a
claim for "damage to property" in order to qualify for
postponement under section 6(3)(b)? In Ridley, Holmes J.
considered this question and found at para 27 that "section
6(3) does not apply to inherent defect; only to "damage to
property." That is, he equated "injury to property" to "damage
to property".

[12] The court also considered the question in Privest. Drost
J. concluded at p. 436 that on the facts of that case:


Whatever the different meanings intended by the use
of the phrase "damage to property" (in s. 6) as
opposed to that of "injury to property" (in s. 3), I
am satisfied that this claim is one for the recovery
of pure economic loss, and accordingly, does not fall
within the ambit of either of the two phrases.

[13] Plaintiff's counsel encourages me to distinguish Privest
and reconsider Ridley.

[14] Plaintiff's counsel distinguishes Privest on the basis
that this case is not a claim for pure economic loss. He claims
that the plaintiff's claims for damages in respect of economic
loss resulting from the defects in the condominium are
recoverable because the defects are so serious as to constitute
a potentially dangerous situation (Winnipeg Condominium Corp.
No. 36 v. Bird Construction Co. (1995), 121 D.L.R. (4th) 193
(S.C.C.)).

[15] Plaintiff's counsel argues that in Ridley, Holmes J. did
not consider whether "injury" and "damage" to property are the
same, but assumed that to be so. In Ridley, Holmes J. said (at
para 27) that:


I have previously found the damage to be caused from
inherent defect and rejected it occurred as a result
of "damage to property".


Plaintiff's counsel points out that in the previous decision
referred to (Ridley Terminal Inc. v. Mitsubishi Canada Ltd.,
[1993] B.C.J. No. 443 (S.C.) (QL)), Holmes J. had decided that
the claim in respect of inherent defect was not in respect of
"injury to property", within the meaning of section 3(2)(a)
(then section 3(1)) of the Act. He did not expressly decide
that it was not the result of "damage to property".

[16] Plaintiff's counsel argues that as a matter of statutory
construction, different words used in the same statute should
be given different meanings. He says that Holmes J. failed to
recognize that the test for "injury" is narrower than that for
"damage" to property, as stated by McLachlin J. in W.C.B. at p.
162:


Whether the action is brought in contract or tort,
damage is an essential element of it. The question in
each case in whether that damage comes within the
phrase "injury to property".

[17] Plaintiff's counsel argues further that if Ridley is
correct, if the limitation period runs from the date the
contract for the delivery of property is complete and there is
no knowledge of an inherent defect in the property for six
years, no action can be brought. He submits that this runs
counter to the policy considerations enunciated by McLachlin J.
in W.C.B. at p. 162:


Policy considerations support the conclusion that
"injury to property" refers to damage caused by an
identifiable external event. A short limitation
period of two years is appropriate where the claim is
based on an event which causes direct injury to
property. Such a short limitation period may not be
appropriate for a claim based on defects in the
property which may not manifest themselves clearly
for some time, even though with the benefit of
hindsight one may be able to say that their onset was
revealed at an earlier date.



[18] It is anomalous and inappropriate, according to
plaintiff's counsel, that the decisions interpreting section
3(2)(a) of the Act, which have the effect of lengthening the
limitation period for actions in respect of inherent defects
from two to six years, should be applied to limit the
limitation period by excluding the postponement provisions.

[19] Plaintiff's counsel points out that in W.C.B., the Court
of Appeal agreed with the chambers judge that the issue of
postponement was to be decided at trial, and argues that, by
implication, this supports his position that postponement is
available for an action in respect of inherent defects although
the action is not for "injury to property".

[20] "Damage" and "injury" are defined in Black's Law
Dictionary, Fourth Edition, as follows (at p. 466):


DAMAGE. Loss, injury, or deterioration, caused by the
negligence, design, or accident of one person to
another, in respect of the latter's person or
property. The word is to be distinguished from its
plural,--"damages,"--which means a compensation in
money for a loss or damage. An injury produces a
right in them who have suffered any damage by it to
demand reparation of such damage from the authors of
the injury. By damage, we understand every loss or
diminution of what is a man's own, occasioned by the
fault of another....The harm, detriment, or loss
sustained by reason of an injury.

INJURY. Any wrong or damage done to another, either
in his person, rights, reputation or property....An
act which damages, harms, or hurts.

[21] There is an obvious overlap between the definitions of the
two words. They may be and often are used synonymously. But I
can see no logical reason why that should be assumed to be the
case here. From the definitions quoted above, it appears that
"injury" is used to connote an act, something that is done to
another. Certainly that is the judicial interpretation: "injury
to property" means damage caused by an extrinsic act. The
damage is the result of the injury -- loss, deterioration, or
diminution. The specific type of damage may or may not be
recoverable at law. In Privest the court found that it was not.
Arguably, that is also the explanation for the result in
Ridley, though Holmes J. did not express his conclusion in that
manner. McLachlin J. recognizes this distinction when she says
in W.C.B., at p. 162, that "the question is "whether the damage
comes within the phrase 'injury to property'".

[22] The effect of the authorities is that the limitation
period for an action that is not an action for damages for
"injury to property" is six years and the postponement
provisions available for actions for "damage to property" do
not apply. I am bound to follow the decisions of other judges
of this court unless I find that subsequent decisions have
affected the validity of their decisions, they did not consider
binding authority or the judgment was unconsidered (Re Hansard
Spruce Mills Ltd. (1954), 13 W.W.R. (NS) 285 (B.C.S.C.)).

[23] On my reading of the courts' reasons in Privest and
Ridley, neither court addressed the question of whether there
is a distinction in meaning between "injury" and "damage" to
property in the context of sections 3(2)(a) and 6(3)(b) of the
Act. Nor did either court provide any reason or justification
for the postponement provisions not to apply to actions in
respect of inherent defects in property.

[24] It may be argued that allowing the postponement provisions
to apply to claims in respect of inherent defects will allow
actions to be brought against builders for a time long after
their involvement with the project has ended and result in
uncertainty as to their liability. The legislature has dealt
with this concern under section 8 of the Act by providing an
ultimate limitation period of 30 years. In Bera v. Marr (1986),
1 B.C.L.R. (2d) 1 at 27 (C.A.), Esson J.A. pointed out:


Sections 6 and 8 are obviously designed to work
together with s. 3(1) to provide relief against the
injustice which can be created by hidden facts and,
on the other hand, to provide reasonable protection
against stale claims.

[25] Similar arguments were made in Winnipeg Condominium.
Although that case did not deal with the limitation period, the
Supreme Court of Canada dealt with the argument that allowing
recovery for economic loss for a contractor's negligence for
dangerous construction defects "will subject a defendant
to...'liability in an indeterminate amount for an indeterminate
time to an indeterminate class'." (at p. 217). The Court said
at pp. 219-18:


...no serious risk of indeterminate liability arises
with respect to this tort duty. In the first place,
there is no risk of liability to an indeterminate
class because the potential class of claimants is
limited to the very persons for whom the building is
constructed: the inhabitants of the building....

Secondly, there is no risk of liability in an
indeterminate amount because the risk of liability
will always be limited by the reasonable cost of
repairing the dangerous defect in the building and
restoring that building to a non-dangerous state.

Finally, there is little risk of liability for an
indeterminate time because the contractor will only
be liable for the cost of repair of dangerous defects
during the useful life of the building.

[26] In light of the policy reasons enunciated by the Supreme
Court of Canada in Winnipeg Condominium for allowing recovery
for economic loss for dangerous defects, it would be anomalous
if an action in respect of a defect which the plaintiff alleges
is dangerous was statute-barred before the plaintiff had
knowledge of it, on the grounds that the defect is not "damage
to property".

 

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