New Westminster, Rialto: Court rules owners of leaky condo complex developed by Molnar can sue subcontractors

Date: 19991015
Docket: C981500
Registry: Vancouver

 

IN THE SUPREME COURT OF BRITISH COLUMBIA

 

 

BETWEEN:

THE OWNERS, STRATA PLAN LMS 0283

PLAINTIFF

AND:

QUAY DEVELOPMENTS LTD., MOLNAR CONSTRUCTION LTD.,
ANDRE MOLNAR, NEW HOME WARRANTY OF BRITISH COLUMBIA INC.
AND JOHN DOE AND OTHERS, CITY OF NEW WESTMINSTER,
PAUL MERRICK AND PAUL MERRICK ARCHITECTS LIMITED

 

DEFENDANTS

AND:

PRICE & WHALLEY PLASTERING AND STUCCO CONTRACTORS LTD.

 

THIRD PARTY

 

 

REASONS FOR JUDGMENT
OF THE
HONOURABLE MR. JUSTICE LOWRY

  

 

Counsel for the Plaintiff:

G. Walker

Solicitors for the Third Party, Price & Whalley Plastering and Stucco Contractors Ltd.:

 

D.H. Murray

Place and Date of Hearing:

Vancouver, B.C.

October 8, 1999

 

 

[1] The plaintiffs, who are the owners of what they allege to be a "leaky condo", appeal from the order of a Master dismissing their application to add various subcontractors as defendants to this action against the developer and the contractor who constructed the building. They maintain that the Learned Master erred in holding as he did that, because there was a potential limitation problem, the plaintiffs were required to commence a separate action against the proposed new defendants. The question is whether the Master was clearly wrong in disposing of the application as he did.

[2] The building, called the "Rialto" in New Westminister, was completed in 1992 and fully occupied by the end of 1993. Discreet incidents of water ingress were addressed as they arose until 1995 when the plaintiffs engaged a consultant to make an assessment of what was seen by then to be a substantial problem. Various deficiencies in the building envelope were subsequently identified. Remedial work began in mid 1997 and this action was commenced. The plaintiffs found it necessary to change counsel in 1998 and did not conduct discoveries until the beginning of this year. The action is now set to be tried in six months time. The trial is expected require 50 days to complete.

[3] During the course of discoveries, the plaintiffs determined the identity of 17 subcontractors that had worked on the building. They applied before the Master to add them as well as the provincial Crown as defendants. The application was entirely ex parte save for the appearance of the developer and Price & Whalley Plastering and Stucco Contractors Ltd., a subcontractor named as a third party by New Home Warranty of British Columbia Inc., a defendant against which the action has been stayed by virtue of intervening insolvency proceedings.

[4] The addition of parties is governed by Rule 15(5). In particular, Rule 15(5)(a)(iii) affords a discretion to order the addition of any person to an action where there may exist an issue relating to the subject matter of the action or the relief claimed between that person and a party which it would be just and convenient to resolve.

[5] It appears clear that there are issues related to the subject matter of the action between the plaintiffs and the proposed defendants. The Master expressed no view as to whether it would be convenient to have them resolved in this action. Rather, as indicated, he took the view that the claims could be time-barred and regarded that as sufficient reason to dismiss the application. In so doing, while he did not say so, he appears to have been following what he understood to be prescribed in such circumstances in Brito (Guardian at litem of) v. Wooley (1997), 15 C.P.C. (4th) 255 (B.C.S.C.). He expressed concern that, if he were to allow the application, the raising of any limitation defence would then be precluded as being res judicata.

[6] While he declined to order that any of the subcontractors be added as defendants, the Master said that his analysis of their position did not apply to the Crown and he ordered that it be added. He then awarded costs of the application payable forthwith to all of the subcontractors, specifically those who were not, and would not become, parties.

[7] On this appeal, the plaintiffs first say that the Master erred in not allowing them to amend to replace "John Doe and others" named in the style of cause with the names of the 17 subcontractors on the basis of a misnomer, employing Rule 24(1). They rely on Jackson v. Bubela and Doe, [1972] 5 W.W.R. 80 (B.C.C.A.) and Oldridge v. North West Vancouver Hospital Society (c.o.b. Lions Gate Hospital), [1997] B.C.J. No. 2639 (S.C.). However, the application was not framed as one to cure a misnomer, and, more importantly, no evidence to the effect that the identity of the subcontractors could not be determined when the action was commenced has been adduced. On the authority cited, it appears clear that a plaintiff must establish that no reasonable exercise of diligence would have revealed the true identity of the defendant very long before the application is made. I do not consider that the application could have succeeded as one to cure a misnomer.

[8] The plaintiffs then say that the Master was clearly wrong in dismissing the application as one to add defendants under Rule 15(5) and, in my respectful view, there they are on much better ground. I consider the Master was in error in expressing the concern that, if the application was allowed, subcontractors who had not been served and did not appear could be precluded from raising a limitation defence without ever having been heard. The cases where the inability to raise a limitation defence was viewed as a consequence of a Rule 15(5) order are cases where, as in Brito, the proposed defendant appeared. Here only one of the 17 subcontractors was served and appeared and, as it appears from the reasons, counsel say that the question of what, if any, limitation defence may be applicable to Price & Whalley was not fully argued. The Master appears to have simply determined that there may be a limitation problem and dismissed the application with respect to all of the subcontractors but, as indicated, not with respect to the Crown.

[9] In my view, it was open to the Master to make the order sought if, on the face of the material, it appeared to him that there were issues between the owners and the subcontractors that are convenient to be resolved in this action. Under Rule 44(8), those affected could then have applied to have it set aside and may then have raised such limitation issues as there may be. Given that this might have led to a large number of applications being brought by various of the subcontractors at different times before different judges, it appears to me the better course would have been to direct the plaintiffs to serve all of the proposed defendants with sufficient notice of the application to enable them to obtain and brief counsel.

[10] I conclude that the plaintiffs are entitled to succeed on this appeal. The Master's order is to be set aside in its entirety. The plaintiffs will be directed to give appropriate notice of their application to all of the proposed defendants.

[11] There will be an order accordingly.

[12] Costs in the cause.

"Lowry J."