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

                                                Date:  19991224
Docket: C967345
Registry: Vancouver





IN THE SUPREME COURT OF BRITISH COLUMBIA





BETWEEN:


NOEL DEVELOPMENTS LTD. and SPF PROPERTIES INC.



PLAINTIFFS
AND:


METRO-CAN CONSTRUCTION (HS) LTD.,
METRO-CAN CONSTRUCTION LTD. and
THE GUARANTEE COMPANY OF NORTH AMERICA


DEFENDANTS



AND:

ALLAN WINDOW SYSTEMS INC., SPIDER CONSTRUCTION LTD.,
COAST MILLWORKS LTD., NORMAC KITCHENS LTD.,
TORONTO DOOR AND HARDWARE LTD.,
WESTCO CONTRACTORS LTD.,
PACIFIC COMMERCIAL INTERIORS INC. and
BAKER McGARVA HART INCORPORATED


THIRD PARTIES




Ä A N D Ä




IN THE SUPREME COURT OF BRITISH COLUMBIA

Docket: C974151
Registry: Vancouver

BETWEEN:
THE OWNERS, STRATA PLAN NO. LMS2064

PLAINTIFFS
AND:
NOEL DEVELOPMENTS LTD. and SPF PROPERTIES INC.,
BAKER McGARVA HART INC.,
INTERTEK TESTING SERVICES NA LTD.,
LEVELTON ENGINEERING LTD.,
METRO-CAN CONSTRUCTION (HS) LTD.,
METRO-CAN CONSTRUCTION LTD.,
ALLAN WINDOW SYSTEMS INC.,
BROADWAY REFRIGERATION & AIR CONDITIONING CO. LTD.,
J.R. TRORY & COMPANY LTD.,
GOLDEN CITY ROOFING AND WATERPROOFING LTD.,
WESTCO CONTRACTING LTD. and
PROTECTION ENGINEERING INC.
DEFENDANTS
AND:
METRO-CAN CONSTRUCTION (HS) LTD.,
METRO-CAN CONSTRUCTIONS LTD.,
THE GUARANTEE COMPANY OF NORTH AMERICA,
BAKER McGARVA HART INCORPORATED,
PROTECTION ENGINEERING INCORPORATED,
INTERTEK TESTING SERVICES NA LTD.,
LEVELTON ENGINEERING LTD.,
YONEDA & ASSOCIATES CONSULTANTS LTD.,
WONG-SOKULSKI ENGINEERING LTD.,
ALLAN WINDOW SYSTEMS INC.,
J.R. TRORY & COMPANY LTD.,
GOLDEN CITY ROOFING AND WATERPROOFING LTD.,
H.P. CONSTRUCTION LTD.,
NATIONAL HYDRONICS LTD.,
BROADWAY REFRIGERATION & AIR CONDITIONING CO. LTD.,
WESTCO CONTRACTORS LTD.,
DOVER CORPORATION (CANADA) LTD.,
BERT'S ELECTRIC LTD. and
VIADUCT SHEET METAL LTD.
THIRD PARTIES
AND:
BAKER McGARVA HART INCORPORATED,
PROTECTION ENGINEERING INCORPORATED,
INTERTEK TESTING SERVICES NA LTD.,
LEVELTON ENGINEERING LTD.,
YONEDA & ASSOCIATES,
SOKULSKI ENGINEERING LTD.,
ALLAN WINDOW SYSTEMS INC.,
WESTCO CONTRACTORS LTD.,
DOVER CORPORATION (CANADA) LIMITED and
GOLDEN CITY ROOFING & WATERPROOFING LTD.
AND OTHERS
FOURTH PARTIES



REASONS FOR JUDGMENT
OF THE
HONOURABLE MR. JUSTICE SHAW



Counsel for:

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

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

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

Allan Window Systems Inc.: Mr. G. Jones

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

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

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

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

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




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

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

[3] The two present actions and several other actions involve
the construction of two residential towers on the waterfront of
Vancouver. The residential towers contain a total of 382
condominiums. The development is called Harbourside Park. All
the actions are set to be tried together, commencing in May,
2000.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[19] Noel relies upon evidence that demonstrates that in
practically every conceivable way, the subsidiary was run by
the parent. The vehicle for this was a management contract
between the parent and the subsidiary. The contract reads:
MANAGEMENT AGREEMENT BETWEEN
METRO-CAN CONSTRUCTION LTD. ("MC")
AND METRO-CAN CONSTRUCTION (HS) LTD. ("MCHS")

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

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

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



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

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

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

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

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

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

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



Further, at pp.267-268:

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

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

And, at p.269:

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

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

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

[28] In arguing the alter-ego issue, Noel places reliance upon
the management agreement between Metro-Can and Metro-Can (HS).
I see no difference in substance between it and an agreement,
express or implied, between the principal of a "one man"
company and the company itself pursuant to which the man runs
the company. He may be the company's sole shareholder, sole
officer, sole employee, its sole source of financing and
indeed, the very reason for that company having anything to
offer anyone doing business with the company, but when someone
knowingly enters into a contract with that company, the
corporate protection afforded to the principal against personal
liability must apply. The policy of limited liability is the
very essence of the legislation that provides for the
incorporation of limited liability companies. In Salomon v.
Salomon & Co., [1897] A.C. 22 (H.L.), Lord Halsbury said, at
pp.33-34:
My Lords, the truth is that the learned judges have never
allowed in their own minds the proposition that the
company has a real existence. They have been struck by
what they have considered the inexpediency of permitting
one man to be in influence and authority the whole
company; and, assuming that such a thing could not have
been intended by the Legislature, they have sought various
grounds upon which they might insert into the Act some
prohibition of such a result. Whether such a result be
right or wrong, politic or impolitic, I say, with the
utmost deference to the learned judges, that we have
nothing to do with that question if this company has been
duly constituted by law; and, whatever may be the motives
of those who constitute it, I must decline to insert into
that Act of Parliament limitations which are not to be
found there.

Lord Herschell said, at pp.42-43:

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

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

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

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

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



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

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

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

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

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

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

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

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

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

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

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

THE OWNERS' CLAIMS AGAINST METRO-CAN AND METRO-CAN (HS)

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

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

Vancouver, Harbourside Park: Court orders leaky condo owners to provide further and better particulars and answers to interrogatories in order to determine the facts upon which their claim is based

Citation:

Strata Plan No. LMS 2064

v. Noel Developments et al

Date:

19990204

 

 

S99-2129

Docket:

C974151,
C964747,
C967345 

Registry:  Vancouver

IN THE SUPREME COURT OF BRITISH COLUMBIA

Oral Reasons for Judgment
Mr. Justice Shaw
Pronounced in Chambers
February 4, 1999

 

BETWEEN:

THE OWNERS, STRATA PLAN NO. LMS 2064

PLAINTIFF

AND:

 

NOEL DEVELOPMENTS LTD., SPF PROPERTIES INC.,
BAKER MCGARVA HART INC., INTERTEK TESTING SERVICES NA LTD.,
LEVELTON ENGINEERING LTD., METRO-CAN CONTRUCTION (HS) LTD.,
 METRO-CAN CONSTRUCTION LTD., ALLAN WINDOW SYSTEMS INC.,
BROADWAY REFRIGERATION & AIR CONDITIONING CO. LTD.,
JR TRORY & COMPANY LTD., GOLDEN CITY ROOFING LTD.,
WESTCO CONTRACTING LTD., AND PROTECTION ENGINEERING INC.

 

DEFENDANTS

AND:

 

METRO-CAN CONSTRUCTION (HS) LTD., METRO-CAN
CONSTRUCTION LTD., THE GUARANTEE COMPANY OF
NORTH AMERICA, BAKER MCGARVA HART INCORPORATED,
PROTECTION ENGINEERING INCORPORATED,
INTERTEK TESTING SERVICES NA LTD., LEVELTON
ENGINEERING LTD., YONEDA & ASSOCIATES CONSULTING LTD.,
WONG-SOKULSKI ENGINEERING LTD., ALLAN WINDOW
SYSTEMS LTD., J.R. TRORY & COMPANY LTD.,
GOLDEN CITY ROOFING, H.P. CONSTRUCTION LTD.,
NATIONAL HYDRONICS LTD., BROADWAY REFRIGERATION &
AIR CONDITIONING CO. LTD., WESTCO CONTRACTORS LTD.,
DOVER CORPORATION (CANADA) LIMITED
BERT’S ELECTRIC LTD. AND VIADUCT SHEET METAL LTD.

 

THIRD PARTIES

BETWEEN:

 

METRO-CAN CONSTRUCTION (HS) LTD.

 

PLAINTIFF

 

AND:

 

NOEL DEVELOPMENTS LTD., SPF PROPERTIES INC.,
CARRYING ON BUSINESS AS “S.P.F. PROPERTIES INC.”
AND THE SAID S.P.F. PROPERTIES INC., AND
BAKER MCGARVA HART INCORPORATED

 

DEFENDANTS

 

BETWEEN:

 

NOEL DEVELOPMENTS LTD. AND SPF PROPERTIES INC.

 

PLAINTIFFS

 

AND:

 

METRO-CAN CONSTRUCTION (HS) LTD.,
METRO-CAN CONSTRUCTION LTD. AND
THE GUARANTEE COMPANY OF NORTH AMERICA

 

DEFENDANTS

 

AND:

 

ALLAN WINDOW SYSTEMS INC., SPIDER CONSTRUCTION LTD.,
COAST MILLWORKS LTD., NORMAC KITCHENS LTD.,
TORONTO DOOR AND HARDWARE LTD.,
WESTCO CONTRACTORS LTD., PACIFIC COMMERCIAL
INTERIORS INC., AND BAKER McGARVA HART INCORPORATED

 

THIRD PARTIES

 

 

 

Counsel Appearing:

Representing:

Rose-Mary Basham, Q.C.
T.W. Yu

 

The Owners, Strata Plan

No. LMS 2064

J. Logan

Noel Developments Ltd. and
SPF Properties Inc.

 

H. Shapray, Q.C.

Metro-Can Construction (HS) Ltd.

 

Brad Cramer

And Metro-Can Construction Ltd.
(Action No. C967345)

 

L. Gerow

Baker McGarva Hart Incorporated

 

D.W. Roberts, Q.C.
L.C. Fong

 

Intertek Services NA Testing Ltd.

 

G.A. Jones

Allan Window Systems Inc.
And Spider Construction Ltd.

 

C.G. White

Golden City Roofing &
Waterproofing Ltd.

 

 

 

[1]            THE COURT:  This is a double-barrelled application by Noel Developments Ltd. and SPF Properties Inc. to require the plaintiff, The Owners, Strata Plan No. LMS2064, to provide further and better particulars and to provide answers to interrogatories.

[2]            This action is one of three underway at the same time.  They all relate to a large construction project.  They have been ordered to be tried at the same time. 

[3]            The essence of what Noel and SPF are asking for here is the facts upon which the plaintiff's claim is based. 

[4]            Counsel for the plaintiff takes the position that this is no more than an attempt to get at expert opinions.  I do not agree.  Plaintiff's counsel further takes the position that requests by Noel and SPF should be postponed until the plaintiff has obtained all its experts' reports and carried out its examinations for discovery.

[5]            Certainly there is case law which indicates the court has discretion to delay, until after discovery, disclosure of certain facts upon which a claim may be based.  However, each case must be decided in the context of what is before the court.  In the present case ── and I should say cases because what I need to decide is in the context of three actions being carried out at the same time ── we have complaints by the owners of the subject building that all kinds of things were wrong in the construction of that building.  There are defendants and third parties including contractors, subcontractors and suppliers.  They have been drawn in and they all need to know what went wrong and they need to know that in detail. 

[6]            It is not simply the plaintiff that needs to obtain expert reports directed to what went wrong and why.  It is also the other parties that need to obtain their own expert reports, and at the present time they are in large part hamstrung; they do not know in large part precisely what it is that is said to have gone wrong.  The pleadings indicate in broad strokes what went wrong.  A reply to the demand or demands for particulars indicates in broad strokes what went wrong, but broad strokes, in my view, are not sufficient in the present case.  It is one thing to point to a matter such as plumbing or the windows or various other things that are said to have gone wrong with the construction.  It is another to get down to the precise details of what went wrong so that experts can be brought in where necessary and the parties can have a reasonable chance to try and put their positions together in this case.  If everything has to wait until the plaintiff has carried out its discoveries and has completed its acquisition of expert reports, this case is going to be delayed interminably.

[7]            The request for further and better particulars and for answers to the interrogatories covers a considerable amount of work.  Should this ruling that I am about to make descend into every single detail of what is being asked and why it is being asked, the reasons could go on for a long, long time and I do not think it practical, at least at this point, to get into that kind of detail.

[8]            What I am satisfied of is this; that the facts upon which the plaintiff's claim is based must be spelled out by the plaintiff in sufficient detail to allow the defendants and other parties down the line to be able to meet the case or cases against them.  Also, where law is pleaded and it is in respect of the pleading of failure to comply with building restrictions, zoning regulations and other restrictions governing the use and development of the particular development and any lot therein, I am satisfied that the law must be pleaded in much more detail; that the specific provisions that are being relied upon by the plaintiff and alleged by the plaintiff to have been the subject of failure of compliance must be spelled out.

[9]            I am advised by counsel for Noel and SPF that the particulars that are being demanded and the interrogatories, the answers to which are being requested, cover almost completely separate grounds.  There is one area where I am advised that the group is the same and that relates to para. 14(a) of the original statement of claim [now para. 26(a)] relating to water leakage. 

[10]        The conclusion I come to is that I must and do order the plaintiff to provide further and better particulars of the nature I described above and to provide answers to the interrogatories of the nature I described above.  To recapitulate, what I am getting at is the facts upon which the claims are made in sufficient detail so as to allow the defendants and the other parties to meet the allegations, get their experts organized, carry out examinations for discovery and do whatever they need to defend themselves.  I say the same with respect to the law that I have just dealt with.

[11]        I am not including in this ruling any expert opinions other than those opinions which are of the nature of facts upon which the plaintiff's claim is based. 

[12]        Counsel for the plaintiff has, in the reply to the demand for particulars, set out with regularity phrases such as "without limiting the generality of the foregoing", "further particulars will be the subject matter of an expert report which will be provided to the plaintiff in due course", "but reserve the right to deliver further particulars after examinations for discovery have been conducted", "some particulars of which include but are not limited to", "subject to such additional information as may be obtained from the experts' reports", "some of the areas include but are not limited to", and matters of that nature.  In my opinion, that is not the correct way to supply particulars or to answer the interrogatories.

[13]        If the plaintiff is caught in the position of finding that the answers to the interrogatories and the further and better particulars provided pursuant to this ruling leave facts out inadvertently or because of the discovery of further information as the action proceeds through the interlocutory stage, it is open to the plaintiff to apply to the court to either amend answers to interrogatories or amend the particulars provided.  It will be up to the court to decide whether to make orders pursuant to any application of that nature.  The ruling of the court will and must be in accordance with the justice of the situation.  For example, if it is something very major but it is very late in the proceedings and the trial date may be lost and it is something that could have been discovered much earlier, considerations of that nature may well be critical in deciding how the court's discretion should be exercised. 

[14]        In my view, the parties are entitled to know where the plaintiff is going and the plaintiff is obliged to set out those facts which are critical to the defendants and to the other parties so that they can properly defend themselves.

[15]        I think that covers the ground I wished to cover on this application and an order will go accordingly.  The one thing I have not addressed is dates and I would like to hear first from you, Ms. Basham, as to when this ruling may be complied with reasonably.

(SUBMISSIONS BY COUNSEL) 

 

[16]        THE COURT:  From what I have seen of the case thus far, my reaction to Ms. Basham's suggestion of six weeks is that it is a reasonable request and I do impose the requirement that the directions that I have given in this order be carried out within six weeks.

(SUBMISSIONS BY COUNSEL)

 

[17]        THE COURT:  In my view, costs should be ordered.  There has been clear victory to Noel and SPF on this particular application and I order that costs be payable by the plaintiff to SPF and Noel in any event of the cause, and for the time being I will use level 3.

“D.W. Shaw, J.”
The Honourable Mr. Justice D.W. Shaw

Vancouver, Harbourside Park: Court of Appeal dismisses appeal by general contractor for dismissal of claims by developer

                                                 Date: 19980326
Docket: CA023594
Registry: Vancouver


COURT OF APPEAL FOR BRITISH COLUMBIA



ORAL REASONS FOR JUDGMENT:


Before:

The Honourable Mr. Justice Macfarlane March 26, 1998
The Honourable Madam Justice Prowse
The Honourable Mr. Justice Finch Vancouver, B.C.



BETWEEN:

NOEL DEVELOPMENTS LTD. and
SPF PROPERTIES INC.

PLAINTIFFS
(RESPONDENTS)

AND:

METRO-CAN CONSTRUCTION LTD.

DEFENDANT
(APPELLANT)

AND:

METRO-CAN CONSTRUCTION (HS) LTD.
and THE GUARANTEE COMPANY OF NORTH AMERICA

DEFENDANTS




B. Cramer appearing for the Appellant
J. Logan appearing for the Respondent



[1] PROWSE, J.A.: This is an appeal from an order of
Madam Justice Koenigsberg pronounced July 9, 1997, dismissing
an application by Metro-Can Construction Ltd. pursuant to Rule
19(24)(d) of the Rules of Court to strike certain paragraphs of
the plaintiffs' statement of claim and to dismiss the action
against it as an abuse of process. In the result Madam Justice
Koenigsberg found that the position taken by the plaintiffs in
a related action did not preclude them from pursuing this
action against Metro-Can Construction.

[2] In my view, Madam Justice Koenigsberg came to the correct
conclusion. I would dismiss the appeal substantially for the
reasons given by her.

[3] MACFARLANE, J.A.: I agree.

[4] FINCH, J.A.: I agree.

[5] MACFARLANE, J.A.: The appeal is dismissed.




"The Honourable Madam Justice Prowse"

Vancouver, Harbourside Park: Court grants leave to appeal in dispute between developers and construction firms

                                                 Date: 19971205
Docket: CA023594
Registry: Vancouver


Court of Appeal for British Columbia


BETWEEN:


NOEL DEVELOPMENTS LTD. and SPF PROPERTIES INC.

PLAINTIFFS
(RESPONDENTS)
AND:


METRO-CAN CONSTRUCTION LTD.

DEFENDANT
(APPLICANT)
AND:


METRO-CAN CONSTRUCTION (HS) LTD.,
and THE GUARANTEE COMPANY OF NORTH AMERICA

DEFENDANTS




Before: The Honourable Mr. Justice Goldie
(In Chambers)


B. Cramer Counsel for the Defendant
Metro-Can Construction Ltd.
(Applicant)


J. Logan Counsel for the Plaintiffs (Respondents)


Place and Date of Hearing Vancouver, British Columbia
November 14, 1997


Place and Date of Judgment Vancouver, British Columbia
December 5, 1997



Reasons for Judgment of the Honourable Mr. Justice Goldie:

[1] This is an application for leave to appeal. The applicant
is the defendant styled in the cause as Metro-Can Construction
Ltd. I will refer to it as "Metro-Can". It is the parent of
the defendant Metro-Can Construction (HS) Ltd. I will refer to
it as "Metro-Can (H.S.)".

[2] The order appealed was made in chambers by Madam Justice
Koenigsberg on 9 July 1997. She dismissed the application of
Metro-Can to strike out paragraphs 6 through 8 of the statement
of claim as offending sub-rule 24(d) of Rule 19 of the Rules of
the Supreme Court of British Columbia. If Metro-Can had been
successful it would have been dismissed from the action.

[3] I had prepared draft reasons which set out the somewhat
labyrinthine network of disputes between the parties. I put
these to one side when I found it difficult to describe what
had gone on without touching upon questions which may have to
be decided on appeal. It is sufficient to say the plaintiffs
are developers who as owners entered into a contract with
Metro-Can (H.S.) to build apartment buildings. Differences
arose which were the subject matter of proceedings which have
been before this Court. Both parties were united in predicting
further differences.

[4] Accordingly, I content myself with saying, in the briefest
terms, that the merits of Metro-Can's appeal are not so lacking
as to make it possible to say it is bound to fail; the
importance to the parties is established and the issues which a
panel of this Court may be called upon to consider could be of
general importance to the profession.

[5] Leave to appeal is granted, with costs to be determined by
the panel hearing the appeal. Order accordingly.

[6] If the parties are anxious to expedite this appeal a
request to this end should be made to the Chief Justice of the
Court.



"The Honourable Mr. Justice Goldie"

Vancouver, Harbourside Park: Court decides leave to appeal required in continuing battle between leaky condo developer and contractor

                                                 Date: 19970911
Docket: CA023594
Registry: Vancouver




Court of Appeal for British Columbia



BETWEEN:

NOEL DEVELOPMENTS LTD. and SPF PROPERTIES INC.

PLAINTIFFS
(RESPONDENTS)
AND:

METRO-CAN CONSTRUCTION LTD.

DEFENDANT
(APPELLANT)

AND:
METRO-CAN CONSTRUCTION (HS) LTD.,
and THE GUARANTEE COMPANY OF NORTH AMERICA

DEFENDANTS



Before: The Honourable Mr. Justice Donald
(In Chambers)




Brad Cramer Counsel for the Appellant


John Logan Counsel for the Respondents



Place and Date of Hearing Vancouver, British Columbia
August 27, 1997


Place and Date of Judgment Vancouver, British Columbia
September 11, 1997



Reasons for Judgment of the Honourable Mr. Justice Donald:


[1] Metro-Can Construction Ltd. (the applicant) seeks
direction whether leave is required for the proposed appeal.
The appeal is against the decision of Madam Justice Koenigsberg
on 9 July 1997 dismissing the applicant's motion, advanced
under Rule 19(24)(d) of the Rules of Court, to strike out
portions of the statement of claim with the effect of
dismissing the whole claim against the applicant.

[2] In brief, the applicant argued below that the action
against it is an abuse of process because the plaintiffs
maintained in a previous action that Metro-Can Construction
(HS) Ltd. was a corporate entity separate from the applicant,
but now assert that the two companies are so closely related
that the applicant should bear responsibility for the acts of
Metro-Can Construction (HS) Ltd.; in other words, the
plaintiffs should not be permitted to blow hot and cold.

[3] I have decided that leave to appeal is required. My
judgment in Burlington Northern Railroad Co. v. Canadian
National Railway (1994), 10 B.C.L.R. (3d) 302 (C.A.), was an
attempt to distill from the somewhat varied opinions expressed
by judges of this Court and from other authority, a working
principle for distinguishing final orders from those requiring
leave. That decision was followed by Hinds J.A. in Primex
Investments Ltd. v. Northwest Sports Enterprises Ltd. (1995),
23 B.C.L.R. (3d) 251, where, at 255 he adopted the test set out
in Burlington Northern:

... an examination of the effect the order has on the
status of the litigation leads to a determination of
whether an order is final or interlocutory ...

[4] In Hamelin v. Davis (1996), 18 B.C.L.R. (3d) 85, Newbury
J.A. said, at 91:

Two preliminary matters arose on the main
appeal. First, Ms. Ross on behalf of the Auditors
had never obtained leave to appeal the Chambers
judge's ruling, perhaps on the assumption that it was
a final order. Mr. McAfee did not take objection to
our proceeding with the appeal, however, and we
advised counsel that if we ultimately concluded that
leave was necessary, it would be granted.

On reflection, it does appear that the order
dismissing the Auditors' application to strike Mr.
Hamelin's pleadings was an interlocutory one, since
it did not finally dispose of the rights of the
parties but instead "set the stage for determination
on the merits." Here I quote from Sopinka and
Gelowitz, The Conduct of an Appeal (Toronto, 1993) at
15. The authors also state at 13-14:

. . . numerous species of orders arising
between parties to litigation have been
authoritatively classified as final for the
purposes of appeal, for example: orders
striking out a Statement of Claim . . .
Numerous other orders have been classified
as interlocutory, for example: orders . . .
refusing to strike out a Statement of
Claim.

This is so even though the opposite result would have
occurred if the Chambers judge had allowed the
Auditors' application. As noted recently by Donald,
J.A. in Burlington Northern Railroad Co. v. Canadian
National Railway Co. (1994), 10 B.C.L.R. (3d) 302 at
306 (C.A.), "Many examples can be cited to illustrate
the point that an application decided one way could
be final, but if decided the other way interlocutory;
the most obvious is a Rule 18A application for
summary judgment. Leave is required where the
application has been refused, but not if it is
granted."

It follows of course that the Chambers judge's
order striking out certain portions of the Statement
of Claim was a final one in respect of which leave to
appeal was not necessary.

[5] Applying that test to the instant case, I observe that the
applicant invoked Rule 19(24)(d) as the means of advancing the
abuse of process point and that in doing so, the applicant bore
the onus of showing a plain and obvious case of abuse. Counsel
before me were divided as to the effect of Madam Justice
Koenigsberg's order. Mr. Cramer argued that all she decided,
and all she was empowered to decide, was that the applicant
failed to meet the onerous standard to which I just referred in
supporting a motion to strike out the statement of claim. As a
result, the issue remained open for determination after all the
evidence has been adduced at trial. On the other hand, Mr.
Logan submitted that the question of abuse has been finally
settled and thus cannot be revisited in the remainder of the
action.

[6] I prefer Mr. Cramer's position. It is supported by the
decision of this Court, Lomak Industries Corp. v. Bull, Housser
& Tupper (1995), 9 B.C.L.R. (3d) 155, where Cumming J.A. said
for the Court, at 162, "... a refusal to strike a claim under
R. 19(24) is not a final determination of the issue".

[7] Even if the decision in question closed the abuse of
process issue, as was argued by Mr. Logan, I would nevertheless
hold that leave is required. The effect of the decision did
not bring an end to the litigation between these parties and
therefore the rationale for the leave process comes into play
(see the relevant factors for leave in the Court's Practice
Directive, conveniently collected in British Columbia Annual
Practice 1997-98 at p. 614). In my opinion, it is not the
nature of the proceedings but the outcome that matters. The
fact that the Rule 19(24) application had the potential for
finally disposing of the action does not resolve the question
of whether leave is necessary. If the learned chambers judge
had decided the motion the other way, then the case against the
applicant would have been over and the plaintiffs would have
had an appeal as of right. In this respect, my reasoning
differs from that of Macdonald J.A. in Evans v. Campbell
Mitchell (1991), 11 B.C.A.C. 1, where he found that an order
refusing the defendant's Rule 18A application to dismiss the
action for res judicata was a final order because if res
judicata were found on appeal the litigation would be at an
end. With deference, I do not think that approach allows the
court to prevent appeals which may unduly impede the course of
trial proceedings.


[8] For these reasons, I direct that leave to appeal must be
obtained. I note that Mr. Logan has kindly consented to a
reasonable extension of time for completing the leave process.





"THE HONOURABLE MR. JUSTICE DONALD"

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