New Westminster, Carnarvon Towers: Built in 1994-1995; condo owners noticed leaks in October 1996; defects had given rise to a dangerous condition by September 1998; legal action commenced December 23, 1999; court excludes developers Stoneman and Muller in their personal capacity

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

The Owners Strata Plan LMS 2262 v. Stoneman Developments Ltd. et al.,

 

2004 BCSC 828

Date: 20040623
Docket: C996826
Registry: Vancouver

Between:

The Owners, Strata Plan LMS 2262

Plaintiff

And

Stoneman Developments Ltd., Bayou Developments Ltd.,
S & B Developments Ltd., James Hancock Architects Inc.,
Eric Pattison, Read Jones Christoffersen Ltd., Diana Klein, R.A. Mossakowski,
Sterling, Cooper & Associates Ltd., Myles Sterling,
Dec Design Mechanical Consultants Ltd., Alliance Roofing Systems Ltd.,
Eltex Enterprises (1990) Ltd., Preswitt Manufacturing Ltd., Cryovac Canada, Inc.,
City of New Westminster, Steven Moskalyk, Intertec Testing Services NA Ltd.,
Clan Glass & Metals Ltd., Preferred Restoration & Emergency Services Inc.,
and B.C. Building Science & Engineering Ltd.

Defendants

And

Stoneman Developments Ltd., Bayou Developments Ltd.,
James Hancock Architects Inc., Eric Pattison,
Read Jones Christoffersen Ltd., Diana Dlein,
R.A. Mossakowski, Sterling, Cooper & Associates Ltd.,
Myles Sterling, Steven Moskalyk
and Intertek Testing Services NA Ltd.

Third Parties

And

Stoneman Developments Ltd., Wade Stoneman
and Bayou Developments Ltd.

Third Parties

And

Belgrove Construction Ltd.,
Inter-Coast Consultants Ltd. and McArthur Vantell Limited

Third Parties


Before: The Honourable Madam Justice Garson

Reasons for Judgment

Counsel for the plaintiffs

J.G. Mendes and

V. Critchley

 

Counsel for the defendants Bayou Developments Ltd. and Arnold Muller

 

J.J. Campbell

 

Counsel for the defendants James Hancock Architects Inc. and James Hancock

 

G. Miller

 

Counsel for the defendants Stoneman Developments Ltd. and Wade Stoneman

 

T. Peters

 

Counsel for the defendants McArthur Vantell Limited

 

S. Dumont

 

Counsel for the defendant Preferred Restoration & Emergency Services Inc.

 

M. Worfolk

 

The defendant Rudolf Kevesdi appearing in person for himself and R.K. Engineering Ltd. 

 

 

Date and Place of Hearing:

May 10-11, and May 25, 2004

 

Vancouver, B.C.

Introduction

[1]            The applications before the court are to add several corporations and individuals as defendants in this action concerning alleged defective construction of a condominium.  The applications are opposed by some respondents on various grounds, including delay, prejudice, and a lack of evidence of an arguable case. 

[2]            The following individuals and companies are proposed defendants in this action:

(a)   Ericson Window Corporation;

(b)   Ericson Glass Industries Ltd.;

(c)   McArthur Vantell Limited;

(d)   Rudolf Kevesdi;

(e)   R.K. Engineering Ltd.;

(f)   Avalar Caulking Services Ltd.;

(g)   Wade Stoneman;

(h)   Arnold Muller;

(i)   All-Span Engineering and Construction Ltd.;

(j)   Key Glass & Aluminum Ltd.; and

(k)   James Hancock;

(collectively, the “Proposed Defendants”).

[3]            The plaintiffs also apply for an order that the style of proceeding, the further amended writ of summons and fourth further amended statement of claim be amended in accordance with the proposed draft amendments. 

[4]            The following parties were served with the applications to add them as defendants but have not filed any response and did not appear at the hearing: 

(a)   Ericson Window Corporation;

(b)   Ericson Glass Industries Ltd.;

(c)   Avalar Caulking Services Ltd.;

(d)   All-Span Engineering and Construction Ltd.; and

(e)   Key Glass & Aluminum Ltd. 

[5]            In order to add a defendant, the applicant plaintiffs must establish that there exists between the proposed party and the original party a question or issue relating to or connected with the relief claimed in the action or with the subject matter of the action and that there is a real question or issue to be tried in the sense that it is not entirely frivolous.  The plaintiffs must also establish that there is a good and sufficient reason for any delay in adding these defendants. 

[6]            There is evidence that Ericson Window Corporation and Ericson Glass Industries Ltd. were the suppliers of windows and doors to the condominium and that water leaked through the windows and doors, requiring repair and replacement. 

[7]            There is evidence that All-Span Engineering and Construction Ltd. was retained by the developers to design and conduct field reviews of the condominium steel stud framing, which studding is now alleged to be defective. 

[8]            There is evidence that Key Glass & Aluminum Ltd. was retained by the defendant, Preferred Restoration, to undertake repair work to the windows.  There is evidence that the repair work was defective and increased the damage to the condominium.

[9]            I am satisfied on the evidence that: there exists, as between the plaintiffs and these proposed defendants, issues connected to the relief claimed in the original action, there has not been inexcusable delay in seeking to add these defendants, and it is just and convenient to add these defendants, pursuant to Rule 15(5)(a)(iii).

[10]        I therefore order that the defendants Ericson Window Corporation, Ericson Glass Industries Ltd., Avalar Caulking Services Ltd., All-Span Engineering and Construction Ltd., and Key Glass & Aluminum Ltd. be added as defendants and the pleadings be amended in accordance with Schedule A to the notices of motion dated June 6, 2003, October 31, 2003, and April 29, 2004. 

[11]        The application to add the defendant James Hancock was consented to. 

[12]        The remaining Proposed Defendants oppose the applications to add them as defendants.  These defendants have the following general involvement with the condominium development that is the subject matter of this action. 

[13]        McArthur Vantell Limited ("McArthur Vantell") was retained as a consultant by Preferred Restoration & Emergency Services Inc. ("Preferred Restoration"), who were initially retained by the developer to remedy what was then considered to be a problem of some leaking windows.  It is alleged that McArthur Vantell failed to ensure that the remedial work was carried out in a proper manner and/or failed to perform adequate inspection of the remedial work. 

[14]        The allegation against Rudolf Kevesdi and R.K. Engineering Ltd. is that R.K. Engineering was retained as a window structural engineer and that it owed a duty to exercise reasonable care in reviewing and approving the structure and design of the windows and sliding doors used in construction of the condominium.  There is evidence that water ingressed through the windows and sliding doors and it is alleged that there are structural problems with the windows, which caused or contributed to the leakage. 

[15]        The allegations against Arnold Muller and Wade Stoneman are that they acted as project managers in respect of the construction of the condominium and participated in and supervised the design, development and construction of the condominium.  As well, it is alleged that the disclosure statement contained misrepresentations for which Stoneman and Muller are liable under s. 75 of the Real Estate Act, R.S.B.C. 1996, c. 397. 

[16]        I turn to a consideration of the applications which are defended by the Proposed Defendants.  But before doing so, I will briefly outline the facts which form the background to this action. 

Facts

[17]        The members of the plaintiff Strata Plan (collectively known as the “Owners”) are owners of the strata lots in the condominium development known as Carnarvon Towers, located at 720 Carnarvon Street in New Westminster (the “Condominium”).  The strata plan is composed of 87 strata lots (80 residential units and 7 commercial lots). 

[18]        The Condominium was built during 1994 and 1995.  The first date of possession as noted in the New Home Warranty Program (“NHW”) Special Project Possession Certificates was December 28, 1995.  (The last owner of a residential unit took possession on November 3, 1998). 

[19]        The developer of the Condominium was S & B Developments Ltd., a joint venture between Stoneman Developments Ltd. and Bayou Developments Ltd. (the “Developers”). 

[20]        Water ingress problems were first noted by the Owners in or about October 1996.

[21]        When the water ingress problems were first noted by the Owners, the Developers obtained a Moisture Ingress Investigation Report from McArthur Vantell dated December 4, 1996.  The Condominium was covered by the warranty made available to purchasers through the NHW.  The Developers subsequently advised the Owners that they would honour the warranty. 

[22]        The Developers retained Preferred Restoration and McArthur Vantell to undertake and oversee the repairs thought necessary in 1997. 

[23]        In about December 1996 the plaintiffs received legal advice suggesting that they should independently investigate the water ingress problems.  The plaintiffs subsequently received an Exterior Envelope Preliminary Option report dated March 31, 1997, prepared by Morrison Hershfield Limited. 

[24]        The remedial work undertaken by the Developers was not completed until late 1997 or early 1998.  Ongoing water ingress was experienced.  Consequently, the Owners retained Morrison Hershfield to undertake a building envelope condition assessment.

[25]        A Building Envelope Condition Assessment report dated September 4, 1998 was prepared by Morrison Hershfield Limited.  A summary of this report was given to the Owners in October 1998.  This was the first report which indicated in any way that any of the defects in the Condominium had given rise to a dangerous condition. 

[26]        The plaintiffs retained counsel in October 1999 and commenced this action on December 23, 1999.  The parties included as defendants were those that counsel for the plaintiffs thought might be found liable based on the Building Envelope Assessment report of Morrison Hershfield dated September 4, 1998. 

[27]        The statement of claim was issued on November 15, 2000. 

Principles of Law That Govern This Application

(a)   Statutory Framework

[28]        An application to add a party is governed by Rule 15(5)(a)(ii), which reads as follows: 

(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. 

[29]        Where as here, it is alleged that a limitation period has expired, the application is also governed by s. 4(1)(d) of the Limitation Act, R.S.B.C. 1996, c. 266, which provides:

s. 4(1)     If an action to which this or any or act applies has been commenced, the lapse of time limited for bringing an action is no bar to …

(d)   adding or substituting a new party as plaintiff or defendant,

under any applicable law, with respect to any claims relating to or connected with the subject matter of the original action. 

[30]        The inter-relationship between these two statutory provisions has been the subject of much judicial commentary.  Here, it is alleged by the Proposed Defendants, that the applicable limitation period expired after the issuance of the writ and prior to the filing of this application to add the Proposed Defendants. 

[31]        The following principles emerge from the authorities which govern this application. 

[32]        First, the plaintiffs must establish a degree of connection between the cause of action in the existing writ and statement of claim and the cause of action against the Proposed Defendants and that there is a real question or issue to be tried as between the plaintiffs and the Proposed Defendants.  

[33]        Second, the plaintiffs must establish that it is just and convenient to add the Proposed Defendants.

[34]        The determination of what is just and convenient where it is alleged there is an accrued limitation defence includes considerations of the extent of the delay, the reasons for the delay, any explanation put forward to account for the delay, prejudice in defending the action caused by the delay, as well as the extent of the connection between the existing claims and proposed new causes of action (Letvad v. Fenwick (2000), 82 B.C.L.R. (3d) 296 (C.A.) and Teal Cedar Products (1977) Ltd. v. Dale Intermediaries Ltd. et al. (1996), 19 B.C.L.R. (3d) 282 (C.A.)). 

[35]        In Brito v. Wooley (1997), 15 C.P.C. (4th) 255 (B.C.S.C.), Master Joyce (as he then was) conveniently summarized the principles that govern the determination of what is just and convenient where it is alleged that a limitation period has expired.  At ¶ 10, 11 and 12 he said:

I will begin my analysis with a summary of the applicable legal principles: 

1.    The addition of a party to an action under Rule 15(5) eliminates any limitation defence which might otherwise be available to the defendant if separate proceedings were brought:  see Lui v. West Granville Manor Ltd. et al. (1987) 11 B.C.L.R. (2d) 273 (C.A.) (“Lui No. 2”) at 295;

2.    The court may add a new party to an action notwithstanding that its effect will be to eliminate a limitation defence if it is just and convenient in all the circumstances to do so.  The existence of a limitation defence is a factor for the court to consider in determining whether it is just to add a party but is not determinative:  see Lui No. 2, supra, at 302; 

3.    The degree of interrelationship between the claim that is sought to be brought through the addition of the party and the existing claim is a factor to be considered as is the delay in making the application and any reasons which are advanced to explain the delay:  see Cementation Co. (Can) Ltd. v. Amer. Home Assur. Co. (1989), 37 B.C.L.R. (2d) 172 (C.A.); 

4.    If a limitation period has expired, then it may be that prejudice to the defendant is to be presumed.  However, prejudice to the defendant, whether presumed or demonstrated, is only a factor; it is not necessarily fatal to the application.  In the end, the court has a broad discretion to do what is just; see Teal Cedar Products (1977) Ltd. v. Dale Intermediarries Ltd., (1996) 19 B.C.L.R. (3d) 272 (C.A.) per Finch J.A.  In Tri-Line Expressways v. Ansari (1997), 143 D.L.R. (4th) 100 (B.C.C.A.) Lambert J.A. said that any presumption of prejudice (which was first mentioned in Lui v. West Granville Manor Ltd. (1985), 61 B.C.L.R. 315 (C.A.) (“Lui No. 1”) “should be confined to the sort of context in which it was first mentioned, namely the context of third party proceedings against a new party on an entirely new cause of action”. 

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

3.    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. 

[Emphasis added.]

If the conclusion is that, assuming a limitation defence has accrued, it would not be just and convenient to deny the defendant the benefit of that defence, then the order should not be made. 

[36]        In this case, all the Proposed Defendants who contested the application allege that there is an accrued limitation defence.  The plaintiffs deny this fact and I cannot determine the issue on this interlocutory application.  I shall therefore proceed on the basis that there is a limitation defence available in each case and I will consider the factors mentioned above. 

[37]        The length of the delay is one of the factors to be considered, although even an extraordinary length of delay is not necessarily determinative of the outcome (Yablonski v. Cranbrook, 2002 BCSC 1875).  The reasons in Teal, however, do not indicate how the length of delay is to be determined.  The plaintiffs and the Proposed Defendants advance different approaches for measuring the length of delay.  

[38]        Plaintiffs’ counsel contends that the significant period is the delay that accumulates beyond the expiry of the limitation period, plus one year for service.  

[39]        The Proposed Defendants, on the other hand, maintain that the relevant period is the lapse of time beginning upon the plaintiffs' acquisition of facts upon which it would have been reasonable to commence an action against the Proposed Defendants, which in this case appears to have occurred before the expiry of the limitation period. 

[40]        The cases submitted by the parties indicate that both approaches have been used in recent Supreme Court decisions.  Therefore it is difficult to determine whether one method is to be preferred over the other.  In my view, however, it would be inappropriate to adhere rigidly to either one of these methods of calculating the delay, given the discretionary nature of the Court’s power to allow addition of parties and the holistic approach to joinder advocated in Teal

[41]        In Teal Finch J.A. held at ¶ 41 that:

. . . neither the defendant’s interest in being secure against claims after a limitation period had expired, nor the plaintiff’s deliberate dilatory conduct in applying to add parties, are decisive of whether the application should be allowed. Both considerations may be important factors, but neither would prevent the court from exercising its discretion in the plaintiff’s favour.

[42]        For the Court to constrain its consideration of delay by exclusively relying on one of the methods of measuring delay advocated by the parties would be contrary to the guidelines set in Teal.

[43]        To focus only on delay that occurred after the limitation period and the period for service would place emphasis on the prejudice caused to the defendants’ interest in not being vulnerable to claims that are out of time.  According to this approach, delay before the limitation period expired would not feature in the court’s reasoning, despite the potential impact that this delay might have on the justness and convenience of adding the party in question.  Similarly, to measure delay exclusively from the date at which the plaintiffs learned the facts upon which it could have reasonably launched an action necessarily focuses the court’s attention on the plaintiffs’ fault or lack of fault in delaying its claim.

[44]        An approach that would more closely conform to the guidelines set in Teal would be to look at the entire delay, and consider factors such as the circumstances surrounding the delay, the expiry of the limitation period, and the prejudice to the parties when determining whether in the circumstances of the particular case it would be just and convenient to add the proposed defendant, despite the delay.  As dictated by Teal, none of these factors should be considered as having overriding importance, absent a clear evidentiary basis for doing so (¶ 45).  

[45]        I now turn to each of the applications before me with the aforementioned legal principles in mind. 

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