Vancouver, Laurel Bridge: Leaky condo owners lose suit against realtor and developer

Citation:

Fee v. Currie et al.

Date:

19991217

1999 BCPC 0004

File No:

98-45814

 

Registry:

Vancouver

 

 

IN THE PROVINCIAL COURT OF BRITISH COLUMBIA

 

 

 

 

BETWEEN:

SANDRA FEE (a.k.a. Sandra Lago) and GARRY FEE

CLAIMANTS

 

 

AND:

MARILYN CURRIE, BELL-OLSEN REALTY LTD
AND LAUREL BRIDGE PROJECTS LTD

DEFENDANTS

 

 

 

 

 

 

 

 

 

REASONS FOR JUDGMENT

OF THE

HONOURABLE JUDGE H. DHILLON

 

 

 

 

Counsel for the Claimants:

Appeared in Person

Counsel for Defendants Currie & Bell-Olsen Realty Ltd.:

C. Spratt

Representative of Defendant Laurel Bridge:

Jim Wyse

Place of Hearing:

Vancouver, B.C.

Dates of Hearing:

March 4, May 27 & October 21, 1999

Date of Judgment:

December 17, 1999

 

CORRIGENDUM

The judgment is amended to reflect the correct name of Bell-Olsen Realty Ltd and to show the Claimants appeared in person and C. Spratt appeared as counsel for the Defendants Currie and Bell-Olsen Realty Ltd., and J. Wyse appeared as representative of the Defendant Laurel Bridge.

Introduction

By way of background, Strata Plan LMS 1909 is a strata corporation formed in September 1995. Its sole asset is a strata building, known as Laurel Point, at 908 West 7th Avenue in Vancouver. The developer of Laurel Point was the Defendant, Laurel Bridge Projects Ltd. Scott Canada constructed the Strata building for Laurel Bridge. Laurel Bridge retained the Defendants Marilyn Currie and Bell-Olsen Realty to sell the units in the strata building.

In June 1996, the Claimants, Sandra Fee and Gary Fee, attended at an open house at the building, and made certain enquiries of Ms.Currie. They made an offer to purchase a unit on June 16, 1996 and took possession of it on July 13, 1996. Within a year, the building began to show had significant water damage problems.

The Claimants' pleadings do not particularize a specific cause of action. The defendants have conducted the defence on the footing of a claim in damages for negligent misrepresentation.

The Claimants seek an award of damages against the Defendants, Marilyn Currie and Bell Olsen Realty Ltd., and against the developer, Laurel Bridge Projects Ltd. for their alleged failure to disclose water penetration into the strata building before they purchased a unit in it. It is not disputed that the strata building was eventually found to have membrane problems resulting in it becoming a "leaky condo". The Claimants paid special assessments exceeding $10,000 to repair the building membrane. They seek recovery of these payments, in the amount of $10,000, consistent with the upper limit of recovery in this Court.

The Claimants say that these water problems were known or ought to have been known to the Defendants at the time of their purchase. Accordingly, their discussions with Ms. Currie in June 1996, the extent of her knowledge of what was occurring in the building, and what was disclosed to the Claimants is a central point of the dispute between the parties.

 

Evidence of the Claimants

Mr. and Mrs. Fee both testified at trial.

Mr. Fee is an experienced buyer and seller of real estate. Previous to his involvement in Laurel Point, he owned a condominium unit in Surrey purchased in 1984, two detached houses in the 1980s, and another condominium in purchased in 1993. In each purchase he used the services of a realtor. In each sale of real property, he used a salesperson. He was familiar with strata councils and was aware that strata minutes existed.

In March 1996, Mr. Fee and his wife, Sandra, were looking to buy a strata unit in the Vancouver area. They intended this unit to be owned by Mrs. Fee, who was then known as Sandra Lago. They attended at a viewing of a display suite at Laurel Point, a recently constructed building, in early June 1996. Of the 26 units, only 3 remained unsold at that time. They liked the building and made three or four visits to view unit 302 in which they were interested. On at least two of the visits, they were dealing with Ms. Currie.

The Claimants testified that Ms. Currie told them that she was a very experienced realtor. She said she had dealt with the construction company, Scott Canada, on other developments. She described Scott Canada as a top-notch builder and that the quality of construction of the building was excellent.

The Fees testified that they asked Ms. Currie about the potential for leaks. According to them, she advised them that the building would never leak as it had a "space age acrylic finish."

The Fees looked at the exterior but did not look specifically for signs of water leaks. Both testified that there was nothing visible such as water stains, algae growth, or any cracking of the stucco to indicate a problem with leakage in the building.

Mr. and Mrs. Fee each agreed in cross-examination that Ms. Currie did not represent herself as having any special skill or training with respect to engineering matters or building envelopes.

The Fees agree that Ms. Currie gave them a document called Working with a Real Estate Agent in which it was recommended that for special or expert advice, the buyer should seek professionals such as home inspectors, contractors, engineers or surveyors.

The Fees did not speak to any owner or the chairperson of the Strata Corporation before agreeing to purchase their unit. They did not have the building inspected. The only subject clause in the offer is with respect to financing which was a concern as they were seeking high mortgage financing. Mr. Fee agreed that it was possible that this subject was extended.

The Fees made an offer on June 16, 1996, the vendor accepted it on June 17, the sale was completed on July 12 and the Fees moved in on July 13, 1996.

Mr. Fee said initially that he got a copy of the Strata Council minutes after the offer was made. Later in cross-examination he said that he believed that the minutes were provided before the offer was made. He admitted that he did not recall exactly when he asked for the minutes but he is certain that he saw them before the offer was accepted.

Mrs. Fee believed that the Strata Council minutes were provided to them before their offer dated June 16, 1996 was made.

Mrs. Fee examined the minutes of the Strata Council and asked Ms. Currie about complaints of condensation by some owners noted in the minutes, as well as about a letter from one owner complaining about water seepage in her unit.

Mr. Fee testified they told Ms. Currie that they did not want a condo that leaked. He recalls having a specific conversation with Ms. Curry about the reference to a water leak in the minutes.

Mrs. Fee said that Ms. Currie explained that the condensation was likely due to too much fireplace usage and that the water seepage was due to a plumbing leak that had been fixed. Ms. Currie wrote a note along side the leak reference in the minutes, indicating that the water leakage in unit 208, owned by Elizabeth Gubin, was related to a bathroom pipe and that it had been corrected.

Mrs. Fee did not recall if, after they took possession of their unit in July 1996, there were any further references to leakage problems in any of the Strata Council minutes for that year.

Mrs. Fee was elected to the Strata Council in January 1997 and became Chair of the Council later in 1997. After becoming Chair, Mrs. Fee discovered a letter in the Council file from the owner of unit 208, Mrs. Gubin, dated April 24, 1996, in which Mrs. Gubin had first complained about water leakage. This letter had been sent to Mr. Wyse of Laurel Bridge Projects and to the Strata Council. Ms. Currie was not sent a copy of this letter.

Mrs. Fee agreed that Council began to document a concern about leakage problems in Spring 1997 and sought help thereafter from engineering and building envelope specialists.

In early 1998 the owners of the Strata Building filed a writ in the Supreme Court against New Home Warranty, and in June 1998 they filed a writ against the City of Vancouver, and the Strata Building architects and engineers, claiming damages for the costs of remedying the cause of the leaks and for the loss of value of the property.

In July 1998, the Fees purchased a second unit, #204, because the vendor agreed to pay the large special assessment which made the purchase affordable for them.

 

Elizabeth Gubin

Ms. Elizabeth Gubin, owner of unit #208, testified that she first experienced wet spots in her living room in March 1996. She telephoned Ms. Currie on April 5, 1996 to complain about the water in her unit. Ms. Currie referred the matter to Jeff Ryan of Scott Canada for follow-up. Ms. Gubin complained again to Ms. Currie on April 10, 1996 after which she had no further direct dealings with Ms. Currie. Ms. Currie never entered the Gubin unit to look at the problem. Ms. Gubin saw Ms. Currie speak with a worker on Ms. Gubin's patio in around mid-April but Ms. Gubin was not privy to that conversation.

Ms. Gubin agreed that workers did attend at her unit to investigate the leak problem in May and June 1996. She agreed that one of the leaks was caused by a failed bath connection, due to a missing clamp along a seam. This problem was fixed. The second source of the leak was also fixed. The walls in her unit were fully repaired in June 1996.

Ms. Gubin received and reviewed the June 12, 1996 Strata minutes which noted that the water leakage in her unit had been "resolved". In her own mind, she did not think the problem had been totally resolved. She thought that there was no evidence of water in June because it was not raining. She thought the problem would surface again when the rainy season restarted. Ms. Gubin did not attend the June Strata Council meeting to raise this concern. As she expected, the water problems arose again with the return of rainy weather in September 1996.

 

Jim Wyse

Mr. Jim Wyse testified on behalf of Laurel Bridge Projects Ltd. He was a part owner, along with John Scott of Scott Canada, the construction contractor. Laurel Bridge hired the architects and relied on them to design a building that met the building standards at that time. They did not intend to build a leaky condo. There were three series of inspections, and all inspectors stated that the building met the standards in place. Mr. Wyse's own children purchased units in the building and were elected to the Strata Council.

Mr. Wyse first retained Ms. Currie in 1994 to sell units in another building and called on her again for the Laurel Bridge project. Mr. Wyse testified that he recalled the complaint by Ms. Gubin in the Spring of 1996. Mr. Jeff Ryan of Scott Canada attended to the complaint.

Various investigations were carried out to determine the cause of the leak problem. As a result of those investigation in May and June 1996, it was thought that the problem was unique to the Gubin unit. At that time, Mr. Ryan did not indicate there was a systemic leak problem or that the building had an envelope problem.

In the Spring and Summer of 1996, there were no complaints about leaks other than the one from Ms. Gubin. Laurel Bridge believed this to be an isolated incident. After investigating the Gubin complaints, and performing the repairs, their deficiency contractor sprayed the repaired area with a waterhose to simulate a rainstorm. No leaks were noted and the problem was thought to be resolved.

Mr. Wyse stated that Scott Canada would have handled the Gubin complaints as a deficiency, and it was not his usual practice to discuss deficiencies with Ms. Currie.

Up until late 1996, Laurel Bridge thought the problem was isolated and particular to the Gubin unit. When, in 1997, other complaints surfaced, it became apparent that the problem was systemic. Laurel Bridge retained Gordon Spratt & Associates, building envelope specialists, who reported on the cause of the problem in the summer of 1997. Laurel Bridge spent about $40,000 in investigating and repairing the leaks.

 

Pierre Gallant

Mr. Gallant testified as an expert on building envelopes on behalf of the claimants. His company, Morrison Hirshfeld, investigated the leaks for the Strata Council in 1997 and provided a report that recommended the total removal of the building cladding and the installation of a rain screen system.

Mr. Gallant was of the opinion the leaks he saw in 1997 are caused by a systemic problem in the construction of the building in that a face seal stucco wall cladding was used. However, he agreed that when the building was being constructed in 1994-95, this type of construction would have been approved by the City of Vancouver. Such cladding would not be acceptable today.

In cross- examination, Mr. Gallant agreed that he gave an opinion on the Gubin unit based on its condition in the fall of 1997. He did not give an opinion on its state before that time. He also agreed that a leak could be a one-time event. His testimony was that the leaks he saw in 1997 in the Gubin unit likely stem from the end of construction and are linked to building design and construction issues.

 

John Hilderly

Mr. Hilderly had been a resident of the Strata building since July 1995. He is the son-in-law of Ms. Currie. He testified that, as an owner, he was not concerned about a leakage problem with the building in the Spring of 1996. The problem with the Gubin unit was reported as resolved in June 1996. It was not until March or April 1997 that the owners became concerned and agreed to form a three-person committee to review the leak issue.

 

Marilyn Currie

Ms. Currie has been a licensed realtor for 29 years. In 1996, 75% of her sales were condominium units. She believed the Laurel Point building to be an excellent one, and sold a unit to her daughter and son-in-law. She knew that Mr. Wyse's family had purchased a unit. She considered buying a unit herself. When she met the Fees in June 1996, three units remained unsold.

Ms. Currie had no knowledge about building construction or envelope design in 1996. She noted nothing about the building exterior that would have caused her to question if there was a systemic leak problem in the building.

The first knowledge she had of a problem with the Gubin unit was in April 1996 when she received a phone call about a water leak in the wall. Ms. Currie contacted Mr. Ryan of Scott Construction who agreed to remedy the problem.

According to Ms. Currie, the fact of a deficiency is not unusual in the first year of a new construction. The complaint of a water problem was unusual and it was investigated immediately. Ms. Currie testified that she had a discussion with Al, the deficiency worker, who advised her that the source of the Gubin leak had been found. Al was very excited to have found the cause of the problem, which he explained was related to a plumbing connection in the wall. Al advised her that the leak in the Gubin unit had been fixed.

At the time Ms. Currie dealt with the Fees in June 1996, she did not see the detailed letter by Ms. Gubin dated April 24, 1996 outlining the water penetration in her unit . The Gubin letter was not copied to her. Ms. Currie did not see this letter until after this litigation arose.

Ms. Currie admitted that it was her practice to obtain a copy of the Strata Council minutes and to place the minutes in the information packages she prepared for purchasers. Her practice is to provide the minutes after there is an accepted offer to purchase but before the subject clauses are removed. She considers the minutes to be personal and does not give them to prospective purchasers before acceptance.

Ms. Currie agrees that she made the notation about the leak being resolved in the copy of the April 1996 minutes which the Fees reviewed in June 1996. She disagrees that it was done in front of the Fees because she did not sign the note. She states she provided a copy of the minutes with her endorsement of the problem being rectified to the Fees.

Ms. Currie disclosed her limited dual agency role to the Fees. From her discussions about financing and price negotiations with them, she felt that they were experienced real estate investors.

Ms. Currie understood that under the limited agency, she had an obligation to the Fees to provide accurate information and to advise of any defects known to her at the time the offer to purchase was made.

Ms. Currie denies that the Fees said anything about leak concerns to her. She also disagrees that she used the words "space age" when describing the stucco finish or advising that it was guaranteed not to leak. She stated this was not her usual wording.

  

Minutes and Correspondence

Several of the Minutes of the Strata Council and other relevant correspondence were tendered into evidence. I propose to summarize the salient facts from them.

 (More)