Westlaw Delivery Summary Report for SCHUETT,ROBERT
Date/Time of Request:
Client Identifier:
Database:
Lines:
Documents:
Images:
Tuesday, February 14, 2012 11:24 Central
CLASS
CAN-ALLCASES
591
1
0
The material accompanying this summary is subject to copyright. Usage is governed by contract with Thomson Reuters, West
and their affiliates.
Page 1
2011 CarswellAlta 1913, 2011 ABQB 649
2011 CarswellAlta 1913, 2011 ABQB 649
Vargo v. Canmore (Town)
Robert Vargo and Patricia Phillips, Plaintiffs and The Town of Canmore, Joby Messier (also known as Denny
Messier), Glen Chernen and Marie Chernen, Cascade Engineering Group, Highland Construction Ltd., Ike Hanson,
Code Works Corp., Brad Davis, Davis Electrical Inspection Services Ltd., Lockie Hughes, XYZ Ltd. #2, John Doe #1,
and John Doe #2, Defendants and Valley Building Materials and Valley Engineering Ltd., Third Party
Alberta Court of Queen's Bench
G.C. Hawco J.
Heard: April 27 - May 6, 2011
Judgment: October 26, 2011
Docket: Calgary 0701-10138
© Thomson Reuters Canada Limited or its Licensors (excluding individual court documents). All rights reserved.
Counsel: Frank A. Mason, for Plaintiffs
Dale Wm. Fedorchuk, Q.C., for Defendants, Lockie Hughes and Highland Construction Ltd.
Kevin P. McGuigan, for Defendant, Joby Messier
Tyson Dahlem, for Defendants, Valley Building Materials Ltd., Valley Engineering Ltd.
Subject: Contracts; Property
Construction law --- Contracts — Breach of terms of contract — Breach by contractor — Defective workmanship —
Miscellaneous
On March 23, 2006, plaintiff homeowners purchased home from vendors — Home inspection report was prepared and
nothing untoward was noted — Homeowners hired JC Ltd. to carry out renovations — Almost immediately upon
commencing work, JC Ltd. discovered many irregularities in basic construction of the building, beginning with improper load-bearing points — Actual costs of all of renovations amounted to $950,000 — Costs associated with respect to structural problems amounted to $170,000 — Homeowners brought action against vendors and builder —
Action allowed in part — Claim against defendant builders was allowed in amount of $165,250.64 — Claims against
remaining defendants were dismissed — House was negligently built by builder — Defects constituted real and substantial danger to homeowners — Court was not satisfied that court of appeal intended to require that defective roof
must not only be in danger of collapse but that it be in imminent danger of collapse before plaintiff may take steps to
ensure that perceived danger did not result in actual harm to family and others, and be compensated for doing so.
© 2012 Thomson Reuters. No Claim to Orig. Govt. Works
Page 2
2011 CarswellAlta 1913, 2011 ABQB 649
Cases considered by G.C. Hawco J.:
Blacklaws v. 470433 Alberta Ltd. (2000), 187 D.L.R. (4th) 614, 1 C.C.L.T. (3d) 149, [2000] 11 W.W.R. 476, 261
A.R. 28, 225 W.A.C. 28, 7 B.L.R. (3d) 204, 2000 ABCA 175, 2000 CarswellAlta 599, 84 Alta. L.R. (3d) 270
(Alta. C.A.) — distinguished
Mariani v. Lemstra (2004), 2004 CarswellOnt 5126, 246 D.L.R. (4th) 489, 27 C.C.L.T. (3d) 261, 39 C.L.R. (3d)
71 (Ont. C.A.) — considered
Privest Properties Ltd. v. Foundation Co. of Canada Ltd. (1997), 143 W.A.C. 182, 87 B.C.A.C. 182, 31 B.C.L.R.
(3d) 114, 143 D.L.R. (4th) 635, 1997 CarswellBC 500, [1997] 5 W.W.R. 265, 33 C.L.R. (2d) 29 (B.C. C.A.) —
considered
Roy v. Thiessen (2005), 252 D.L.R. (4th) 475, [2005] 7 W.W.R. 199, 42 C.L.R. (3d) 207, 2005 SKCA 45, 2005
CarswellSask 212, 257 Sask. R. 239, 342 W.A.C. 239 (Sask. C.A.) — considered
Sable Offshore Energy Inc. v. Ameron International Corp. (2006), 2006 NSSC 332, 57 C.L.R. (3d) 163, 2006
CarswellNS 496, 792 A.P.R. 122, 249 N.S.R. (2d) 122 (N.S. S.C.) — considered
Winnipeg Condominium Corp. No. 36 v. Bird Construction Co. (1995), 18 C.L.R. (2d) 1, [1995] 1 S.C.R. 85, 23
C.C.L.T. (2d) 1, 43 R.P.R. (2d) 1, [1995] 3 W.W.R. 85, 1995 CarswellMan 19, 176 N.R. 321, 1995 CarswellMan
249, 74 B.L.R. 1, 50 Con. L.R. 124, 100 Man. R. (2d) 241, 91 W.A.C. 241, 121 D.L.R. (4th) 193 (S.C.C.) —
considered
ACTION by homeowners against vendors and builder.
G.C. Hawco J.:
Introduction
1
Building a house with insufficient load-bearing points is like building a statute using feet of sand.
2
On March 23, 2006, the Plaintiffs purchased a home in Canmore, Alberta, from Glen and Marie Chernen. A
home inspection report was prepared. The Plaintiffs conducted a fairly extensive walk-through before submitting their
offer to purchase. Nothing untoward was noted. It was the Plaintiffs' intention to carry out certain renovations
3
The Plaintiffs hired Jenan Construction Ltd. to carry out the renovations. Jenan's person in charge was Roger
Gelfand who arrived at the house, [...] Stone Creek Place, in Canmore, on September 18, 2006. When he arrived, most
of the cabinetry, trim and drywall had been removed to accommodate the new design. The original framing was exposed and the site was ready to proceed. Almost immediately upon commencing his work, Mr. Gelfand discovered
many irregularities in the basic construction of the building, beginning with improper load-bearing points. The
problems with the load-bearing points gave him concerns with the rest of the structure Mr. Vargo suggested a thorough
investigation, which Mr. Gelfand proceeded to carry out, with assistance from Jamie Fukishima, an engineer.
4
Throughout his work, Mr. Gelfand was requested to keep a detailed, and conservative, accounting of all the
costs incurred relating to what he considered to be structural defects. The actual costs of all of the renovations
amounted to $950,000. The costs associated with respect to the structural problems amounted to $170,000.
5
The Defendants have each denied any negligence. It is alleged by all Defendants, other than Mr. Hughes, that it
© 2012 Thomson Reuters. No Claim to Orig. Govt. Works
Page 3
2011 CarswellAlta 1913, 2011 ABQB 649
was Mr. Hughes, as the builder, who would have been negligent. Mr. Hughes himself says that he was merely following the building plans and the advice of the engineers engaged at the time. He further argues that if there were any
defects, they were not of such magnitude that they posed a "real and substantial danger to the occupants" and that any
damages incurred to remedy them are therefore not recoverable.
6
The house was negligently built by Mr. Hughes. The defects constituted a real and substantial danger to the
Plaintiffs. They are entitled to recover as damages the costs of remedying the defects.
Facts
7
Mr. Vargo and Ms. Phillips purchased their house from the Chernen's on March 23, 2006. Prior to closing the
deal, they visually inspected the house and had a house inspection report prepared. They saw nothing which alarmed
or even concerned them. The house inspection report gave the house a clean bill of health.
8
The purchase price for the property was $1.304 million. While they certainly liked the house and the location,
they determined they did not like many of the finishings, so they bought the house intending to carry out a number of
renovations. They had budgeted some $200,000 to $300,000 for those renovations.
9
The company they hired to do the renovations was Jenan Construction Ltd. It in turn hired Roger Gelfand to
carry out the work. Mr. Gelfand had no engineering training other than on-the-job learning. He was a carpenter by
trade but did not have his journeyman's ticket. He had, however, managed and carried out quite a few renovations. He
had never built a house from the ground up. He did not purport to be an expert.
10
When Mr. Gelfand arrived at the house on September 18, 2006, he ran into Mr. Lockie Hughes who introduced
himself as "Lockie Hughes - Master Builder" and then proudly stated that he had built this house that Mr. Gelfand was
going to be working on.
11
Mr. Gelfand reviewed the original plans for the house and the plans which had been drawn up for the renovations and formulated a "game plan". As stated, most of the cabinetry, trim and the drywall had been removed to
accommodate the new design. The site was ready to proceed. While preparing his plan for the renovations, Mr. Gelfand discovered what he described as many irregularities in the basic construction of the building. He was concerned
with what he considered to be improper load-bearing points. He was also concerned that the framing was inadequate.
His superior, Mr. Frank Gust of Jenan Construction, told him to proceed with an investigation and to report anything
he suspected to be inadequate.
12
What first caught Mr. Gelfand's eye was a post in the kitchen area that was supporting the second floor and
picking up some of the load for the roof of what he referred to as the great room. The post in the kitchen was accepting
the load but was only resting on the sub-floor. There was nothing else under the post to transfer the load to the footings.
He found this rather unusual and continued to investigate further. He found numerous locations in the house that had
the same defects. He also noticed that certain load-bearing beams were not in the right places and they were not doing
their intended function of carrying and deflecting the loads they were meant to carry. By this time, Mr. Gelfand determined that the problems may have been greater than his expertise so he retained the services of Mr. Jamie Fukishima of Valley Engineering Ltd.
13
Mr. Gelfand approached Mr. Fukishima about the project and his concerns. Mr. Fukishima informed him that
he was familiar with the home as he had dealings with the original builder. Mr. Gelfand showed Mr. Fukishima the
spots he was concerned about. Mr. Fukishima agreed with his diagnosis of the problem and began recommending
corrective measures to be taken. Mr. Fukishima's original report of November 17, 2006 was entered as Tab 26 of
Exhibit 1. The primary structural defects which he noticed were set forth in that report. There were eight primary
deficiencies, all of which related to load-bearing beams or posts being out of position and therefore not bearing and
© 2012 Thomson Reuters. No Claim to Orig. Govt. Works
Page 4
2011 CarswellAlta 1913, 2011 ABQB 649
distributing the weight to the proper points, not being present at all or improperly transferring loads or not transferring
them at all to the foundation and the bearing walls.
14
Mr. Vargo requested that Mr. Gelfand keep a running summary of the work he did related specifically to what
he had to do to deal with the structural defects. Mr. Vargo told Mr. Gelfand to be conservative with respect to the costs
incurred. A summary of the work and the costs associated with the work was entered as Tab 20 of Exhibit 1. The total
set out is $170,250.64. That should have been reduced by $5,000 for certain flooring which was wrongly attributed to
the deficiencies. The total claim being advanced by the Plaintiffs is $165,250.64.
15
The total costs of all renovations incurred by the Plaintiffs was $954,228.21.
16
Mr. Gelfand's report and all of the photographs he took relating to the deficiencies discovered and remedial
work carried out was entered as Tab 29 of Exhibit 1. I do not intend to go through the report in great detail, other than
the primary problems discovered.
17
After the initial structural problems were noted, the Plaintiffs determined that all drywall should be removed.
Having done that, it was soon apparent that the problems began from the foundation when larger beams were installed
than were called for in the original plans. This gave rise to the walls and, eventually, the trusses for the roof, being out
of alignment. The result of the main support beams in the foundation not being properly installed was to deflect the
walls such that when the trusses were installed for the roof, there was insufficient bearing for those trusses. Mr.
Hughes had attempted to remedy this by adding what are referred to as ledger strips, which were simply strips of wood
nailed into the trusses. This was deemed by Mr. Gelfand, and more importantly, Mr. Carswell, to be completely inadequate. The result of that insufficient loadbearing was to cause undue weight and deflection on the roof. More will
be said on this later.
18
In addition to the trusses not sitting properly, Mr. Hughes omitted to install two loadbearing beams which were
called for in the plans and which were simply not installed. It was Mr. Hughes' evidence that Mr. Messier (the original
owner) told him that he did not want them to be installed because he did not like the aesthetics. Mr. Hughes maintained
that he checked with Mr. Fukishima who told him that they were not necessary for load-bearing and could be omitted.
Mr. Fukishima denies having said this. Mr. Messier denies that any such conversation took place between him and Mr.
Hughes at all. The lack of these two beams put additional stress upon the trusses, which were already not able to take
up the weight for which they were designed.
19
Up to the point in time when Mr. Gelfand perceived there to be a significant flaw in the way the roof trusses
were installed, he had been working under the direction of Mr. Fukishima. When he discovered the roof trusses
problem, he discerned that Mr. Fukishima may be in a possible conflict of interests, having had a hand in the design of
the roof trusses and the supply of the roof trusses through his companies, Valley Engineering Ltd. and Valley Building
Materials Ltd. Mr. Gelfand asked Mr. Fukishima if he would mind if he brought in someone who was totally impartial.
Mr. Fukishima had no objections. As a result, Mr. Vargo contacted Mr.John Carswell, a structural engineer. Mr.
Carswell then became involved with the problems and how to fix them.
20
Mr. Carswll agreed that the roof and the lack of support constituted a very serious problem. He determined that
the roof was not structurally safe and that it could collapse under heavy snow.
21
Mr. Carswell's report was entered as Tab 27 of Exhibit 1. His observations included the following:
• the main bearing walls that support loads from the second floor and the roof were not constructed concentrically,
over the major beams that are located in the main floor, that support the walls;
• columns that supported loads from the second floor and roof to the basement did not line up. These columns had
© 2012 Thomson Reuters. No Claim to Orig. Govt. Works
Page 5
2011 CarswellAlta 1913, 2011 ABQB 649
to be moved in order for them to be lined up and carry loads to the foundation;
• columns had been located directly on plywood between two wooden joists. The plywood had sagged in these
locations. Blocking had to be installed so that the column loads could be transferred to the beams;
• walls that supported trusses were not constructed in the proper location;
• the roof over the Great Room was designed to be supported by two outside walls and two interior beams. The
beams were not installed and the trusses for the roof were inadequate to properly support the roof;
• beams and headers that were required to support the second floor were not installed;
• the roof overhand outside the Great Room was sagging and had not been installed so that it could support its own
weight or snow loads.
22
Mr. Carswell's conclusions were as follows:
• the residence was originally constructed with defects that cause serious structural problems including partial
collapse of the residence. Serious deficiencies included the following:
1. The roof overhang at the front of the residence that was sagging and that could easily collapse.
2. Columns that were not directly supported by major structural elements such as beams or columns. The
columns could easily have punched through the plywood and created subsequent failures within the structure.
3. Headers and beams were not properly installed or properly supported. Sagging of the floors or roofs that
were being supported by these members would occur as the floors were loaded.
4. The roof in the Great Room was not properly supported. The roof was starting to deflect excessively and
could have experienced structural failure. The roofing could start to leak and cracks would occur in the interior finishes of the residence.
23
Mr. Carswell did give evidence at trial. He opined that the trusses had a good chance of failure and that because
of that, the roof could collapse. The situation that existed was unsafe and dangerous.
24
Following Mr. Carswell's investigation, there ensued a number of discussions among Mr. Vargo, Mr. Gelfand,
Mr. Carswell and Mr. Fukishima. Mr. Hughes had been invited to inspect the deficiencies. It did not appear he participated in any of the discussions as to how to remedy the problem with the trusses or lack of interior beams at the
time. He did proffer an opinion at trial which was, needless to say, somewhat belated.
25
It was determined that the most cost-efficient and structurally sound method of proceeding with lack of support
in the roof was to add another set of trusses to the existing trusses. That was done.
26
Because the two interior beams in the Great Room were not installed, there was lack of support for the roof
overhang. Additional work had to be carried out to make that safe.
27
The end result of all of this was that the renovations which were to be carried out cost $950,000 rather than
$300,000 originally contemplated. Only $165,000 of the extra cost was a result of the deficiencies which were referred
to. Some of those costs were also attributable to having to re-wire certain parts of the house because of moving some of
© 2012 Thomson Reuters. No Claim to Orig. Govt. Works
Page 6
2011 CarswellAlta 1913, 2011 ABQB 649
the structural posts. There was an electrical inspection carried out by Mr. Daniel Shannon, an electrical engineer. He
determined that, over all, there was poor electrical workmanship carried out, which resulted in a number of very
serious fire hazards being present. The cost of the electrical work was but a small portion of the costs of the remedial
work, notwithstanding that the poor electrical workmanship did pose a very real threat of harm.
28
Mr. Hughes gave evidence. He appeared to have quite an extensive background in building houses. But for
whatever reason, this was not one of his finer efforts. Mr. Hughes would have the Court believe that he was not responsible for any of the problems. He maintained he was hired by Mr. Messier to simply help him build the house. He
simply did was he was told. He was paid by the hour and had no control over anything.
29
It was his evidence that the two beams which were to be installed on the first floor were not available when it
was time to install them and that it would take some six to eight weeks for the beams which had been designed to
arrive. As a result, Mr. Messier decided to go with the larger beams and Mr. Fukishima agreed that they would do the
job. He stated that he simply installed them as instructed and made the necessary adjustments because of the greater
size of the beams.
30
He encountered no problems with any of the work as he was building the house. When he got to the trusses,
they were not sitting exactly where they should have sat, so he used ledger strips, which were something which were
approved by the Alberta Building Code.
31
It was his evidence that he did not put the two beams called for in the drawings in the Great Room because Mr.
Messier did not like the aesthetics. He called Mr. Fukishima and inquired as to whether the beams were for appearance
or for support. His evidence was that Mr. Fukishima told him that they were not necessary for support so he did not put
them in.
32
As stated earlier, Mr. Fukishima denied making any such statement and Mr. Messier denied having requested
they not go in.
33
Mr. Carswell did admit in cross-examination that the roof did not appear to be in imminent danger of collapse,
but he did say the roof could certainly collapse if the lack of structure support was not fixed.
34
According to Mr. Gelfand's calculations, the total amount expended on the house was $954,228.21. Of that,
Mr. Gelfand attributed $170,250.64 to the cost of remedying the deficiencies, all of which are set out in detail in
Exhibit 2. As stated earlier, the sum of $5,000 has to be deducted from that because it is not directly related to the
deficiencies.
Issues
35
There are four issues before the Court.
1. Was Mr. Lockie Hughes negligent in his construction of the house?
2. Was Mr. Messier a party to any negligence or directly responsible for any negligent workmanship?
3. Were any of the remaining Defendants negligent?
4. Did the negligence of any of the Defendants create a situation which posed a real and substantial danger to
persons or property?
© 2012 Thomson Reuters. No Claim to Orig. Govt. Works
Page 7
2011 CarswellAlta 1913, 2011 ABQB 649
Answers
1. Mr. Hughes was negligent in the construction of the Plaintiffs house.
2. Mr. Messier was not negligent but, as owner of the original house and as the person who hired Mr. Hughes, he
is vicariously liable.
3. None of the remaining Defendants were negligent.
4. Mr. Hughes' negligence created a situation which posed a real and substantial danger to the Plaintiffs and their
property.
Negligence of Lockie Hughes
36
I am satisfied that Mr. Hughes did not properly take into consideration the impact of using the wider beams on
the ground floor. If the walls of the house are not placed in the right position to properly carry the trusses which will
bear the weight of the roof and any snow it might receive, there will be a problem.
37
Mr. Hughes was aware that if he used the wider beams, he would have to make the proper adjustments to the
exterior walls so that the exterior walls would properly support the trusses.
38
Mr. Hughes did not consult with Mr. Fukishima or anyone at Valley Building Materials exactly how much he
would have to move the foundations or the walls to accommodate the wider beams and, ultimately, the trusses. He
made certain calculations which were not correct. The trusses could not even sit properly on the walls as they were
delivered, which required Mr. Hughes to add ledge strips. The ledger strips were not properly incorporated into the
trusses and were not, in and of themselves, sufficient to bear the weight of the roof.
39
Mr. Hughes' first negligent act began early on - allegedly on the ground floor. By failing to adjust the walls to
accommodate the wider beams, he ought to have foreseen that there would ultimately be a problem with the roof
trusses.
40
The next series of negligent work followed shortly thereafter. A number of posts on the ground floor were not
resting on support beams. Some interior load-bearing beams were not where they should have been. Other main
support beams were not properly bearing the loads they should have been. Posts were out of plum. Beams were out of
place. Two major weight-bearing beams in the Great Room were not installed at all.
41
I do not accept Mr. Hughes' evidence that the beams were not installed in the Great Room with the knowledge
and approval of either Mr. Messier or Mr. Fukishima.
42
I do not accept Mr. Hughes evidence that he did nothing wrong.
43
I do not accept Mr. Hughes evidence that he was nothing more than an hourly worker doing what he was told to
do by Mr. Messier. Mr. Messier placed him in charge of building the house as designed. He failed to do so.
44
I do accept the evidence of Mr. Gelfand, Mr. Carswell and Mr. Fukishima.
45
This house was poorly built, from the ground up. Mr. Hughes must bear responsibility.
Mr. Messier
© 2012 Thomson Reuters. No Claim to Orig. Govt. Works
Page 8
2011 CarswellAlta 1913, 2011 ABQB 649
46
Although I am satisfied that Mr. Messier was not guilty himself of any negligence, he did hire Mr. Hughes. As
such, he is vicariously liable.
Other Defendants
47
The only other remaining Defendants are not Defendants, but Third Parties. The other defendants set out in the
style of cause have been released. Mr. Fukishima was the principle of both Valley Building Materials and Valley
Engineering. Valley Building Materials provided all of the materials for the house, including the various beams,
lumber, trusses and everything that went into the construction of this house. It is not clear whether they provided the
stone for the fireplace.
48
There is no evidence before me which would suggest any failure by Valley Building Materials to provide
anything less than proper building materials. There is no evidence to suggest that Valley Engineering or Mr. Fukishima was guilty in negligence in advice given or plans provided. The third party proceedings against them are
therefore dismissed.
Real and Substantial Danger
49
In Winnipeg Condominium Corp. No. 36 v. Bird Construction Co., [1995] 1 S.C.R. 85 (S.C.C.), the Supreme
Court of Canada found that a contractor who constructs a building has a duty of care not only to the other party to its
contract, but to anyone who may eventually live or work in the building. The duty is to insure that the material and
workmanship meet a reasonable construction standard. The duty requires that the contractor build a structure that is
free from any defects which may pose a risk of causing damage to an occupant or to other property.
50
La Forest, J. put this way:
35 In my view, it is reasonably foreseeable to contractors that, if they design or construct a building negligently
and if that building contains latent defects as a result of that negligence, subsequent purchasers of the building
may suffer personal injury or damage to other property when those defects manifest themselves. A lack of contractual privity between the contractor and the inhabitants at the time the defect becomes manifest does not make
the potential for injury any less foreseeable. Buildings are permanent structures that are commonly inhabited by
many different persons over their useful life. By constructing the building negligently, contractors (or any other
person responsible for the design and construction of a building) create a foreseeable danger that will threaten not
only the original owner, but every inhabitant during the useful life of the building.
...
36 In my view, the reasonable likelihood that a defect in a building will cause injury to its inhabitants is also
sufficient to ground a contractor's duty in tort to subsequent purchasers of the building for the cost of repairing the
defect if that defect is discovered prior to any injury and if it poses a real and substantial danger to the inhabitants
of the building. In coming to this conclusion, I adopt the reasoning of Laskin J. in Rivtow, which I find highly
persuasive. If a contractor can be held liable in tort where he or she constructs a building negligently and, as a
result of that negligence, the building causes damage to persons or property, it follows that the contractor should
also be held liable in cases where the dangerous defect is discovered and the owner of the building wishes to
mitigate the danger by fixing the defect and putting the building back into a non-dangerous state. ....
51
It should, perhaps, be pointed out that the damages sought in Winnipeg Condominium were for purely economic loss. The law on pure economic loss was still being developed (and debated) in the United Kingdom and
Canada.
© 2012 Thomson Reuters. No Claim to Orig. Govt. Works
Page 9
2011 CarswellAlta 1913, 2011 ABQB 649
52
This case was a landmark in both the law of economic loss and the duty of care to noncontractual parties. There
need not be actual damage to property nor harm to an individual before recovery can occur.
53
However, the Court did require that there must be "a real and substantial danger" to the inhabitants of the
building.
54
In 2000, our Court of Appeal in Blacklaws v. 470433 Alberta Ltd., [2000] 11 W.W.R. 476, 2000 ABCA 175
(Alta. C.A.)dealt with another claim for pure economic loss arising from a development. The losses sustained were
related to poor management and costs that arose because of the poor or even negligent management of the development.
55
The majority of the Court found no contractual liability on the part of a personal defendant and found that the
failure to properly manage the development gave rise to a pure economic loss which was not recoverable because no
physical harm was suffered by the Plaintiffs or the Plaintiff's chattals. Nor was there an "imminent risk of harm".
56
It is helpful to set out what the Court said, in para 62:
The final category (d) is about economic losses caused by defective products or buildings. There was no tangible
product here. Nor did the buildings cause any harm, and they were not really defective. Even if one were to try to
put this case inside that category, the Supreme Court of Canada has never approved liability for economic loss on
facts like the present ones. Such liability here would be barred by both the majority and the minority judgments in
Rivtow Marine v. Washington Iron Works, [1974] S.C.R. 1189, 40 D.L.R. (3d) 530, and is not supported by
Winnipeg Condo Corp. #36 v. Bird Constr. Co, supra, (nor by Fraser-Reid v. Droumtsekas, [1980] 1 S.C.R. 720,
29 N.R. 424). The Winnipeg Condo. case requires physical harm to the plaintiffs or their chattels, or imminent risk
of it [my emphasis]. A shoddy but not dangerous building does not suffice for torts liability. In this case, there was
not even a threat of physical harm to persons or property, let alone actual physical harm (Klar, op. cit. supra, at
213-20). Those facts are discussed above. Even if one applies the pure two-part test in Anns v. Merton L.B.C.,
[1978] A.C. 728 (HL(E)), the Winnipeg Condo. case uses its second test to exclude torts liability for safe but
shoddy building: see its paras. 25, 35 ff., and 44 ff. (And English law is even more restrictive.)
57
The Defendants argue that this constitutes a "refinement" on what the Supreme Court of Canada said in
Winnipeg Condo. Not only must there be a "real and substantial danger", it must also be "imminent".
58
With respect, I disagree. Firstly, the facts in Blacklaws bear no resemblance to either the facts in this case, nor
to Winnipeg Condo. This house was not particularly "shoddy", but it was dangerous.
59
Secondly, with the greatest respect, I saw no mention in Winnipeg Condo. of the requirement that the danger be
imminent.
60
The Canadian Oxford Dictionary, Oxford University Press, 1998, defines "imminent" as" "impending; about to
happen".
61
One may argue that if there is indeed a "clear presence of a real and substantial danger" (para 41 of Winnipeg
Condo), then this means the danger is imminent. However, Justice La Forest did not make that a requirement.
62
In Mariani v. Lemstra (2004), 246 D.L.R. (4th) 489 (Ont. C.A.), Sharpe, JA spent considerable time analyzing
and commenting on Winnipeg Condo, (from para 24-37). At para 29, he referred to the defendants argument in much
the same as the Defendants in this case argue:
© 2012 Thomson Reuters. No Claim to Orig. Govt. Works
Page 10
2011 CarswellAlta 1913, 2011 ABQB 649
The Lemstras' second ground relates to the question of dangerousness. They submit that while the centre wall was
unstable, the house was not dangerous in the sense that there was any risk to personal safety or of imminent
collapse. The trial judge found that the defective centre wall "rendered the premises dangerous" but then added:
The various experts apparently did not conclude that it was unsafe in the sense that the house was likely to
collapse but it is clear from that same evidence that the centre wall deficiencies made the house susceptible to
movement or shifting in any significant wind, or as the case may be, snow load.
63
At para 31, Justice Sharpe, considered the nature of the danger to the occupants' homes:
I would not interfere with the trial judge's findings with respect to dangerousness. There was expert evidence that
the centre wall was unstable and dangerous within the meaning of the Ontario Building Code, R.R.O. 1990. While
those same experts agreed that there was no danger of imminent collapse, there was evidence that the defect made
the building unstable and that, if not repaired, it might collapse under a heavy snow load and that if not repaired,
"a catastrophic condition may prevail". ...
64
At para 32, Justice Sharpe concludes as follows:
In my view, the evidence on both defects is capable of bringing the case within the Winnipeg Condominium
principle. That case does not require the level of immediate danger suggested by the argument advanced by the
Lemstras. The operative principle is explicitly preventative. Recovery for the economic loss of repair is allowed
to avoid the greater cost of recovery for personal injury should the danger materialize and this must mean that the
plaintiff is entitled to claim for the cost of repairs required to avoid the danger and to prevent it from occurring.
65
The Saskatchewan Court of Appeal considered the same argument in Roy v. Thiessen, [2005] 7 W.W.R. 199
(Sask. C.A.). At paras 17 and 18, Lane, JA set out the findings of the trial judge:
17 He concluded the structural defects caused by Travis Thiessen's negligence constituted a real and substantial
danger to the respondents, and other occupants of the house, which danger a reasonably prudent person who
undertook construction of a house would have known or have reasonably foreseen. The danger consisted of
structural members rotting. The decomposition of the wooden structural members was a foreseeable result of
Travis Thiessen's failure to take reasonable care when installing a continuous vapour barrier between the interior
and exterior of the house.
18 He rejected the appellants' argument the negligence must be such as to present an "imminent risk" of physical
harm to found liability and ruled the harm created must be one which is "real and substantial and endangers the
safety of occupants of a defective building during its useful life."
66
At paras 37-38, Justice Lane concludes:
37 Finally, did the trial judge err in finding the defects posed a real and substantial danger? Having found there
was negligence and the defect complained of arose out of that negligence, the plaintiffs must prove the defect
posed a real and substantial danger to the occupant. The appellants contend the words "real and substantial" in
Winnipeg Condominium mean "imminent." They argue the trial judge erred because there was no threat of
physical harm and no evidence as to when any potential structural rot would occur, or to what extent. They argue
it may be that any rot resulting from the condensation problems could have caused structural decay long after the
natural life of the building came to an end for other reasons.
© 2012 Thomson Reuters. No Claim to Orig. Govt. Works
Page 11
2011 CarswellAlta 1913, 2011 ABQB 649
38 I agree with the trial judge Winnipeg Condominium does not impose a requirement of "an imminent risk" of
physical harm to found liability. In my view the imposition of such a standard seems contrary to the policy basis
for assigning liability to contractors in these circumstances. The policy goal must be to encourage homeowners to
make any necessary repairs as soon as possible in order to mitigate potential losses; they should not have to delay
such repairs until there is an imminent danger of harm.
67
In Sable Offshore Energy Inc. v. Ameron International Corp. (2006), 57 C.L.R. (3d) 163 (N.S. S.C.), Justice
Hood of the Nova Scotia Supreme Court reviewed a number of similar cases, including the decision of the British
Columbia Court of Appeal in Privest Properties Ltd. v. Foundation Co. of Canada Ltd. (1997), 143 D.L.R. (4th) 635
(B.C. C.A.) where the BCCA was satisfied that the fact that "at some point the joist could fail" and spoke of a concern
that a roof could collapse, was sufficient in their mind to constitute a real and substantial danger.
68
I am simply not satisfied that our Court of Appeal intended to require that a defective roof must not only be in
danger of collapse but that it be in imminent danger of collapse before a plaintiff may take steps to ensure that the
perceived danger does not result in actual harm to his family and others and be compensated for doing so.
Conclusion
69
The Plaintiffs' claim against the Defendants Hughes and Messier is allowed in the amount of $165,250.64.
70
The Plaintiffs' claims against the remaining Defendants are dismissed.
71
The Third Parties claim against Valley Building Materials and Valley Engineering is dismissed.
72
Costs will follow and may be spoken to if necessary.
Action allowed in part.
END OF DOCUMENT
© 2012 Thomson Reuters. No Claim to Orig. Govt. Works