The British Columbia Court of
Appeal has written what may be the final chapter in the first of many
"leaky condo" cases to reach that court. Following its decision,
ratepayers in the Vancouver suburb of Delta will probably have to pick
up the tab for a $3.2 million repair, plus six years of interest and
costs now owing to the owners of Strata Plan NW3341.
The decision has important
implications for Ontario homeowners who are unhappy with the
construction of their own new homes and condominiums.
The leaky condo story began
with the construction of the 85-unit Riverwest development in Delta in
All three Riverwest buildings
are of wood frame construction. They were designed with terraced decks,
balconies, flat roofs and stucco walls. Unfortunately, improper slopes
in the design of the decks and balconies resulted in water pooling on
their surfaces. Despite repeated but unsuccessful attempts over the
years to make repairs, water began to leak into the exterior and
interior walls, window surfaces and ceilings.
This leakage caused
significant internal wood rot, and the structural beams of the buildings
began to weaken. To make matters worse, the joists were not properly
attached to the supporting beams and were inadequate to support the
decks and balconies. As well, the chimneys were not resting on
Total repair costs came in at
more than $3 million, or between $35,000 and $60,000 per unit.
In 1996, the condominium
corporation, on behalf of the owners, sued the city of Delta, the
developer, the architects, the building designers and the contractor.
By the time the case got to
trial in 2000 and 2001, most of the defendants had either settled or
been dropped from the case, and the only real issue for the judge to
decide was the liability of the city of Delta.
After a lengthy trial, Delta
was ordered to pay $3.15 million plus interest and costs. The basis of
liability against Delta was that it breached its statutory duty to
inspect and supervise the construction, and to enforce the provisions of
the building code.
Delta did not appeal either
the finding of liability against it or the amount of the damages.
Instead, it based its appeal on two technical arguments. First, Delta
claimed that the court action was started after the limitation period
had run out. Under two separate B.C. laws, there are three different
limitation periods for suing a municipality six months, two years and
six years, depending on circumstances.
The trial judge ruled that
the limitation period in this case was six years, and the condominium
corporation was not too late in starting their lawsuit in 1996.
The second ground of appeal
was that the condo owners should have been held partly at fault for not
following the advice of their own experts and starting repairs sooner.
On appeal, the three-judge court refused to interfere with the decision
of the trial judge, who ruled that the condo owners had acted reasonably
in carrying out repairs.
Unless some of the other
defendants can be found and forced to contribute, the entire judgment
will be the responsibility of the taxpayers of Delta.
Elsewhere in British
Columbia, the owners of some 65,000 similarly defective units are
awaiting compensation that could exceed $2 billion in damages and tie up
the court system for years. At last report, 7,500 of them had declared
bankruptcy. The British Columbia New Home Warranty Plan filed for
bankruptcy several years ago and is unable to pay at least $100 million
in claims against it.
In the trial decision of the
Strata Plan 3341 case, the judge relied heavily on the Supreme Court of
Canada decision in the Toronto case of Ingles vs. Tutkaluk (see Title
Page, City takes hit for shoddy reno, June 21, 2001, at
highest court has now made it clear that when a municipal government
makes a policy decision to inspect homes under construction for
compliance with bylaws and the building code, it owes a duty, under
certain circumstances, not to be negligent in implementing that policy.
Based on the appeal decision
in the B.C. leaky condo case, and the Supreme Court of Canada decision
in Ingles vs. Tutkaluk, unhappy owners of new homes and their lawyers
should consider if in some cases there is some municipal liability for
failing to ensure compliance with local bylaws and the Ontario Building