0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

2022 BCSC 1002 0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: 0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd., 2022 BCSC 1002 Date: 20220614 Docket: S1510418 Registry: Vancouver Between: 0790482 B.C. Ltd. Plaintiff And KBK No. 11 Ventures Ltd., 1100 Georgia Partnership, Peterson Investment (Georgia) Limited Partnership, Abbey Adelaide Holdings Inc., LJV Georgia Investments Inc. and No. 274 Cathedral Ventures Ltd. Defendants Brought under the Class Proceedings Act, R.S.B.C. 1996, c. 50 Before: The Honourable Mr. Justice Walker Reasons for Judgment Counsel for the Plaintiff: M. Hunt E. Christian Counsel for the Defendants/Applicants: S.D. Coblin M. Hashmi Counsel for the Proposed Third-Party Respondents, IGA/AGS Joint Ventures Inc. and IGA/AGS Joint Venture Inc.: D. Lehrer Place and Dates of Hearing: Vancouver, B.C. April 20-21 and May 17-18, 2022 Place and Date of Judgment: Vancouver, B.C. June 14, 2022 Table of Contents Introduction. 3 Applicants' Position. 7 IGA's Position. 8 Warranty Actions. 9 Class Action. 9 Issues. 9 Claim for Pure Economic Loss. 10 Introductory Remarks. 10 Winnipeg Condominium.. 11 Maple Leaf Foods. 12 Other Case Authorities. 19 Conclusion. 23 Characterizing the Applicants' Proposed Third-Party Tort Claim.. 23 Disposition. 27 Limitation Defence in Class Proceeding.. 27 Should Leave Be Granted in the Class Action?. 36 Summary. 38 Introduction [1] KBK No. 11 Ventures

Ltd. ("KBK"), 1100 Georgia Partnership, and their related entities apply for leave to file third-party proceedings against IGA/AGS Joint Ventures Inc. (collectively, "IGA") in three of five related actions, VA S1510418, VA S117480, and VA S117461. The subject matter of those and two other related actions, VA S1510419 and VA S1510431, concerns alleged defects in the curtain-wall window system of the Shangri-La Hotel building located on the corner of Georgia and Alberni Streets in Vancouver, B.C. ("Building"). For ease of reference, I will refer to all five related actions collectively as the "Related Actions". [2] The Building is a high-end, multi-use glazed tower, consisting of three air space parcels: the Shangri-La Hotel itself which occupies floors 1-15; live-work strata units on certain portions of floors 5 and 6 and on floors 16-43; and residential strata units on floors 44-62. The strata corporation responsible for the common property in the live-work units is the Owners, Strata Plan 3165 ("SP 3165") and for the residential units, the Owners, Strata Plan 3206 ("SP 3206"). I refer to them collectively in these reasons as the "strata corporations". [3] The Building is composed of a curtain-wall system consisting of pre-fabricated panels constructed as distinct, four-sided insulated glass units ("IGUs") which are said to be integral to the proper functioning of the Building

and separate the exterior and interior environments. IGUs include inner and outer glass (which are called "lites") separated by a metal spacer bar. The outer and inner lites have different structural attributes. The outer lite is heat-strengthened glass while the inner lite is tempered glass. The inner lite is twice as stiff as the outer lite and unlike the outer lite, it is supposed to break into small pieces when shattered. Both glass lites are sealed to the spacer using two types of sealant which are meant to provide an air- and vapour-tight cavity between the glass panes. A chemical known as a "desiccant", designed to absorb moisture in the air between the two lites, is contained inside of the spacer bar. [4] The curtain-wall system, including the IGUs, is common property. [5] Further Information concerning the lengthy and complex history of the Related Actions may be gleaned from reasons for judgment indexed at 2021 BCSC 1761 and 2022 BCSC 226. In those reasons, the applicants are referred to collectively as the "developer defendants". [6] The Related Actions are to be tried at the same time. The trial is scheduled to commence on October 3, 2022, and estimated to take approximately 130 days. [7] The applicants comprise the legal owner of the land, KBK, the developer, 1100 Georgia Partnership (a general partnership), and the latter's four partners, Peterson Investment

(Georgia) Limited Partnership, Abbey Adelaide Holdings Inc., LJV Georgia Investments Inc., and No. 274 Cathedral Ventures Ltd. [8] In two of the five Related Actions, SP 3165 (VA S1510431) and SP 3206 (VA S1510419) have sued multiple defendants, including the applicants, grounding their claims in negligence. The parties refer to those actions collectively as the "IGU Actions". [9] At the heart of the IGU Actions is the strata corporations' assertion of systemic dangerous defects in the IGUs which require repair or replacement. The strata corporations claim that the systemic defects, resulting from negligent design, manufacture, assembly, and installation, are manifesting in a number of inner and outer lites fogging, leaking water, spontaneously breaking, cracking, and/or failing, which have caused the IGUs and Building to be unsafe and hazardous. The strata corporations allege that the systemic dangerous defects pose a substantial risk of physical danger, including to the health and safety of any person in the vicinity of the Building. [10] In the IGU Actions, the strata corporations seek recovery of economic loss, i.e., the cost to abate the dangerous defects in common property through repair or replacement, based on the decisions of the Supreme Court of Canada in Winnipeg Condominium Corporation No. 36 v. Bird Construction Co., [1995] 1 S.C.R. 85 and 1688782 Ontario Inc. v.

Maple Leaf Foods Inc., 2020 SCC 35. [11] Two of the other five Related Actions, VA S117461 and VA S117480, are brought by the strata corporations against warranty insurers, National Home Warranty Group Inc. and Aviva Insurance Company of Canada (collectively, "Warranty Actions"), for recovery of losses they maintain are covered by warranty insurance policies. In turn, those insurers have issued third-party claims against two of the applicants, KBK and 1100 Georgia Partnership. [12] The fifth action, VA S1510418, is a class action brought on behalf of individual unit owners who stood in privity with the applicants. The numbered company 0790482 B.C. Ltd. is the representative plaintiff. The claims in the class proceeding are on account of breach of contract and breach of implied warranty of fitness, and are advanced on behalf of current and former unit owners who stood in privity with the applicants. The claims are in respect of all defects and are not restricted to proof of loss arising from dangerous defects. Recovery is sought in respect of individual losses (as opposed to common property), such as damage to individual units, diminution in value, and loss of amenities. [13] Prior to certification of this class action, and in addition to advancing claims concerning common property, the strata corporations advanced representative claims on behalf of individual unit holders in

the IGU Actions. The defendants and third parties in the IGU Actions challenged the strata corporations' standing to pursue such claims. As a result of amendments to pleadings in the IGU Actions and the class action, claims for individual losses on behalf of current and former owners who stood in privity with the applicants are now being pursued in the class action. [14] The proposed third party, IGA, is a trade contractor alleged to be responsible for the design, supply, and installation of the curtain-wall system, including the IGUs. In their proposed third-party notice, the applicants seek to advance claims against IGA for contribution and indemnity as well as an independent claim for damages premised on KBK's contractual relationship with IGA. Their initial written submissions described the essence of their claim this way: 5. In the proposed Third-Party Notice, these Defendants advance a contractual claim and a claim in negligence against IGA.

6. It is alleged therein that IGA owed the Applicants a duty in contract and tort to design, supply and install a "Curtain Wall" system that functioned without defect and was fit for its intended purpose.

7. It is pleaded that the IGA breached its duties to the Applicants by, among other things, failing to perform the services it contracted to perform in a good and workmanlike manner. [15] The applicants made similar allegations in third-party notices they previously filed in the IGU Actions. In the IGU Action brought by SP 3206 (VA S1510419), the applicants obtained leave from Master Muir on August 11, 2017 (unopposed by IGA) to file a third-party notice against, inter alia, IGA and filed their third-party notice on August 18, 2017. The applicants filed their third-party notice against IGA in the IGU Action brought by SP 3165 (VA S1510431), with leave from Master Taylor and unopposed by IGA, on December 10, 2018. [16] It is in the Warranty Actions and the class action that the applicants seek leave to file their respective third-party notices seeking contribution and indemnity for any amounts they are ordered to pay. The applicants' proposed third-party notices also advance independent contractual and tort claims for damages. [17] In the class action, it is all of the applicants who seek leave to file a third-party notice as all of them are named as defendants. In the Warranty Actions, it is only KBK and 1100 Georgia Partnership who apply for leave as they, as opposed to their related entities, are named as third parties. [18] Through the course of the hearing, the applicants

obtained leave (which was unopposed) to submit redrafted proposed third-party notices to clarify the nature of their claim and the relief sought. As it now stands, the proposed third-party claim against IGA advances a breach of contract claim, asserting that IGA breached its contractual obligations to KBK, and a claim in tort. The applicants characterize their tort claim as grounded in misrepresentation and negligent performance of a service for which, they submit, there is no limit on the scope of their recovery for economic loss. The allegations in the three proposed third-party notices differ slightly, to capture the differing nature of the claims made against the applicants, but not in any substantive way. Applicants' Position [19] The applicants' position is that the allegations in their proposed third-party notices essentially mirror those advanced in third-party notices they filed in the IGU Actions. They contend that their proposed third-party notices advance valid causes of action premised on misrepresentation and negligent performance of a service, are not barred by any limitation period, their claims as pleaded if assumed to be true are not bound to fail, and that there is no surprise or prejudice to IGA, such that leave should be granted to avoid a multiplicity of proceedings. [20] They also contend that, similar to those they advanced unopposed in the IGU Actions,

they would be prejudiced if they were denied the right to advance third-party claims against IGA in the class action as a result of the change in which claims for individual losses are being pursued, particularly those consequent upon amendments to the notice of civil claim in the class action filed in December 2021. [21] The applicants submit that they have not delayed in seeking leave and further, that in all respects, they meet the prerequisites in R. 3-5(1)(b) and (c) of the Supreme Court Civil Rules [Rules]. They contend that the merits of their application fall squarely within the holdings in the following case authorities (which I discuss or refer to below): McNaughton v. Baker, [1988] 4 W.W.R. 742 at paras. 18, 21, 28-30 (B.C.C.A.); Health Sciences Association of British Columbia v. Hewitt Associates Corp., 2019 BCSC 208; The Owners, Strata Plan EPS 677 v. ASPAC Developments Ltd., 2021 BCSC 2294 at paras. 16, 23; Steveston Seafood Auction Inc. v. Bahi, 2013 BCSC 1072 at para. 19; Tyson Creek Hydro Corporation v. Kerr Wood Leidal Associates Limited, 2014 BCCA 17 at paras. 1, 16, 24; Lui v. West Granville Manor Ltd. (1985), 18 D.L.R. (4th) 391 at para. 41 (B.C.C.A.); Canfor Pulp Limited Partnership v. Siemens Building Technologies Ltd., 2016 BCSC 2089 at para. 49. [22] A claim for contribution or indemnity may be brought by a separate action or a third-party notice per R.

3-5(1), which sets out when a claim for contribution or indemnity may be brought by a third-party notice: Making a third party claim (1) A party against whom relief is sought in an action may, if that party is not a plaintiff in the action, pursue a third party claim against any person if the party alleges that (a) the party is entitled to contribution or indemnity from the person in relation to any relief that is being sought against the party in the action, (b) the party is entitled to relief against the person and that relief relates to or is connected with the subject matter of the action, or (c) a question or issue between the party and the person (i) is substantially the same as a question or issue that relates to or is connected with (A) relief claimed in the action, or (B) the subject matter of the action, and (ii) should properly be determined in the action. [23] Rule 3-5(4), brought into force on April 4, 2022, requires a third-party notice to be brought within 42 days of a defendant's response pleading being filed, otherwise leave of the court is required. The applicants are beyond that time and hence, require leave. [24] The same principles governing R. 9-5, which concerns dismissal of a claim on the basis that no cause of action is alleged, apply to the analysis for granting leave or striking third-party claims. The party advancing or seeking to advance a

third-party claim is not required to adduce evidence in support of the application. The facts pleaded are presumed to be true. The third-party notice or the application seeking leave will only be struck or dismissed (as the case may be) if it is plain and obvious that the pleading fails to disclose a reasonable claim that is not bound to fail: McNaughton at paras. 28-30; Health Sciences; ASPAC at para. 16; Steveston Seafood at para.

19. IGA's Position [25] IGA does not contend that the proposed third-party notices fall outside the scope of R. 3-5. Their defence to the application focuses on whether the applicants' claims for economic loss engage a valid cause of action and also, in respect of the class action, whether the claim is time-barred. Warranty Actions [26] IGA acknowledges that the claims in the proposed third-party notices in the Warranty Actions are not barred by any limitation period. It does not oppose the filing of third-party notices in the Warranty Actions so long as the relief sought is grounded on a contractual claim. [27] In respect of the claim for contribution and indemnity based in negligence, IGA's original position on the application was that there is no basis in law on which the applicants can seek recovery in tort because their claim is to recover pure economic loss. However, in oral submissions, IGA confirmed that it was not vigorously contending that it did not owe a duty of care in tort to the applicants. Its primary defence is that there is no basis in law on which the applicants can recover economic loss beyond any cost to abate dangerous defects. Class Action [28] For the class action, IGA's position is that leave should be denied because the limitation period has expired. In addition, and similar to its revised position in the Warranty Actions, IGA opposes the tort claim in

the proposed third-party notice for pure economic losses not falling within the exception for dangerous defects outlined in Winnipeg Condominium and Maple Leaf Foods. IGA acknowledges that in theory, claims for recovery of economic loss predicated on dangerous defects arising in individual units from the defects in the IGUs might be made. On that basis, IGA acknowledges that in addition to the contractual claim, it cannot oppose a tort claim confined to recovery for economic loss in respect of dangerous defects to individual strata units arising from defects in common property, as the claim cannot be said to be bound to fail. Issues [29] The submissions of the applicants and IGA raise the following issues. [30] Are the proposed third-party tort claims in respect of losses not arising from dangerous defects bound to fail as they disclose no reasonable cause of action? This issue involves the characterization of the nature of the claim (i.e., a claim for misrepresentation and negligent performance of services or for negligent supply of a defective product) and whether the holding in Winnipeg Condominium nonetheless limits recovery for economic loss in respect of any claim concerning building defects to the cost to abate dangerous defects. [31] Is the proposed third-party claim in the class proceeding time-barred? Determination of that issue depends in part on the merits of the

applicants' submission that IGA is precluded from a limitation defence on account of a tolling agreement or is estopped on account of its conduct. [32] If the applicants are not time-barred, should they be permitted to issue the third-party notice in the class action since they are beyond the 42-day time period (provided for in R. 3-5(4)) to do so without leave? Claim for Pure Economic Loss Introductory Remarks [33] The parties' dispute concerns whether, as IGA contends, claims for pure economic loss arising in building defect cases are restricted to the cost to repair or replace dangerous defects. IGA says the leading authority concerning the scope of recovery in building defect cases remains the Supreme Court of Canada's decision in Winnipeg Condominium. While not specifically contesting the applicants' submission that as a matter of law, IGA owed a duty of care to the applicants in relation to the curtain-wall system, IGA's submissions focus on whether the potential scope of recovery is limited to the cost to abate dangerous defects. [34] The applicants contend that IGA's position overlooks the most recent discussion of the law set out in the Court's decision in Maple Leaf Foods and subsequent authorities. According to the applicants, its claim against IGA is effectively a claim for misrepresentation and negligent provision of services, which, they submit, is not fettered by

proof of dangerous defects as shown in Maple Leaf Foods. Winnipeg Condominium [35] Winnipeg Condominium concerned a claim for pure economic loss, i.e., the cost of repair or replacement of defects alleged to be dangerous, by an indirect purchaser of units in a building based in negligence. In carving out an exception to the general bar on claims in negligence for pure economic loss, the Court said that any such claim in the building defect context is restricted to the cost to abate dangerous defects and must be founded upon accepted relationships of proximity. [36] The Court's reasoning in allowing the claim is distilled in the passages excerpted below: 47 Turning to the first concern, a duty on the part of contractors to take reasonable care in the construction of buildings can, in my view, be conceptualized in the absence of contract and will not result in indeterminate liability to the contractor. As I mentioned earlier, this Court has recognized that a tort duty can arise concurrently with a contractual duty, so long as that tort duty arises independently of the contractual duty; see Rafuse, supra; Edgeworth, supra. As I see it, the duty to construct a building according to reasonable standards and without dangerous defects arises independently of the contractual stipulations between the original owner and the contractor because it arises from a duty to create the building

safely and not merely according to contractual standards of quality. It must be remembered that we are speaking here of a duty to construct the building according to reasonable standards of safety in such a manner that it does not contain dangerous defects. As this duty arises independently of any contract, there is no logical reason for allowing the contractor to rely upon a contract made with the original owner to shield him or her from liability to subsequent purchasers arising from a dangerously constructed building. This point was forcefully made by Richmond P. in Bowen, supra, at p. 407: 48 The tort duty to construct a building safely is thus a circumscribed duty that is not parasitic upon any contractual duties between the contractor and the original owner. Seen in this way, no serious risk of indeterminate liability arises with respect to this tort duty. In the first place, there is no risk of liability to an indeterminate class because the potential class of claimants is limited to the very persons for whom the building is constructed: the inhabitants of the building. The fact that the class of claimants may include successors in title who have no contractual relationship with the contractors does not, in my view, render the class of potential claimants indeterminate. As noted by the New Jersey Supreme Court in Aronsohn v. Mandara, 484 A.2d 675 (1984), at p. 680,

"[t]he contractor should not be relieved of liability for unworkmanlike construction simply because of the fortuity that the property on which he did the construction has changed hands". 53 My conclusion that a subsequent purchaser is not the best placed to bear the risk of the emergence of latent defects is borne out by the facts of this case. It is significant that, when cracking first appeared in the mortar of the building in 1982, the Condominium Corporation actually hired Smith Carter, the original architect of the building, along with a firm of structural engineers, to assess the condition of the mortar work and exterior cladding. These experts failed to detect the latent defects that appear to have caused the cladding to fall in 1989. Thus, although it is clear that the Condominium Corporation acted with diligence in seeking to detect hidden defects in the building, they were nonetheless unable to detect the defects or to foresee the collapse of the cladding in 1989. This, in my view, illustrates the unreality of the assumption that the purchaser is better placed to detect and bear the risk of hidden defects. For this Court to apply the doctrine of caveat emptor to negate Bird's duty in tort would be to apply a rule that has become completely divorced, in this context at least, from its underlying rationale. [Emphasis in original] Maple Leaf Foods [37] Maple Leaf Foods

was not a building defect case. It was a claim by franchisees for recovery of economic loss due to tainted meat, which they alleged to be dangerous to human health and had been voluntarily recalled by the defendant manufacturer. The claim engaged two separate categories of recovery for pure economic loss: negligent performance of a service and negligent supply of shoddy goods or structures. [38] With respect to the first category--negligent performance of a service--the Court dismissed the claim on the basis that the plaintiff failed to establish the requisite elements of undertaking and reliance. For a claim of negligent performance of a service, a relationship of proximity is created when, and only when, the defendant undertakes responsibility which invites reasonable and detrimental reliance by the plaintiff upon the defendant for that purpose. The plaintiff's reliance must fall within the scope of the defendant's undertaking: Maple Leaf Foods at paras. 32, 35. The Court in Maple Leaf Foods found that the only responsibility the defendant had undertaken was to provide meats fit for human consumption, the purpose of which is to ensure that the ultimate consumers of their meats would not become ill or die as a result of eating the product. The Court found that the undertaking was not made in reference to the plaintiff's business interests and therefore even if there was any

merit to the claim of reasonable and detrimental reliance, which was not found to exist in any event, it fell outside the purpose of the undertaking. [39] Under a separate subheading in its reasons, the Court analyzed whether the plaintiff was entitled to recover pure economic loss consequent upon the delivery of a defective product. [40] Applying the Anns/Cooper framework, the Court first held the plaintiff could not analogize its claim to Winnipeg Condominium, as unlike the latter, the allegedly contaminated meats had been voluntarily recalled by the defendant and thus posed no danger to the ultimate consumers: Maple Leaf Foods at paras. 47-48. [41] Given the dispute between the parties concerning the effect of the reasoning in Maple Leaf Foods upon the holding in Winnipeg Condominium, I have excerpted a greater number of passages from the reasons in Maple Leaf Foods. [42] The applicants rely on the passages from Maple Leaf Foods excerpted below concerning misrepresentation and negligent performance of a service, to support their contention that their claims are not limited to the cost to abate dangerous defects, and instead that recovery for economic loss is unlimited where a claimant can establish a relationship of proximity (not necessarily arising from a contractual relationship): (1) Negligent Misrepresentation or Performance of a Service [29] In Livent, this Court

restated the analytical framework governing cases of negligent misrepresentation or performance of a service. In doing so, it brought the analytical approach in such cases into accord with the refined Anns/Cooper framework laid out in Cooper. Previously, the duty analysis had been stated in Hercules Managements Ltd. v. Ernst & Young, [1997] 2 S.C.R. 165, which grounded a prima facie duty of care on mere foreseeability of injury. Cooper, however, "signalled a shift from th[at] test" (Livent, at para. 22; see also para. 23). [30] Under the Anns/Cooper framework, a prima facie duty of care is established by the conjunction of proximity of relationship and foreseeability of injury. As this Court affirmed, "foreseeability alone" is insufficient to ground the existence of a duty of care. Rather, a duty arises only where a relationship of "proximity" obtains (Cooper, at paras. 22 and 30‑32; see also Livent, at para. 23). Whether a proximate relationship exists between two parties at large, or inheres only for particular purposes or in relation to particular actions, will depend on the nature of the relationships at issue (Livent, at para. 27). It may also depend on the nature of the particular kind of pure economic loss alleged. [31] A party may seek "to base a finding of proximity upon a previously established or analogous category" (Livent, at para. 28). But where no established

proximate relationship can be identified, courts must undertake a full proximity analysis in order to determine whether the close and direct relationship ⸺ which this Court has repeatedly affirmed to be the hallmark of the common law duty of care ⸺ exists in the circumstances of the case (ibid., at para. 29; Saadati, at para. 24; Cooper, at para. 32). [32] In cases of negligent misrepresentation or performance of a service, two factors are determinative of whether proximity is established: the defendant's undertaking, and the plaintiff's reliance (Livent, at para. 30). Specifically, "[w]here the defendant undertakes to provide a representation or service in circumstances that invite the plaintiff's reasonable reliance, the defendant becomes obligated to take reasonable care", and "the plaintiff has a right to rely on the defendant's undertaking to do so" (ibid.). "These corollary rights and obligations", the Court added, "create a relationship of proximity" (ibid.). In other words, the proximate relationship is formed when the defendant undertakes responsibility which invites reasonable and detrimental reliance by the plaintiff upon the defendant for that purpose (P. Benson, "Should White v Jones Represent Canadian Law: A Return to First Principles", in J. W. Neyers, E. Chamberlain and S. G. A. Pitel, eds., Emerging Issues in Tort Law (2007), 141, at p. 166). [33] Taking Cooper

and Livent together, then, this Court has emphasized the requirement of proximity within the duty analysis, and has tied that requirement in cases of negligent misrepresentation or performance of a service to the defendant's undertaking of responsibility and its inducement of reasonable and detrimental reliance in the plaintiff. Framing the analysis in this manner also illuminates the legal interest being protected and, therefore, the right sought to be vindicated by such claims. When a defendant undertakes to represent a state of affairs or to otherwise do something, it assumes the task of doing so reasonably, thereby manifesting an intention to induce the plaintiff's reliance upon the defendant's exercise of reasonable care in carrying out the task. And where the inducement has that intended effect ⸺ that is, where the plaintiff reasonably relies, it alters its position, possibly foregoing alternative and more beneficial courses of action that were available at the time of the inducement. That is, the plaintiff may show that the defendant's inducement caused the plaintiff to relinquish its pre‑reliance position and suffer economic detriment as a consequence. [34] In other words, it is the intended effect of the defendant's undertaking upon the plaintiff's autonomy that brings the defendant into a relationship of proximity, and therefore of duty, with the plaintiff. Where that

effect works to the plaintiff's detriment, it is a wrong to the plaintiff. Having deliberately solicited the plaintiff's reliance as a reasonable response, the defendant cannot in justice disclaim responsibility for any economic loss that the plaintiff can show was caused by such reliance. The plaintiff's pre‑reliance circumstance has become "an entitlement that runs against the defendant" (Weinrib, at p. 230). [35] That entitlement, however, operates only so far as the undertaking goes. As this Court cautioned in Livent, "[r]ights, like duties, are . . . not limitless. Any reliance on the part of the plaintiff which falls outside of the scope of the defendant's undertaking of responsibility ⸺ that is, of the purpose for which the representation was made or the service was undertaken ⸺ necessarily falls outside the scope of the proximate relationship and, therefore, of the defendant's duty of care" (para. 31, citing Weinrib and A. Beever, Rediscovering the Law of Negligence (2007), at pp. 293‑94). This "end and aim" rule precludes imposing liability upon a defendant for loss arising where the plaintiff's reliance falls outside the purpose of the defendant's undertaking. Livent makes clear, then, that considerations of undertaking and reliance furnish not only a principled basis for drawing the line in cases of negligent misrepresentation or performance of a service between duty

and no‑duty, but also for delineating the scope of the duty in particular cases, based upon the purpose for which the defendant undertakes responsibility. Reliance that exceeds the purpose of the defendant's undertaking is not reasonable, and therefore not foreseeable (para. 35). [Emphasis added] [43] I agree with the applicants that the Court's reasons do not limit recovery for pure economic loss to the cost to abate dangerous defects for claims grounded in misrepresentation and negligent performance of a service. The Court in Maple Leaf Foods clearly states at para. 34 that such claims derive their rationale from the plaintiff's reliance induced by the defendant's undertaking, and seeks to rectify the harm caused to the plaintiff who relied on the defendant's undertaking of responsibility to its detriment. [44] As mentioned, in their written submissions, the applicants characterize the entirety of their proposed third-party claims as founded on misrepresentation and negligent performance of a service, predicated on their relationship of proximity with IGA (a relationship that IGA does not dispute). Their written submissions excerpted below highlight the point: 40. Thus, in cases of negligent misrepresentation or negligent performance of a service, the aggrieved party can advance a claim in respect of what would otherwise be termed "pure economic loss." 41. In the present case, the pleadings allege that IGA entered into a Contract to provide services. It is further alleged that the intended effect of that undertaking invited the Applicants reasonable reliance, and thus IGA owed a duty of care to the Applicants to design, supply and install a Curtain Wall with reasonable skill, care and diligence and in a proper and workmanlike, inter alia.

42. It is finally alleged that IGA breached that duty, which had the effect of causing losses on the part of the Applicants for which IGA is responsible.

43. It follows that the reliance interest in this case, and the damages resulting therefrom, falls within the scope and purpose of the services provided--that is, within the scope of the undertaking. The Applicants are therefore entitled, on the pleadings, to all those damages that would put the Applicants into its pre-reliance state. These damages are not limited to the cost of repairing any allegedly dangerous defect with the Curtain Wall, and include the individual losses for which the Plaintiff herein is seeking an award of damages.

44. These pleadings quite clearly ground a viable cause of action in negligent performance of a service. This claim is not duplicative of any claim in any of the Related Actions (which as amended, concern the cost to repair allegedly dangerous defects under the framework articulated by the Court in Winnipeg Condominium), and is not an abuse of process. [Emphasis in original; footnotes omitted] [45] However, if as IGA contends, the claim is essentially a claim for delivery of a defective product, recovery would, in light of the reasons in Maple Leaf Foods, be limited to the cost to abate dangerous defects. [46] In Maple Leaf Foods, the Court said, when revisiting its decision in Winnipeg Condominium, that recovery for such a claim is restricted to the cost to abate dangerous defects: (2) Negligent Supply of Shoddy Goods or Structures (a) The Correlative Right and Duty of Care in Winnipeg Condominium [41] Until this appeal, the sole occasion on which this Court has considered a claim for pure economic loss arising from the negligent supply of shoddy goods or structures is its judgment in Winnipeg Condominium. It is therefore worth carefully reviewing the liability rule that it established, with attention to the nature of the legal right and correlative duty of care on which it is founded. Further, and as we will explain, subsequent developments to the law of negligence in Cooper

and Livent signify that claims under Winnipeg Condominium must now account for the requisite element of proximity. [42] In Winnipeg Condominium, the plaintiff condominium corporation sued the defendant builder for the cost of repairing exterior four‑inch thick stone cladding on its 15‑storey building. Approximately eight years after construction, the board of directors of the condominium corporation observed that some of the cladding had broken away and that cracks were developing in the remaining cladding. They retained engineers, who recommended minor remedial work, which was done. Seven years later, a storey‑high section of the cladding fell from the ninth‑storey level of the building to the ground below. Again, engineers were retained and they recommended removal and replacement of the cladding at substantial cost, for which the condominium corporation sued the builder. Not being in privity, the claim was brought in tort, raising the issue of whether the builder owed a duty to the condominium owners, as "subsequent purchasers" (meaning that they came after the original purchaser on the distributive chain). [43] On that question, and for the Court, La Forest J. recognized a duty of care based on the reasonable foreseeability of injury to "other persons and property in the community" (para. 21). In doing so, he posited that the presence of danger was the linchpin of the

analysis. As he emphasized, the building structure in this case was "not merely shoddy; it was dangerous" (para. 12 (emphasis added)). Further, he added that "the degree of danger to persons and other property" created by the negligent construction is "a cornerstone" of the analysis that must be undertaken in determining whether the cost of repair is recoverable in tort (ibid. (emphasis added)). As opposed to merely substandard construction, only those defects that posed "a real and substantial danger to the occupants of the building" and had "the capacity to cause serious damage to other persons and property in the community" were actionable (para. 21). Returning to this point later in his reasons, he reiterated: [T]he facts of the present case . . . fall squarely within the category of what I would define as a "real and substantial danger". It is clear from the available facts that the masonry work . . . was in a sufficiently poor state to constitute a real and substantial danger to inhabitants of the building and to passers‑by. The piece of cladding that fell from the building was a storey high, was made of 4" thick Tyndall stone, and dropped nine storeys. Had this cladding landed on a person or on other property, it would unquestionably have caused serious injury or damage. [Emphasis added; para. 38.] Given the "reasonable likelihood that a defect in a building will cause

injury to its inhabitants . . . if it poses a real and substantial danger", the Court held that a builder owed a duty to take reasonable care in the design or construction of building structures to avoid creating a real and substantial danger to health and safety (para. 36). [44] At first glance, the liability rule in Winnipeg Condominium may appear curious, since it appears as though liability is imposed not in respect of damage that has occurred to the plaintiff's rights, but in respect of a real and substantial danger thereto. As a general principle, there is no liability for negligence "in the air", for "[t]here is no right to be free from the prospect of damage" but "only a right not to suffer damage that results from exposure to unreasonable risk" (Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19, at para. 33 (emphasis in original); Clements v. Clements, 2012 SCC 32, [2012] 2 S.C.R. 181, at para. 16; Ratych v. Bloomer, [1990] 1 S.C.R. 940, at p. 964). [45] We maintain, however, that, properly understood, the liability rule in Winnipeg Condominium is consonant with that principle. In that case, the Court was clear about the source of the right to which the duty of care corresponds: the plaintiff's rights in person or property (paras. 21, 36 and 42). Where a design or construction defect poses a real and substantial danger ⸺ that is, what Fraser C.J.A. and Côté J.A.

described in Blacklaws v. 470433 Alberta Ltd., 2000 ABCA 175, 261 A.R. 28, at para. 62, as "imminent risk" of "physical harm to the plaintiffs or their chattels" or property ⸺ and the danger "would unquestionably have caused serious injury or damage" if realized, given the "reasonable likelihood that a defect . . . will cause injury to its inhabitants", it makes little difference whether the plaintiff recovers for an injury actually suffered or for expenditures incurred in preventing the injury from occurring (Winnipeg Condominium, at paras. 36 and 38; see also Morrison Steamship Co. v. Greystoke Castle (Cargo Owners), [1947] A.C. 265 (H.L.), at p. 280; Murphy v. Brentwood District Council, [1991] 1 A.C. 398 (H.L.), at p. 488, per Lord Oliver of Aylmerton). Thus, the economic loss incurred to avert the danger "is analogized to physical injury to the plaintiff's person or property" (P. Benson, "The Basis for Excluding Liability for Economic Loss in Tort Law", in D. G. Owen, ed., Philosophical Foundations of Tort Law (1995), 427, at p. 429). The point is that the law views the plaintiff as having sustained actual injury to its right in person or property because of the necessity of taking measures to put itself or its other property "outside the ambit of perceived danger" (ibid, at p. 440; see also Aktieselskabet Cuzco v. The Sucarseco, 294 U.S. 394 (1935), at p. 404). [46] As we

see it, then, recovery for the economic loss sustained in Winnipeg Condominium was founded upon the idea that, in the eyes of the law, the defendant negligently interfered with rights in person or property. We see this as having been La Forest J.'s point in Winnipeg Condominium where he explained: 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 . . . . In both cases, the duty in tort serves to protect the bodily integrity and property interests of the inhabitants of the building. [Emphasis added; para. 36.] In our view, this normative basis for the duty's recognition ⸺ that it protects a right to be free from injury to one's person or property ⸺ also delimits its scope. This is because this basis vanishes where the defect presents no imminent threat. [Emphasis in original] [47] In Maple Leaf Foods, the Court also said that recovery for dangerous defects extends to all products, not just those concerning building defects, but refused to extend its holding in Winnipeg Condominium to non-dangerous defects: Maple Leaf Foods at paras. 47-49. Other Case Authorities [48] Lower court

decisions issued prior to and following Maple Leaf Foods have applied the proximity test for recovery of economic loss separately for negligent performance of a service and negligent supply of shoddy goods. See e.g., Clark Builders and Stantec Consulting Ltd. v. GO Community Centre, 2019 ABQB 706; Ahamed v. The Great Canadian Landscaping Company Ltd., 2021 BCSC 197; Subway Franchise Systems of Canada, Inc. v. Canadian Broadcasting Corporation, 2021 ONCA 25, leave to appeal ref'd 2021 CanLII 61401 (S.C.C.); Rieger v. Plains Midstream Canada ULC, 2022 ABCA 28; Westsea Construction Ltd. v. 0759553 B.C. Ltd., 2012 BCSC 564. [49] When considering the merits of claims for negligent performance of a service, courts have considered whether the plaintiff has established that it reasonably and detrimentally relied on the defendant's undertaking (if any), without imposing any restriction on the scope of recovery to only dangerous defects caused by negligent performance: Ahamed at paras. 55-57; Subway Franchise at paras. 89-94, 100-103; Rieger at para. 50. [50] For example, in Subway Franchise, Justice Zarnett referred to para. 30 of Maple Leaf Foods when explaining that it is the presence of an undertaking and reliance that illuminates the plaintiff's right and justifies the correlative duty in a negligent performance of a service case, as opposed to a case in the defective goods category

which is concerned with the plaintiff's right in person or property: Subway Franchise at paras. 88, 103. [51] Clark Builders is an example of a building construction case where the claim for pure economic loss was not restricted to dangerous defects because the claim was seen as one for negligent performance of a service. In that case, Go Community Centre ("GCC"), a non-profit corporation, acting on behalf of the University of Alberta (consequent on their relationship that culminated in a venture agreement), undertook primary responsibility for the construction of a sports complex. With the assistance of Stantec Consulting Ltd. ("Stantec"), GCC put out a request for a design-build proposal and ultimately entered into a contract with Clark Builders based on Stantec's design (GCC had no contractual relationship with Stantec; however, Clark Builders and Stantec entered into a contractual relationship). Following construction, performance issues relating to the heating, ventilation, and air condition (HVAC) system arose. GCC filed its claim against Clark Builders and Stantec alleging negligence in design and installation of the HVAC system. It sought recovery for economic loss for the cost of repairs. Although the action was dismissed because GCC had not suffered injury (as the Court found GCC had no beneficial interest nor proprietary or possessory rights in the sports complex),

Justice Renke commented on GCC's claim for pure economic loss. After considering the nature of the claim for the remediation or replacement of (or portions of) the HVAC system, Renke J. said the claim was not precluded by Winnipeg Condominium, even though it was a building construction case and did not involve a dangerous defect. [52] Justice Renke viewed Winnipeg Condominium as an "awkward fit" for the relationship between the parties in Clark Builders and instead thought it more closely aligned with misrepresentation and negligent provision of a service doctrines: Clark Builders at para. 168. [53] As well, Renke J. rejected the notion of subsumption by Winnipeg Condominium: (d) Negligent Misrepresentation and Negligent Performance of a Service [165] Keeping in mind Prof. Feldthusen's warning about the varying provenance and purpose of distinct "economic loss" doctrines, complaints of negligent misrepresentation and negligent performance of a service can arise in similar contexts, as in this case. See, e.g., Livent at para 1; Edgeworth Construction; Brown, Pure Economic Loss at 381; Osborne, Law of Torts at 200. [166] The uncontested facts were that, before the Design Contract was signed, Clark Builders and Stantec interacted with GCC respecting HVAC system design. It was true as well that the University was also involved in this interaction. GCC, a community organization, did

not face two large industry players alone. The details of the four-way interaction were not exposed on the record and would require trial or at least additional evidence to sort out. [167] Regardless, GCC worked with Clark Builders and Stantec. Clark Builders and Stantec were aware of the purposes for which the GO Centre was to be used. Clark Builders and Stantec knew or must have known that GCC would remain involved with the GO Centre after construction was completed. It was not as if GCC were an independent construction-related firm retained by the University to hire contractors to get the GO Centre built. [168] While Bird Construction was an awkward fit for the relationship between GCC and the Defendants, negligent misrepresentation and negligent provision of a service doctrines would appear to have a closer alignment with GCC's circumstances. (i) Subsumption by Bird Construction? [169] There was a suggestion in argument that because a building had actually been constructed, the negligent provision of a service route to liability was unavailable to GCC. The argument for the Defendants' liability had to be made on Bird Construction lines, requiring proof of dangerousness. [170] I discern no such subsumption or merger rule in the authorities. This sort of argument did not come up, for example, in Edgeworth Construction. GCC, moreover, is not in the position of a subsequent

purchaser, as in the usual Bird Construction case. In GCC's circumstances, the dangerousness requirement is not required to limit the class of potential plaintiffs. [171] I shall proceed on the basis that the negligent misrepresentation and negligent provision of services routes to liability are not closed to GCC. [Emphasis in original] [54] In Westsea Construction, Justice Harris (as he then was) pointed out that the existence of a relationship of proximity and consequent duty in tort does not depend on the existence of a contractual relationship. A contract, however, may inform the nature of the duty, limit the scope of recovery, or oust obligations beyond those set out in the contract altogether: [65] The law recognizes that concurrent duties may exist in contract and tort and that proximity may arise from a nexus between parties created by contract. The starting point of the analysis remains BG Checo International Ltd. v. British Columbia Hydro and Power Authority, [1993] 1 S.C.R.

12. In that case, an obligation in tort (negligent misstatement) was identical to the contractual obligation. The issue was whether the duties in negligence and contract could exist concurrently. The majority of the Supreme Court concluded they could. The basic rule was stated as follows at para. 15: ... where a given wrong prima facie supports an action in contract and in tort, the party may sue in either or both, except where the contract indicates that the parties intended to limit or negative the right to sue in tort. ... The mere fact that the parties have dealt with a matter expressly in their contract does not mean that they intended to exclude the right to sue in tort. It all depends on how they have dealt with it. [66] The majority makes it clear that the critical question in deciding whether a tort claim can be maintained in the face of a contract addressing the same subject matter is whether the parties have contradicted, extinguished, modified or left untouched the tort duties in the contract. Thus, the principle of the primacy of private ordering is respected at para.

16. Moreover, there is no necessary inference to be drawn from the fact that the contractual obligation may perfectly correspond to the duty in negligence that the parties thereby intended to oust their tort obligations at para. 25; see also the discussion of the authorities beginning at para. 29. [67] In order, however, for a concurrent duty to arise in tort, that duty must exist "even in the absence of the specific contractual term which created the corresponding contractual obligation" at para. 34. [68] I take the following from the majority discussions of concurrency of tort and contract in BG Checo. First, one must be able to identify a tort duty that exists independently of the specific contractual duty in the sense that the tort and the contract duties co-exist, in principle, concurrently. In other words, the existence of the alleged tort duty cannot arise solely and exclusively out of the contract. Secondly, the existence of the contract may be a source of the proximity between the parties that gives rise to the alleged duty in tort. Thirdly, the existence of the tort duty will need to be justified in accordance with the ordinary rules in negligence for recognition of duties. In other words, to establish potential concurrency of duties a plaintiff (or in this case, the defendants) will need to point to an established category where a tort duty has been recognised or

justify a "novel" claim in accordance with the Anns test. Fourthly, if potential concurrency exists, in order to avoid a duty in tort, the defendant (or in this case, the plaintiffs) would have to show that the parties have structured their relationship through the contract in such a way that the existence of the tort duty is eliminated or modified. It must be shown that the parties intended to extinguish tort liability through the contract. Generally, this will require express language, although it may arise by necessary implication. It is not to be assumed that the existence of contractual obligations, even if they correspond exactly to the tort duties, evidences an intention to extinguish the tort duties. [69] In the context of the issue before me, these questions need to be analysed first through the lens of the "plain and obvious" test. Hence, specifically, the question is whether it is plain and obvious that the plaintiffs could not owe the majority defendants duties in negligence given that they maintain the buildings and given that the defendants allege they have not done so "properly" and their failure to do so has led to damage to the structure of the building, including damage giving rise to safety and health concerns. Accordingly, the second critical question is, could these, admittedly broadly characterised circumstances give rise to a duty in negligence? The third

question is whether, in the context of a summary judgment application, there is any evidence capable of raising a genuine issue for trial. [Italics in original] [55] Specifically, in respect of the ambit of the holding in Winnipeg Condominium, Harris J. said: [98] One final observation should be made. The Winnipeg Condominium line of cases deals with recovery of the cost of repairs. It does not deal with the loss of the economic value of the building. I have serious reservations about the characterization of the damage to the majority defendants being a loss of value of the units. Whether that loss may be recoverable as a result of relational economic loss or negligent performance of the service may be another matter. That question, however, may be left to trial. [Italics in original; underlining added] [56] Westsea Construction was decided prior to Maple Leaf Foods, and as such Harris J. did not have the benefit of the Court's reasoning in para. 34 that where the defendant "deliberately solicited the plaintiff's reliance as a reasonable response, the defendant cannot in justice disclaim responsibility for any economic loss the plaintiff can show was caused by such reliance" [emphasis added]. Conclusion [57] From these authorities, I conclude that a claim for pure economic loss for negligent provision of a service and misrepresentation is not subsumed within the holding in

Winnipeg Condominium such that recovery for a tort claim involving construction of a building is always limited to the cost to abate dangerous defects. Assuming the tort duty can be established, claims for pure economic loss for negligent performance of a service and misrepresentation are not so confined. Much depends on the nature of the claim and relationship between the parties, which may be informed by the terms of any contractual relationship between them and the scope of the undertaking and the reliance placed upon it. Characterizing the Applicants' Proposed Third-Party Tort Claim [58] With those principles in mind, I turn now to consider the nature of the proposed third-party tort claim as pleaded. [59] A useful illustration of the claim is drawn from the applicants' proposed third-party claim in the class action. [60] After identifying the applicants' relationship to the land and the development, the applicants allege that they caused KBK to enter into a contract with IGA on account of IGA's representations and undertakings: 5. On account of IGA's representations and undertakings, as are more particularly elaborated upon below, these Defendants caused KBK to enter into a contract with IGA dated May 4, 2005, wherein IGA agreed to design, supply and install insulated glazing units ("IGUs") for the curtain wall system at Shangri-La Vancouver (the "Contract"). [Bold in

original] [61] The undertakings and representations giving rise to the alleged duty owed by IGA to the applicants are pleaded in the facts and legal basis sections as follows: Part 1: STATEMENT OF FACTS ... Negligence 13. Both prior to and after May 4, 2005, IGA undertook and represented to these Defendants that it had the requisite knowledge and experience to properly design, manufacture and install the curtain wall specified for the Shangri La in accordance with all applicable engineering and industry standards and that it understood all applicable architectural, engineering and construction standards, regulations and requirements, and that it would design, construct and install the curtain wall system at the Shangri-La using all reasonable care, skill and diligence and competence, in conformity with all applicable architectural, engineering and construction standards and regulations, and without deficiencies or defects.

14. These representations and undertakings were provided in circumstances that invited these Defendants reasonable reliance upon them and as such, IGA owed a duty of care to these Defendants. Part 3: LEGAL BASIS 4. IGA made various representations and undertakings to provide services which representations and undertakings invited these Defendants reasonable reliance. IGA therefore owed these Defendants a duty of care which arose and exists independently from contractual duties owed to KBK under the Contract. IGA breached that duty and failed to meet the applicable standard of care. As such, IGA was negligent in the design, supply and installation of IGUs and the curtain wall system and as a result is liable in damages for negligence to these Defendants, including in respect of all losses suffered by the Plaintiff for which these Defendants are found liable. [62] The particulars of IGA's duty of care and its purported breaches are alleged as follows: 15. Particulars of the duty of care owed by IGA include, but are not limited to, a duty to perform its services: As such, IGA owed a duty of care to these Defendants to design, supply and install a curtain wall system as follows: (a) with reasonable skill, care and diligence; (b) in a safe, proper and workmanlike manner; (c) with suitable materials and fit for their intended use; (d) free from any defects, latent or patent; and (e) in compliance with all drawings, specifications, construction and engineering standards, manufactures' instructions, building codes and statutory requirements.

16. These duties arose and exist independently from any contractual duties IGA owed to KBK pursuant to the Contract.

17. To the extent there are design, construction, assembly, manufacture and/or installation defects or deficiencies with the IGUs, IGA was negligent in that it breached the above stated duties of care that it owed to these Defendants.

18. Particulars of IGA's breaches of the duty of care owed to these Defendants include, but are not limited to: (a) failing to employ properly trained, licensed or competent workers, including engineers; (b) failing to comply with accepted design, engineering and construction standards; (c) failing to use materials of a good or merchantable quality; (d) failing to adhere to the plans and specifications in the design, supply and installation of the curtain wall system; (e) failing to properly inspect and test the curtain wall system and its constituent components; (f) failing to remedy any defects in the curtain wall system and damage once it ought reasonably to have known of the damage that the Plaintiff and the Class would suffer; (g) using the IGUs when it knew or ought to have known that they were defective; (h) failing to warn, or adequately warn, these Defendants of defects with the IGUs; and (i) such further and other particulars as may become known to these Defendants or are proven at trial.

19. IGA knew or ought to have known that their failure to take reasonable care in designing, constructing, and installing the curtain wall system would result in defects, whether dangerous or otherwise.

20. IGA's negligence has caused these Defendants losses, including, but not limited to, those losses for which the Plaintiff seek recovery in this action. [63] In terms of the existence of a relationship of proximity and consequent duty, I must also assume the facts as pleaded are true. Neither the proposed third-party notice, the notice of application, nor the application response plead or refer to any terms of the contract between KBK and IGA (nor has the contract been produced in the application materials). The question therefore, is whether the facts in the proposed claim as pleaded, assumed to be true, engage a relationship of proximity between the parties that falls within an established category of proximity. As pointed out, IGA does not specifically contend that no tort duty can be established on the proposed pleading and that the claim in this respect was bound to fail. I have reached the same conclusion. [64] The key substantive issue raised by IGA is whether the proposed claim is in essence a claim for the delivery of a defective product as IGA contends, limiting the scope of recovery, or as the applicants contend, for the negligent performance of a service (adding in their oral submissions that the proposed amended claim should also be taken to include a claim for misrepresentation). [65] I view the claim as one that on its face comprises the applicants' reliance on

representations and undertakings concerning IGA's knowledge and experience, compliance with certain standards, and provision of a service. Part of the claim could be read to include the delivery of a defective product. However, whether the essence of the whole of the claim concerns delivery of a defective product such that recovery is precluded to cost to abate a dangerous defect, or whether, for example, the case is akin to Clark Builders, should be left for factual determinations to be made at trial, as will be the issue of proof of the existence of a duty in tort, its scope, and any potential limiting aspects arising from the contract between KBK and IGA. [66] I disagree with IGA that the essence of the whole of the claim can be said at the pleadings stage to be one on account of a defective product falling entirely within the ambit of Winnipeg Condominium. I would not accede to IGA's request to look behind the pleading in an attempt to define the claim as, according to IGA, was done in Heinicke v. Cooper Rankin Ltd., 2006 MBQB 273 (which was a decision rendered following trial and not at the pleadings stage). To do so would be inconsistent with the Rules and with the well-established line of authorities cited in the decision of the majority of the Manitoba Court of Appeal in Sentinel Self-Storage Corp. v. Dyregrov, 2003 MBCA 136 at paras. 14-18. Disposition [67] The

applicants only need to show that their pleading discloses a reasonable cause of action, and in order to strike out a pleading on the ground it discloses no reasonable cause of action, the case must be "perfectly clear": McNaughton at para. 29. [68] The applicants have demonstrated that their claim as pleaded, if assumed to be true, for recovery of pure economic loss consequent upon their purported reliance on IGA's alleged misrepresentations and negligent performance of a service is grounded on a valid cause of action and not bound to fail. They have established that their claim for all economic loss arising from those claims is not, at the pleadings stage, bound to fail. Limitation Defence in Class Proceeding [69] The parties' submissions dealt with a myriad of complex legal and factual issues concerning the limitation defence raised by IGA in response to the proposed third-party notice in the class proceeding. I have set those issues out below with references to some of the case authorities cited by the parties: (a) whether, by virtue of the discoverability provisions of s. 16(a) of the Limitation Act, S.B.C. 2012, c. 13, and the recent decisions of the Court of Appeal in Sohal v. Lezama, 2021 BCCA 40 at paras. 28-30, 70, 88, 109, 111, and of this Court in 0782484 B.C. Ltd. v. E-Pro Enterprises Inc., 2021 BCSC 1509 and Sharma v. Mohammad, 2022 BCSC 270 at paras. 37, 39-40,

43-44, the applicable limitation period only began to run when the plaintiff filed its amended notice of civil claim in December 2021; (b) whether the limitation period was tolled by an explicit, valid, and enforceable agreement: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 at paras. 46-48; Berthin v. Berthin, 2016 BCCA 104; Litt v. Gill, 2016 BCCA 288 at para. 15; Canada Square Corp. v. VS Services Ltd. (1982), 34 O.R. (2d) 250 (C.A.); Hunt River Camps/Air Northland Ltd. v. Canamera Geological Ltd. (1998), 168 Nfld. & P.E.I.R. 207 at paras. 27-28 (C.A.); Wade v. Duck, 2018 BCCA 176 at para. 28; Aubrey v. Teck Highland Valley Copper Partnership, 2017 BCCA 144 at para. 48; Rudyak v. Bekturova, 2018 BCCA 414 at para. 24; (c) whether IGA is estopped by convention or representation: Canadian Superior Oil Ltd. v. Paddon-Hughes Development Co., [1970] S.C.R. 932 at 939-940; Ryan v. Moore, 2005 SCC 38 at paras. 5, 59, 164; Michel v. Saskatchewan, 2021 SKCA 126 at para. 206; and (d) whether I should exercise my discretion to allow the third-party notice to be filed: Lui at para. 41; Tyson Creek at paras. 1, 16; McNaughton at para. 21; Canfor at para. 49; ASPAC at para. 23; Dhanda v. Gill, 2019 BCSC 1500 at para. 63. [70] Nonetheless, and in spite of the parties' diverse positions concerning the effect of those legal authorities, and in particular the effect of the decision

in Sohal, the issue is squarely determined by my findings that the parties entered into a valid and enforceable tolling agreement on February 16, 2017 and that there is no prejudice to IGA arising from the proposed third-party notice in the class proceeding. [71] The tolling agreement is evidenced in email communications between counsel for the applicants and IGA. [72] The original notice of civil claim filed by SP 3206 in the IGU Action (which included the claims for individual owners) and the notice of civil claim in the class action were served on the applicants on approximately December 9, 2016. Counsel for the applicants then wrote to then counsel for IGA and counsel for other parties in the Related Actions, asking for their agreement to toll the limitation period applicable to third-party notices until defences were requested by the plaintiffs. [73] In his correspondence, counsel for the applicants wrote at 2:06 p.m.: Gentlemen, As you know, we were served with two claims by the Residential Estates Strata ("Estates") in respect of fogging windows (one being a proposed class action and the other an action in the name of the strata corporation). These claim names only our clients. Like the claim delivered by the Live/Work Strata [brought by SP 3165], counsel for the Estates has told us not to take any steps to defend the matter until further notice. In an effort to avoid

advancing third party proceedings prior to delivering a defence, I am writing to ask for your agreement that we toll the time periods for our clients to advance third party claims, if any, against IGS/AGS [sic] Joint Venture Inc., Advanced Glazing Systems Ltd. and Garibaldi Glass Industries Inc., such that they don't start to run until Defences are required by the Estates. [Emphasis added] [74] Counsel for Garibaldi Glass responded at 2:07 p.m. advising that he could not agree to any form of tolling agreement as it was unclear whether he would be counsel acting in respect of those claims. [75] However, at 2:09 p.m., counsel for IGA/AGS responded, confirming his client's agreement to the tolling agreement: Shane, you have my client's consent. [76] In Sattva, the Supreme Court of Canada outlined the modern approach to discerning the parties' objective intention at contract formation: [46] The shift away from the historical approach in Canada appears to be based on two developments. The first is the adoption of an approach to contractual interpretation which directs courts to have regard for the surrounding circumstances of the contract -- often referred to as the factual matrix -- when interpreting a written contract (Hall, at pp. 13, 21-25 and 127; and J. D. McCamus, The Law of Contracts (2nd ed. 2012), at pp. 749-51). The second is the explanation of the difference between

questions of law and questions of mixed fact and law provided in Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748, at para. 35, and Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 26 and 31-36. [47] Regarding the first development, the interpretation of contracts has evolved towards a practical, common-sense approach not dominated by technical rules of construction. The overriding concern is to determine "the intent of the parties and the scope of their understanding" (Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21, [2006] 1 S.C.R. 744, at para. 27, per LeBel J.; see also Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69, at paras. 64-65, per Cromwell J.). To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract. Consideration of the surrounding circumstances recognizes that ascertaining contractual intention can be difficult when looking at words on their own, because words alone do not have an immutable or absolute meaning: No contracts are made in a vacuum: there is always a setting in which they have to be placed. ... In a commercial contract it is certainly

right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating. (Reardon Smith Line, at p. 574, per Lord Wilberforce) [48] The meaning of words is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement (see Moore Realty Inc. v. Manitoba Motor League, 2003 MBCA 71, 173 Man. R. (2d) 300, at para. 15 per Hamilton J.A.; see also Hall, at p. 22; and McCamus, at pp. 749-50). As stated by Lord Hoffmann in Investors Compensation Scheme Ltd. v. West Bromwich Building Society, [1998] 1 All E.R. 98 (H.L.): The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. [77] Where possible, courts should take a broad view of the dealings between the parties in order to advance rather than frustrate their intent, taking into account, from an objective determination, their reasonable expectations: Hunt River at para. 28, citing Canada Square at 218. [78] In Berthin

at paras. 46-47, the Court of Appeal explained that the validity of a contract depends on whether the contracting parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract. An enforceable agreement requires a consensus between the parties on all of the essential terms of their agreement and such terms must be expressed with sufficient certainty. IGA contends the tolling agreement must fail for lack of certainty. I disagree. [79] Construing the agreement contextually and objectively from the perspective of the reasonable bystander, there is no lack of clarity in the communications between counsel who acted and continue to act as their agents throughout. The email communication is clear that the request is in respect of each of the SP 3206's IGU Action and the class action: the limitation period applicable to the issuance of third-party notices is tolled for each of those actions until defences are requested. The proposed terms are readily comprehensible and reasonable, as they sought to avoid the applicants having to issue third-party proceedings before their response pleadings were required to be filed. As such, I disagree with IGA that the terms of the agreement are ambiguous. I also reject IGA's submission that the terms of the tolling agreement were conditional upon the

acceptance by all parties to the actions. [80] I agree with the applicants' written submission, excerpted below, concerning the contextual background for their counsel's use of the word "Estates" in his communication: 82. IGA adopts a reading of the Tolling Agreement that cannot be supported by its ordinary and grammatical meaning, the context in which the Tolling Agreement was entered into, and its purpose. Instead its arguments rest entirely on the fact that the Applicants elected to define the two respective plaintiffs, in the two actions which were the subject matter of that agreement, as the "Estates". In so doing, IGA ignores what the parties using those words reasonably understood those words to mean, against the relevant background as was reasonably understood.

83. The first sentence of the Tolling Agreements notifies IGA that the Applicants had received two Notices of Civil Claim: one filed by the Residential Estate Strata in the IGU Defect Actions, and another filed by the Representative Plaintiff in the Class Action.

84. These two claims, and the plaintiffs therein, were then defined as the "Estates". The reason was simple.

85. The representative Plaintiff in the Class Action is 0790482 B.C. Ltd, a numbered company which took assignment of a pre-sale contract in respect of strata lot 64 in the Residential Estate Strata.

86. The numbered company is owned and controlled by Amos Michelson. Mr. Michelson is also the president of the Residential Estate Strata (and has been since its first AGM), and he has been directing the litigation on its behalf since the commencement of this proceeding.

87. Thus, for all intents and purposes, the party directing both the Residential Estate Strata and the representative Plaintiff was Amos Michelson.

88. In the Tolling Agreement, these two entities were referred to by the single moniker, the "Estates".

89. In the next sentence, counsel for the Applicants noted that the "Estates" being both the Residential Estate Strata and the representative Plaintiff, filed and delivered Notices of Civil Claim in two separate actions.

90. The only plaintiff in the Class Action is the representative Plaintiff, and so quite obviously the term "Estates" was understood to capture that entity.

91. The remaining sentences asks for IGA's agreement that the limitation period applicable to Third Party claims against IGA be tolled until such time as the "Estates" (being the Residential Estate Strata and the representative Plaintiff) ask for a defence in their respective actions. [Footnotes omitted] [81] In the same vein, IGA's alternative submission that the tolling agreement (assuming it was enforceable) was terminated for all purposes in April 2017, when SP 3206 asked the applicants for their response pleading in its IGU Action, overlooks the reality of the status of the class action--for quite some time, all parties understood from submissions of counsel for the putative representative plaintiff that he expected to obtain instructions to discontinue the action. It made sense to avoid the necessity of filing third-party notices in an action that may be discontinued. [82] The parties' subsequent conduct also accords with a valid tolling agreement containing separate as opposed to a singular trigger for expiration as IGA contends. [83] On April 19, 2017, counsel for the applicants advised counsel for IGA that SP 3206 required them to deliver a response pleading in its IGU Action: Tim, Further to the below, I got a call from Ken McEwan today. The Estates strata has asked us to deliver a Response within the next few weeks. Regards, Shane [84] The applicants delivered their

response pleading in SP 3206's IGU Action as requested. As they were beyond the time limit in the Rules to file third-party notices without leave, they filed a notice of application on July 18, 2017, seeking to issue third-party proceedings against IGA and others, and obtained leave from Master Muir on August 11, 2017. The application was not opposed by IGA. [85] However, the class action proceeding remained in limbo until the proposed representative class plaintiff advised in 2020 that it intended to apply for a certification order. The certification application was heard in June and July 2021, but was adjourned to allow the proposed representative plaintiff to reframe some aspects of its clam and to file additional materials. The certification hearing resumed in January 2022. [86] The applicants point out in their written submissions that before the certification hearing took place, counsel for the representative plaintiff wrote to counsel for the applicants "on or around February 2021" requesting their response pleading, at which point, they say, the tolling of the limitation period began since the tolling agreement was no longer in effect. The applicants also point out that the two-year limitation period was suspended shortly thereafter, during the COVID-19 pandemic, on March 26, 2020, until March 25, 2021. The applicants filed their response pleading on March 3, 2021. The

applicants brought their notice of application seeking leave to issue their third-party notice against IGA on February 18, 2022, which they assert was well within the applicable limitation period. [87] The applicants' statement of fact in their written submissions concerning receipt of the letter from counsel for the representative plaintiff was confirmed by their counsel in oral submissions, although it is not supported with evidence. The letter from representative plaintiff's counsel is not in evidence, nor is the date of the letter and the date it was received by the applicants. However, IGA and the applicants jointly advised in writing of their agreement that "it can be accepted as a fact that the Plaintiff asked for a defence in the Class Action on or around February 5, 2021." [88] I turn now to IGA's contention that an important consideration is its submission that its current counsel was unaware of the tolling agreement until recently. Respectfully, all parties were aware of the existence of the tolling agreement during the certification hearing at least by June 2021. The certification application materials contained a copy of the tolling agreement. Further, at one point during the hearing, counsel for the proposed representative plaintiff referred to it in oral argument, as excerpted below from the transcript of proceedings from June 15, 2021: In the tort action

commenced by the residential strata it was essentially a contractual claim. In July of 2017, the defendants filed an application seeking leave to file a third party notice to advance a contractual claim against IGA and claims for negligence against IGA and Garibaldi. In the notice of application, and in the affidavit filed by the defendants in support of the application, it appended correspondence between counsel for the defendants IGA and Garibaldi, giving notice that the defendants were served with the action filed by The Owners, BCS 3206 and the class proceeding. That correspondence also demonstrates the agreement that the defendants may pursue third party claims, and discussions about a tolling agreement between them. Both IGA and Garibaldi filed application responses taking no position. Subsequently, the defendants filed a third party notice on August 18th', 2017. Now, let me pause and tell you why I'm telling you some of that. As I understand it, there's a suggestion - and - and it's not - it's one that is easily overcome by Your Lordship giving leave, that-the developer may be prejudiced in respect of third party notices against Garibaldi and IGA. I - - I can't imagine why that would be an issue in these circumstances, but it does appear they have a tolling agreement that my friend may not have remembered. [Emphasis added] [89] IGA was represented at the certification

hearing by counsel. [90] I accept the unchallenged evidence adduced on behalf of the applicants that at no time during the certification hearing did anyone on behalf of IGA object to the admission of the tolling agreement or advise or suggest that it was not a valid and binding agreement applicable to the class action proceeding. [91] IGA did not tender any evidence from its counsel involved in the communications with applicants' counsel concerning the tolling agreement. For that matter, it did not tender any evidence to challenge the evidence adduced by the applicants. [92] The evidence adduced on behalf of the applicants, which is unchallenged and which I accept, establishes that at no time during conference calls between counsel for the applicants and IGA, where the tolling agreement came up, did IGA advise that it was not aware of its existence, not bound by it, or that it expired when the response pleading was requested in SP 3206's IGU Action. Affidavit #3 of Mr. Lucas (one of the counsel acting for the applicants) sworn April 4, 2022, deposes: 3. In or about 2017, I began assisting Mr. Coblin with respect to the Shangri-Law windows litigation. Since that time, I have participated in numerous telephone conference calls with Mr. Coblin, Steven Abramson, counsel for Garibaldi Glass Industries Inc. ("Garibaldi"), and Tim Peters and Devon Lehrer, counsel for IGA/AGS Joint Venture Inc. ("IGA").

4. During those conference calls, the existence of the tolling agreement between the Defendants and IGA (the "Tolling Agreement") was discussed at various times. At no time, did Mr. Peters or Mr. Lehrer ever take the position that they were not aware of the Tolling Agreement nor did they ever indicate that their client was not bound by the Tolling Agreement. Furthermore, neither Mr. Peters nor Mr. Lehrer ever took the position that the Tolling Agreement did not differentiate between the tolling of the limitation periods in the action commenced by the residential estates strata corporation and the class action commenced by the representative plaintiff. [93] It was only after the applicants confirmed their intention to issue a third-party notice against IGA and others at a judicial management conference in February 2022 that IGA informed them of its objection and of its position that the tolling agreement was not a valid and enforceable agreement. [94] It is clear, I find, that the applicants and IGA conveyed (through their counsel) and confirmed through their subsequent conduct their intention to enter into an unambiguous, valid, and binding tolling agreement: Sattva at paras. 46-47; Hunt River at para. 28; Wade at para. 28. [95] Even assuming there was a lack of clarity in the tolling agreement as IGA contends, a submission which I specifically reject, IGA is estopped by its

conduct from asserting a limitation defence. In Ryan, at para. 59, the Supreme Court of Canada discussed the test for the doctrine of estoppel by convention, which, I find, is engaged on the facts of this case: 59 This Court is not bound by any of the above analytical frameworks. After having reviewed the jurisprudence in the United Kingdom and Canada as well as academic comments on the subject, I am of the view that the following criteria form the basis of the doctrine of estoppel by convention: (1) The parties' dealings must have been based on a shared assumption of fact or law: estoppel requires manifest representation by statement or conduct creating a mutual assumption. Nevertheless, estoppel can arise out of silence (impliedly). (2) A party must have conducted itself, i.e. acted, in reliance on such shared assumption, its actions resulting in a change of its legal position. (3) It must also be unjust or unfair to allow one of the parties to resile or depart from the common assumption. The party seeking to establish estoppel therefore has to prove that detriment will be suffered if the other party is allowed to resile from the assumption since there has been a change from the presumed position. See Wilken, at pp. 227-28; Canacemal Investment Inc. v. PCI Realty Corp., [1999] B.C.J. No. 2029 (QL) (S.C.), at para. 35; Capro Investments Ltd. v. Tartan Development Corp., [1998]

O.J. No. 1763 (QL) (Gen. Div.), at para. 31. [Italics in original] [96] I find that the evidence establishes a shared assumption of the existence of an enforceable tolling agreement and the applicants reasonably relied on its existence and the post-acceptance conduct of IGA throughout, including its silence. In the factual circumstances outlined in these reasons, it would be manifestly unfair for IGA to be allowed to resile from their shared assumption. [97] Having found the doctrine of estoppel by convention applies to the case at bar, it is not necessary for me to determine whether the doctrine of estoppel by representation would also apply. Should Leave Be Granted in the Class Action? [98] Leave must be sought to issue a third-party notice outside the 42-day time limit provided for in R. 3-5(4). Factors to consider in deciding whether to grant leave are discussed in Lui at para. 41: My third general point is that there are a number of factors that should always be considered in the exercise of a discretion. What is the fair thing to do? Who suffers prejudice if the discretion is exercised? How much prejudice? Who suffers prejudice if the discretion is not exercised? How much prejudice? Have the parties acted properly and reasonably in their own interests? If a party has not acted properly and reasonably, should he be relieved from the consequences of his own behaviour? Is

there another course available to one or other of the parties? Where does the balance of convenience lie? This list is illustrative, but not exhaustive, of the questions that should be asked with respect to the parties before the court. But part of the purpose of the Rule is to avoid multiplicity of proceedings for the benefit of other litigants, so that congestion in the courts is avoided. So it is proper to ask questions in that area as well. [99] The applicants are not required to adduce evidence supporting its application. Rather, as pointed out in these reasons, the court is to presume the facts as pleaded, or as may be reasonably pleaded by amendment, are true and ask whether it is plain and obvious that the pleading fails to state a reasonable claim. IGA must establish beyond doubt that the pleadings disclosed no cause of action. Leave will be denied where the proposed claims are "bound to lose" or there is no bona fide triable issue: McNaughton at paras. 28-30; Health Sciences at para. 60; ASPAC at para. 16; Steveston Seafood at para. 19. [100] As I have said, I have determined above that the claims advanced in the proposed third-party notices against IGA are grounded on valid causes of action and are not bound to fail. The applications were also brought within the applicable two-year limitation period. The proposed third-party notices also fall within the ambit of R.

3-5(1). However, I must still consider the relative prejudice to the parties, the merits of the proposed claim, any delay in proceedings, and the timeliness of the application: Tyson Creek at para. 16. [101] I have no hesitation in granting leave to the applicants. They will suffer irremediable prejudice if leave is not granted since they will be precluded from advancing claims for breach of contract and negligence they previously advanced in SP 3206's IGU Action when it was structured as a representative action. [102] I also find that the applicants did not engage in delay in seeking leave to third party IGA in this proceeding once it knew that the action had been certified as a class action. [103] Moreover, no prejudice to IGA has been shown if leave is granted. There is no evidence, let alone allegation, that IGA will not have access to witnesses or documents it requires to defend the claim. Discoveries have not been conducted in the class action. IGA is already a party in the IGU Actions and faces allegations in those actions that it breached its duties in contract and tort and in this respect, IGA must be taken to be engaged in preparation of its defence. The difference between the class action and the other Related Actions concerns the damages, i.e., individual losses suffered by class members, which are to be assessed at a later stage in the class action and only if the

representative plaintiff is successful in proving defects. [104] IGA did not raise lack of merits as a basis to refuse leave and, I find, none has been shown. On its face, the merits of the applicants' claims against IGA are appropriately grounded on the claims of SP 3165, SP 3206, and the representative plaintiff, in conjunction with IGA's alleged role in the design, supply, and installation of the curtain-wall system and IGUs. [105] The objective of third-party proceedings is to provide a single procedure for the resolution of related issues, questions, or remedies, avoiding multiple actions and inconsistent findings (which is particularly important in long and complex cases); to provide a mechanism for the third party to defend the plaintiff's claim; and to ensure the third-party claim is decided before a defendant is called upon to pay the full amount of any judgment: McNaughton at 14; Canfor at para.

49. In light of these goals, it would be appropriate to exercise the Court's discretion to grant leave to file third-party notices against IGA. Summary [106] The applicants have leave to file their proposed amended third-party notices against IGA in the Warranty Actions and in the class action. "Walker J."