R171 Enterprises Ltd. et al. v. Sunrise Construction Ltd. et al.

2005BCSC1081 IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: R171 Enterprises Ltd. et al. v. Sunrise Construction Ltd. et al., 2005 BCSC 1081 Date: 20050720 Docket: 31419 Registry: Kamloops Between: R171 Enterprises Ltd. and R204 Enterprises Ltd. and the said R171 Enterprises Ltd. and R204 Enterprises Ltd. dba Crown West Steel Fabricators Plaintiffs And Sunrise Construction Ltd. dba Sunrise Homes Ltd., Harvey Karylchuk, Ron Timm, John Doe #1, John Doe #2 and Wally's Roofing (1984) Ltd. dba Wally's Roofing and/or dba Wally's Roofing Ltd. Defendants And 476462 B.C. Ltd., Harvey Karylchuk, Ron Timm, Wally's Roofing (1984) Ltd. dba Wally's Roofing and/or dba Wally's Roofing Ltd., Sunrise Construction Ltd. dba Sunrise Homes Ltd. Third Parties - and - Docket: S013159 Registry: Vancouver Between: 476462 B.C. Ltd. Plaintiff And Wally's Roofing (1984) Ltd., Sunrise Construction Ltd. carrying on business as Sunrise Homes and Sunrise Homes Ltd., Harvey Karylchuk and Ron Timm Defendants And Wally's Roofing (1984) Ltd., Harvey Karylchuk, Ron Timm, R171 Enterprises Ltd., R204 Enterprises Ltd. and the said R171 Enterprises Ltd. and R204 Enterprises Ltd. d.b.a. Crown West Steel Fabricators, Sunrise Construction Ltd. dba Sunrise Homes Ltd. Third Parties - and - Docket: S013281 Registry: Vancouver Between: Western Star Trucks Inc. Plaintiff And R171 Enterprises Ltd. doing business as Crown West Steel Fabricators, R204 Enterprises Ltd. doing business as Crown West Steel Fabricators, Sunrise Construction Ltd., Wally's Roofing (1984) Ltd. and 476462 B.C. Ltd. Defendants And Sunrise Construction Ltd. dba Sunrise Homes Ltd. and Wally's Roofing (1984) Ltd. dba Wally's Roofing and/or dba Wally's Roofing Ltd. Third Parties Before: The Honourable Mr. Justice Brooke Reasons for Judgment Counsel for R171 Enterprises Ltd. and R204 Enterprises Ltd.: D.J. Bilkey Counsel for Sunrise Construction Ltd.: J.H. MacMaster L.P. Brasil Counsel for 476462 B.C. Ltd. T.J. Maledy C.R. Thomson H.C. Hayden Counsel for Wally's Roofing (1984), H. Karylchuk and R. Timm: T.R. Darby S. Haywood-Farmer Counsel for uninsured interests of Crown West Steel Fabricators: J.A. McAfee Counsel for Western Star Trucks Inc.: R.B. Lindsay, Q.C. S.L. Boothman Date and Place of Trial: November 1-5, 8-10, 15-19, 22-25, 29, 30, December 1, 2, 6, 7, and 13-16, 2004 Kelowna, B.C. Introduction: [1] On June 18, 1999, at 12:27 p.m., the Kelowna Fire Department received a 911 call reporting a fire at the industrial premises of Crown West Steel Fabricators ("Crown West Steel"). Units of the fire department arrived within minutes but the fire was well-established, and despite vigorous fire control efforts, the industrial premises were substantially destroyed. The central issues in this action are: firstly, where did the fire start; and secondly, what was the cause of the fire? June 18th was a Friday, and the plant of Crown West Steel was actively engaged in the fabrication of frame rails for its principal customer, the plaintiff in a related action, Western Star Trucks Inc. ("Western Star"). Crown West Steel had engaged the defendant, Sunrise Construction Ltd. ("Sunrise Construction") to construct new office space over the existing office on the east side of the plant. That work was ready for inspection by the building inspector for the City of Kelowna on June 18th. The fire was reported to the Fire Department by Candace Brockman, who was working in the office beneath the new offices being constructed over her. She said that a person unknown to her came into the office at approximately 12:25 p.m. and told her that the building was on fire and that everyone should leave. She immediately went out the same door the stranger had entered and observed flames in the structure over the office that she occupied and within the new office space. She thought that she had stepped out about 15 feet distant from the east wall and noticed the flames engaged in the studs and rafters in the addition to the right or north of the entrance. [2] I pause to note that the industrial premises of Crown West are located within the industrial core of the City of Kelowna. Those premises front on two busy roads and adjacent buildings are occupied. Ms. Brockman shared office space with Mr. Stolk, Mr. Jones, Mr. Hoffman and Tanis Smith. The office premises were connected to the adjacent industrial shop by a passage and door and were separated by what came to be called "the West Parapet Wall". The stranger who reported the fire to Ms. Brockman was apparently the only person who noticed the fire, and he seemingly did so from outside the premises. No one in the office or in the industrial plant smelled smoke, heard crackling, or saw fire. [3] The owners of the property are 476462 B.C. Ltd. (the "numbered company"), and R171 Enterprises Ltd. and R204 Enterprises Ltd., doing business as Crown West Steel, are the tenants. [4] The claim of Crown West Steel and the numbered company against Wally's Roofing and Mr. Karylchuk and Mr. Timm is that they used a propane torch negligently, and as a result of their negligence, the entire building was destroyed. The claim against Sunrise Construction is that it failed to take such care in the circumstances of the hazardous work being undertaken by Wally's Roofing and the roofers that a reasonable contractor would have done. Central to the claims against all is a causal connection between the propane torch work carried out by the roofers and the fire which was first noted an hour after the roofers left the premises. [5] Those premises were gutted by the fire, and the fire suppression and subsequent investigation further disturbed the physical evidence which remained. In Snell v. Farrell, [1990] 2 S.C.R. 311 [Snell], Justice Sopinka, in Reasons for the court, stated the issue in this way at para. 13: 1. Is the burden of proof of causation in a medical malpractice case on the plaintiff and if so, how is it satisfied? 2. If the burden of proof of causation is on the plaintiff, did the trial judge infer causation in this case and if not, ought he to have done so? [6] Later at para. 26, His Lordship said this: Causation is an expression of the relationship that must be found to exist between the tortious act of the wrongdoer and the injury to the victim in order to justify compensation of the latter out of the pocket of the former. Is the requirement that the plaintiff prove that the defendant's tortious conduct caused or contributed to the plaintiff's injury too onerous? Is some lesser relationship sufficient to justify compensation? I have examined the alternatives arising out of the McGhee case. They were that the plaintiff simply prove that the defendant created a risk that the injury which occurred would occur. Or, what amounts to the same thing, that the defendant has the burden of disproving causation. If I were convinced that defendants who have a substantial connection to the injury were escaping liability because plaintiffs cannot prove causation under currently applied principles, I would not hesitate to adopt one of these alternatives. In my opinion, however, properly applied, the principles relating to causation are adequate to the task. Adoption of either of the proposed alternatives would have the effect of compensating plaintiffs where a substantial connection between the injury and the defendant's conduct is absent. Reversing the burden of proof may be justified where two defendants negligently fire in the direction of the plaintiff and then by their tortious conduct destroy the means of proof at his disposal. In such a case it is clear that the injury was not caused by neutral conduct. It is quite a different matter to compensate a plaintiff by reversing the burden of proof for an injury that may very well be due to factors unconnected to the defendant and not the fault of anyone. [7] Justice Sopinka refers to Blatch v. Archer (1774), 1 Cowp. 63, 98 E.R. 969, (at para. 29), where Lord Mansfield said: Causation need not be determined by scientific precision. It is, as stated by Lord Salmon in Alphacell Ltd. v. Woodward, [1972] 2 All E.R. 475, at p. 490: ...essentially a practical question of fact which can best be answered by ordinary common sense rather than abstract metaphysical theory. ... It is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted. And then sets out the opinion of the court at para. 33: The legal or ultimate burden remains with the plaintiff, but in the absence of evidence to the contrary adduced by the defendant, an inference of causation may be drawn although positive or scientific proof of causation has not been adduced. If some evidence to the contrary is adduced by the defendant, the trial judge is entitled to take account of Lord Mansfield's famous precept. [8] Snell was a medical malpractice case. However, it was relied upon by Justice Macklin of the Court of Queens Bench for Alberta in Lamont Health Care Centre v. Delnor Construction Ltd., [2003] A.J. No. 1511 (Q.B.), which dealt with a claim against a roofer in circumstances not unlike those before me. [9] At para. 138, he states the task of the court in such cases: As in many cases of fire loss, there is no direct evidence here of cause. Therefore, to paraphrase Ryan J.A. in Wilson v. Sutherland (1976), 16 N.B.R. (2d) 377 at 382 (S.C.A.D.), the Court is left to determine whether sufficient proof has been led by the Plaintiffs to enable a reasonable inference to be drawn that the fire originated as alleged, or to exclude any other fair inference as to cause (see also P.R.O. Holdings Ltd. v. Atlantic Speedy Propane Ltd. (2001), 234 N.B.R. (2d) 81 at para. 11 (C.A.)). [10] In Marchuk (c.o.b. Gerry Marchuk Contracting) v. Swede Creek Contracting Ltd., [1998] B.C.J. No. 2851, the British Columbia Court of Appeal said this of the use of circumstantial evidence in determining liability after the abandonment of res ipsa loquitur: While the Supreme Court was critical of the Latin maxim, the underlying principles governing the use of circumstantial evidence in determining liability for negligence were not modified. The issue becomes simply whether, after weighing the whole of the direct and circumstantial evidence, the plaintiff has established a prima facie case of negligence against the defendant, and that inference has not been negated by the defendant's evidence. The legal burden of proof, of course, remains on the plaintiff throughout. [11] After referring to several authorities, Justice Sopinka says at para. 32 of Snell: These references speak of the shifting of the secondary or evidential burden of proof or the burden of adducing evidence. I find it preferable to explain the process without using the term secondary or evidential burden. It is not strictly accurate [page330] to speak of the burden shifting to the defendant when what is meant is that evidence adduced by the plaintiff may result in an inference being drawn adverse to the defendant. Whether an inference is or is not drawn is a matter of weighing evidence. The defendant runs the risk of an adverse inference in the absence of evidence to the contrary. This is sometimes referred to as imposing on the defendant a provisional or tactical burden. See Cross, op. cit., at p. 129. In my opinion, this is not a true burden of proof, and use of an additional label to describe what is an ordinary step in the fact-finding process is unwarranted. [12] It is within the context of these principles that I now turn to the evidence. [13] It is common ground that the fire began above the ceiling of the office in which Ms. Brockman was working, as distinct from within the office or within the industrial plant to the west. On the morning of June 18th, certain persons entered the new office construction over the existing office. The first was the caretaker, Mr. Holland, who was asked to inspect the area under construction to ensure that there was no construction debris that would interfere with the building inspection to be carried out that morning. He noticed a pail with some wood cuttings, sawdust and similar material, and he took that pail out with him. Mr. Holland had begun the cleaning work the previous day and had returned between 5 a.m. and 6 a.m. to finish the job. When he finished, he put the ladder he used to gain access to the addition in the hallway of the downstairs office beside the office of Max Arthur. He admitted to smoking cigars but denied smoking one on June 18th in the addition. [14] A scupper was described as a galvanized metal fitting, 4 inches high with a length varying from 6 inches to 12 inches, with flanges on either side for attachment to the substrate and a 3-inch hole in the bottom. The scupper is installed at the lowest point in the perimeter of the roof. [15] The next person to attend was Mr. Hickerson, the construction superintendent for Sunrise Construction. On his way to the plant, he heard that rain was forecast for the weekend, and he became concerned that water could enter the lower office, unless the scuppers were sealed off. Scuppers or drains are customarily employed around the perimeter of a flat roof structure to drain water which may accumulate on the roof. Mr. Hickerson called Wally's Roofing (1984) Ltd. ("Wally's Roofing") and left a message that the scuppers should be sealed off. Upon his arrival at Crown West at approximately 7:30 or 7:45 a.m., Mr. Hickerson put up a ladder to what he described as the doorway at the northwest corner of the addition, and he tied the ladder off for safety reasons. He did not enter the addition but left the ladder up for the building inspector. [16] The next person to arrive was Mr. Ducharme, the framer employed by Sunrise Construction, who attended, he said, at approximately 7:30 a.m. to ensure that the addition was ready for inspection. He noticed a plastic pail near the stairwell opening, and he said that he picked it up and moved it to the southwest corner of the alcove. The alcove was formed by a partition some three feet distant from the south end of the addition, accessible through an opening three feet wide and four feet high framed by Mr. Ducharme. Mr. Ducharme described the addition as clear of construction debris and ready for inspection. [17] After Mr. Ducharme's departure and around 8 o'clock in the morning, Mr. Jackson, the engineer engaged by Sunrise Construction, attended to check for the building inspection slip. He described the ladder as in place in the doorway in the northwest corner. [18] The roofers, Mr. Karylchuk and Mr. Timm, arrived at approximately 10 a.m. to seal off the scuppers in accordance with Mr. Hickerson's instructions to their employer, Wally's Roofing. They described the ladder giving access to the roof of the addition and the shop as positioned against the shop wall, running east and west, not in the "doorway" on the north side. At approximately 11:26 a.m., the roofers left. During their attendance, a detail torch fired by propane was employed to seal two scuppers, one above the other, on the west wall of the addition and the east wall of the industrial shop. The fire was noticed and called in, according to the log of the Kelowna Fire Department, at 12:27 p.m. [19] The plaintiffs say that the most probable cause of the fire, which substantially destroyed the office and industrial premises, was the careless use of the propane torch by the roofers. Moreover, the plaintiffs say that such an activity is inherently dangerous and that not only the roofers, Mr. Karylchuk and Mr. Timm, and their employer, Wally's Roofing, but also the head contractor, Sunrise Construction, share liability for the ensuing damage. [20] The claims of the numbered company and Crown West Steel are against Wally's Roofing, Mr. Karylchuk, Mr. Timm and Sunrise Homes Ltd. for the damages they sustained as a result of the negligence of all of those defendants. The claims against Wally's Roofing and the roofers, in short, is that they employed a hazardous method of performing a conventional roofing task and that they did so carelessly and without regard to the customs and accepted methods of the roofing industry, the British Columbia Fire Code, and the manual provided by a manufacturer of materials of the kind the roofers said they used. The Experts: [21] Mr. Randy Ayres of the Fire Commissioner's Office attended at the scene of the fire at approximately 9 a.m. on June 19th. He was with Assistant Chief Steve Kinsey of the Kelowna Fire Department. In his report, he notes that the fire was reported to the Fire Department at 12:27 p.m., that the second floor addition was fully involved upon the arrival of the Fire Department, and that Ms. Brockman had been told by a person who came off the street that the building was on fire and that they had better get out. She reported that the fire was directly over her head in the addition. He notes as well that, as a result of his discussions with Mr. Heuthorst and Mr. Stolk, he learned no one was working in the addition at the time of the fire. He notes that he learned that a roofing contractor had been patching the roof. The source of that information was the adjustor appointed for the roofing contractor, Larree Riddell. [22] The investigation of the fire occupied most of the day, and he and Mr. Kinsey were assisted by firefighters in moving debris in their efforts to identify the point of origin of the fire. Mr. Ayres notes that he interviewed Harvey Karylchuk and learned from him that he was working with Mr. Timm commencing at approximately 10:30 in the morning, that he had been directed to seal a scupper and extend a down pipe, that neither had smoked any cigarettes, and that the procedure he employed was to heat the roof patch on a trowel and "smeage" the patch on the roof. Smeaging is the process of applying a heated roofing patch to a hole in the scupper. Mr. Karylchuk said that he heated the trowel for 10 seconds, before picking up a four inch by four inch piece of flam, and then heated the flam for 10 seconds until it turned green. The flam is then placed in the scupper over the hole and pushed manually into a position where the hole is sealed. He notes that Mr. Karylchuk told him that the torch did not touch the roof or the wood and that he extended the down spout while waiting the required one-hour fire watch. He notes that the roofers left at 11:26 a.m. (the time given Mr. Karylchuk by Mr. Timm for the timecard). Mr. Ayres asked Mr. Karylchuk where the roofing work was done, and he was shown a location on the west wall, approximately 20 feet north of the southwest corner. During this interview, Mr. Ayres offered Mr. Karylchuk a cigarette, but he declined. He also asked Mr. Karylchuk if he had seen the plastic pail and he replied, "No." [23] Mr. Ayres goes on to note that the roof of the shop had been completely consumed by the fire with steel beams and columns buckled and beginning to fail and that the addition had collapsed and a number of studs were completely consumed by the fire. The interior of the office on the ground floor revealed light damage and that the fire and charring indicators revealed that the fire had come from the second floor down. [24] Mr. Ayres notes the reports of witnesses and the fire department suggesting that the fire began on the second floor and that by working from the area of the least fire damage to the area of the heaviest damage, he was led to the southwest section of the second floor addition. The fire debris was removed with the assistance of three firefighters, and the area was reconstructed. A hole was cut into the sub-floor of the addition, which exposed the roof of the offices below and the underside of the sub-floor. Examination showed that the roof and underside of the sub-floor were less charred than on top of the sub-floor. He noted that the fire damage to the sub-floor increased as he proceeded west toward the southwest corner. He also noted that during debris removal, the remnant of a plastic five-gallon pail was discovered and that the pail was evenly melted as it would be if a fire occurred inside it. The floor beneath the pail was washed and a burn pattern was obvious. Beneath the pail, the floor was not burned but charring came from the pail, moving east. Evidence of wood shavings and sawdust, as well as wiring debris, was discovered in the pail. Mr. Ayres called in the provincial electrical inspector, Mr. Pilato, who investigated the wiring, fuses and other electrical components and ruled out electricity as a source of ignition. No other sources of ignition were found. Mr. Ayres concluded that the fire originated in the southwest corner of the addition in a plastic pail used for garbage, that access to the addition was open, and that the fire was classified "accidental". [25] Mr. Ayres said that he gained access to the addition through a large hole in the floor over the office. He was unable to say how much of the hole was a result of the fire and how much was the result of "pull down" by the firefighters for safety purposes. [26] Mr. Ayres was extensively cross-examined. He said that he had spoken with Larree Riddell, the adjuster for the roofers, two or three hours after he began his investigation on June 19th. When he learned of the roofing activity several hours before the fire was detected, he said to her words to the effect that the roofers may have a problem. [27] Mr. Ayres acknowledged that, in a general way, he tried to determine if the fire's cause was accidental, negligence or design. He ruled out design in the absence of any evidence of an accelerant, and he did not asked the police to attend. He also ruled out an electrical cause, arson or a natural gas cause. He described working with Mr. Kinsey and firefighters removing debris in the southwest corner, which exposed the plastic pail. He said that he had spoken with Larree Riddell before the pail was found. He described two conversations with Ms. Riddell, the first limited to the roofers being engaged in torch work a few hours before the fire was detected when he expressed the belief that they might have something to do with the fire. He spoke with her again before meeting Mr. Karylchuk and after he returned to the scene and found the pail. It was in that second conversation when he showed Ms. Riddell the area of origin, and it was then that she told him that the roofers were working towards the middle of the west wall. Mr. Ayres described a meeting with Mr. Karylchuk over a cup of coffee with Ms. Riddell present. He said that Mr. Karylchuk told him that he sealed one scupper and that if he had said that he had sealed two scuppers, he would have noted it. When asked if he had been told that the roofers worked on two scuppers, one on the west wall and the other in the southwest corner, whether that would have had a great impact. He replied, "Some impact but not great." He was asked if he learned that the roofers were within the southwest corner an hour or two before the discovery of the fire, whether that would have caused him to reconsider the "smoker theory", he replied that it was only one factor and that it would have caused him to look more closely at the physical evidence. He was then asked whether he would defer to the expertise of Mr. Senez as to the cause and origin of fires, and he said that he would not nor would he defer to the expertise of Mr. Smith. He was then asked whether dropdown burning was a possible explanation for the fire in the bucket. He agreed that it was possible but said that it was not likely. He agreed that if the roofers had ignited bitumen in the scupper hole above the bucket and that ignited material fell into the bucket, that could have caused the fire. Mr. Ayres said that that is possible but unlikely because a fire in the area of the scupper would have emitted black smoke from bitumen and roofing materials, and that black smoke would have been noticed. Mr. Ayres then said that the burn pattern he observed indicated that there was burning above the bucket before it ignited and collapsed. Mr. Ayres considered that the point of origin was within the bucket in the southwest corner and that the cause of ignition was likely discarded smoker's materials. He considered that he eliminated all other likely causes. [28] Mr. Peter Senez prepared four reports dated November 29, 2002; March 5, 2003; September 9, 2003; and October 25, 2004. He gave extensive evidence as well. He was asked to assume that two scuppers were removed and permanently sealed and that there was no evidence of careless smoking. He did not inspect the site. The series of reports responded to the reports of Mr. Ablemas. He concluded that the "bucket theory" is less likely to account for the origin of the fire than the scupper and he relies, in part, upon an experiment conducted by Mr. Ayres' office. He described this controlled burn as "demonstrative of a point source of fire developing from a bucket in a corner and useful for purposes of illustrating the burning behaviour of an uncontained fire and the subsequent damage by fire to the walls and the floor". Because the damage in the southwest corner does not correlate to the damage in the test burn, he rejects the bucket theory. [29] Mr. Al Smith prepared a causation report for the plaintiffs. He determined that the fire was the result of the application of heat from the roofers' torch to seal an opening through a parapet wall at the identified point of origin. Mr. Smith attended at the scene on June 20th, 21st and 22nd. Amongst other things, he was told that an opening had been cut through the original roof, including an opening for the stairs giving access to the new addition from the office below. Mr. Smith notes, of the ground floor office, that "an opening had been cut through the ceiling for the installation of stairs". In this, he appears to be quite clearly wrong based upon not only the evidence of Mr. Ducharme, the framer, but also of those who worked within the office area, including Ms. Brockman. Mr. Smith also noted a burn pattern on the north face of the wall of the higher building to the south of the new addition. He noted as well that the original roofing membrane over the office below the new addition had been removed. Here, too, he is wrong inasmuch as Mr. Ducharme said that he only removed the roof and roofing membrane over the office where the stairs were to be installed. Mr. Smith concludes that the burn patterns are consistent with the area of origin at the alcove and that the burn patterns are consistent with the point of origin inside the parapet wall separating the shop roof to the west from the office and the addition to the east. He relies on the degree of pyrolysis or charring, which he says is consistent with the fire commencing in the wood framing and sheathing inside the membrane. Mr. Smith rejected the electrical service above the point of origin as a source of ignition, and he corrected that part of his report in his testimony to substitute the word "below" for the word "above". Based upon what he was told of a scupper at the identified point of origin, which was removed with the opening sealed with a tar patch melted by a torch, Mr. Smith opined that it was this use of heat that probably caused the fire. [30] Mr. Vanleeuwen attended at the scene of the fire on June 21, 1999, and investigated the electrical systems in the area of origin, which he assumed was in the southwest corner of the new addition. He assumed as well that the roofers sealed the scupper in the southwest corner "precisely the area in which the fire was first noticed". Mr. Vanleeuwen concluded that because the upper electrical cables were "arc severed" while the lower cables were not, the fire likely started above the cables and traveled downward. That leads him to conclude that the fire was within the wall before it was in the bucket. It is noted that the electrical cables are in three groups of three cables and that the three upper cables are arch severed, the lower three are not, and three other cables are shown on the remains of the floor and no longer attached, with the result that their original location cannot be determined. Mr. Vanleeuwen concluded that there was no evidence to suggest an electrical origin to the fire. All of this is, of course, confirmed by Mr. Hoffman who, on his two or three passes through the plant and the office after the fire was discovered, noted that the lights remained on and the electrical service was not interrupted as it would have been if the service cables had been severed. [31] Mr. Schreiner was asked about the use of flam to temporarily seal a scupper hole. In his report of November 3, 2003, he said, "It would have been desirable to apply heat to both of the surfaces being joined...to the metal scupper and the piece of flam." However, the RGC Roofing Practices Manual, to which he refers, says at para. (b) on p. 5: Applicators must take special care when torching at flashing corners or voids in the roof deck. Never torch directly at these locations. Always torch the membrane and then adhere it to the corner or joint. ... 3. Torching Method: Feather seams around details with hot trowel not open flame. Heat membrane and then attach to flashings, corners or voids in the roof deck. Never torch directly. [32] This, of course, is the procedure that the roofers say they followed with the flam. The Roofers: [33] When Mr. Hickerson called after the fire was discovered and asked whether Mr. Karylchuk used a torch, he had to understand that the roofing work was seen as a possible cause having regard to the closeness in time between the use of the torch in the roofing work and the discovery of the fire. Mr. Karylchuk then contacted Rose Osada, the principal of Wally's Roofing, and they went to look at the fire. Mr. Karylchuk then went to see Mr. Timm, who said Mr. Karylchuk told him that he would be thrown in jail. [34] Meanwhile liability insurers for Wally's Roofing retained an adjuster, Larree Riddell, who met with Ms. Osada and Mr. Hickerson the evening of the fire. Ms. Riddell said that she was told by Mr. Hickerson that he wanted two scuppers sealed. Mr. Hickerson said that he pointed to two locations about 20 or 30 feet apart: one near the south west corner and then another about 20 feet from the south west corner. Ms. Riddell's notes say "Sunrise wanted the scupper, referring to that scupper 3 feet from an end wall, sealed off". The next morning, Ms. Riddell returned to watch the investigator from the Fire Commissioner's Office, Mr. Ayres, and the Assistant Chief of the Kelowna Fire Department, Mr. Kinsey, working in the southwest corner, and she made a note that "investigation of fire concentrated in front area close to where scupper was sealed. Also electrical wires in area". There were three bundles each of three cables on the south wall of the alcove. [35] Ms. Riddell spoke with Mr. Ayres, and when she told him the roofers had been using a torch on the roof a few hours before the fire was discovered, he thought they must have been responsible. However, Ms. Riddell then told him that the roofers were not working in the southwest corner but 20 or so feet north on the west wall. [36] Mr. Ayres and Mr. Kinsey then discovered the bucket, or its remains, in the southwest corner of the alcove and the careless discarding of a cigarette or match was suspected. [37] When Mr. Ayres later interviewed Mr. Karylchuk that morning, Mr. Karylchuk said that he had been told to seal "a scupper" that was about 20 feet north of the southwest corner. At trial, Mr. Karylchuk said that he had sealed two scuppers, one on top of the other, but that he did so by heating a trowel and then picking up the flam with the trowel and then heating the exposed surface of the flam, after which it was "smeaged" or massaged into place over the hole. He denied applying the torch to the substrate or to the scupper. He agreed that a permanent removal of a scupper would involve using a knife to cut away the roofing membrane and gravel and then removing the scupper and sealing the hole by applying the flame directly to the base sheet membrane. However, that procedure is denied. [38] I found much of the roofers' evidence unworthy of belief. In evidence, Mr. Karylchuk said that he was told to go to Crown West Steel because there was a "problem" with the scuppers. He told Mr. Ayres that he was told to "seal a scupper" and to extend a down spout. He told Ms. Riddell that he was told to seal two scuppers. When cross-examined on these inconsistencies as to "a scupper" or "two scuppers", he was somewhat disingenuous when he pretended to be confused in whether the question was directed to two or more scuppers designated a) or b) or c). He was then asked, "I take 'a' scupper meaning one scupper. How do you take it?" and he answered, "That's just like having a beer...always there's more". He then went on to "clarify" his meaning by saying this: "it was a scuppers". He also did not remember telling Mr. Timm he was going to jail. [39] Mr. Timm was equally unimpressive. He told Ms. Riddell that he did not bring any downspouts and that he put the propane tank in the "doorway" at the top of the ladder, the opening on the north wall of the addition. In evidence, he said that he took the propane tank to the shop roof. Mr. Karylchuk said that Mr. Timm brought up everything, except the propane tank. When confronted with that, Mr. Timm said "that would be wrong". Mr. Karylchuk said that the fire extinguisher was in the truck; Mr. Timm said that he brought it to the roof. These matters are not without importance. If the propane tank was left in the truck, then the length of the hose becomes important. If it was brought to the doorway, then that is at least some evidence that Mr. Timm entered the new office space and that the ladder was either in the doorway or close enough to it to enter. [40] There were also inconsistencies between evidence on discovery and evidence at trial. Mr. Karylchuk said on discovery that he lit the torch and that he had the lighter. He gave contradictory evidence at trial, and when asked whether the answers he gave on discovery were true, he answered "at the time they were" and when then asked, "And now they're not true?" he answered "no." [41] With respect to the application of the flam to a heated trowel and the application of the torch to the flam on the towel, Mr. Timm said that "Mr. Karylchuk did not touch the torch to the flan...", and when it was put to him that if Mr. Karylchuk said that he would be wrong Mr. Timm said, "yes; he'd have to be wrong 'cause I seen what -- what he did and his story is different than mine." [42] Mr. Karylchuk said that he entered the addition to feel the flam he had smeaged into the scupper. When he was in the addition, he could see the women in the office below and one was a blonde (Ms. Brockman is blonde). Mr. Timm said that he, too, saw people in the office below but, at trial, resiled from that and said, "I don't -- I don't remember seeing any people. Thinking about -- thinking about it now, I don't remember seeing anybody 'cause how can you see any people from up there in the office buildings". I took "up there" to mean the roof. Mr. Timm denied ever being in the addition. [43] Mr. Karylchuk was remarkably candid about the discussions that had been ongoing with Mr. Timm. For example, there is this exchange: Q: "you know Ron Timm says now that he handed you the trowel? A: That's what we believed happened when we discussed this over the last so many years. Q: I'm sorry, did you just say that you discussed it with Ron Timm for the last so many years? A: Yes. We were trying to figure what we did up there. Q: Why? So you could get your stories straight? A: Just to play the game again, just seeing what we did to figure out that we didn't do nothin' wrong on a roof. [44] Then, there is a remarkable exchange on the question of smoking in the cross-examination of Mr. Timm by Mr. MacMaster. Mr. Timm said that he had no money and, therefore, no cigarettes on June 18th. When asked how much he smoked, he said two or three cigarettes per day. When asked when he last bought cigarettes before June 18th, he very quickly said, "June 17th." When confronted with the apparent contradiction, he said that he had left the cigarettes at home. [45] How does one account for the inconsistencies and contradictions in the evidence of the roofers? While there was a natural concern that they were suspected of causing the fire, that does not afford an explanation. [46] Mr. Darby, counsel for the roofers, submits that it can and should be inferred that the fire was most intensive north of the entrance and spread in a southwest direction, drawn by the opening in the West Parapet Wall for the air conditioner. He also refers to the evidence of Mr. Hoffman, who said that when he left the lights were on, and that is not consistent with the electric circuits becoming arc severed at the outset of the fire in the southwest corner. [47] Mr. Hoffman said that he took six or seven steps outside and looked up and saw fire directly above and to the north of the door. He made two or three trips through both the existing office and the shop to ensure complete evacuation. He did not detect any smell of smoke in the shop. In the second pass, he noticed flames in the wall of the old lunch room adjacent to and on the shop side of the West Parapet Wall and elevated above the shop floor. He described the flames as minimal and coming through the air conditioner opening, which had been framed in with plywood, the air conditioner having been removed. Mr. Hoffman went to his office, where he heard crackling and saw the ceiling above bubbling. He was seemingly the last person out before the arrival of the fire department. When he made his last pass, the lights were on. [48] In the result. Mr. Darby submits that the plaintiffs' claim against the roofers must be dismissed because: 1. Mr. Timm denied smoking. 2. It is unreasonable to conclude that a burning cigarette was dropped in the pail. 3. No roofing was work done in southwest corner. 4. There was no application of a torch to the roof or other combustible surface. 5. The procedure employed could not start a fire. 6. The fire could not have started in the scuppers. 7. Equally probable is a "structural fire" in the old office. 8. No theory is more probable than another. [49] If the roofers' evidence that they did no work in the southwest corner is accepted, then no liability can be found because the plaintiffs' entire case points to the southwest corner as the point of origin. Moreover, Mr. Ablemas, an expert called by the defendants, opined that smoking was a possible but unlikely cause, unless the smoking material was placed in a container of combustible and insulating material like paper or sawdust. Such a combination can result in glowing combustion, which becomes a flaming combustion when the insulating material is burned through. This, however, can take as long as 24 hours. Without the presence of combustible material, a cigarette left on plywood will result in a loss of heat to the surrounding air but with minimal heat transferred to the plywood. Similarly, a cigarette left on a thin layer of sawdust would not afford a sufficient supply of combustible material to support flaming combustion. Thus, it is submitted that the roofers cannot be seen as the cause of the fire. [50] Similarly, Mr. Darby says that the expert opinions provided by Mr. Senez and Mr. Smith both assume that the propane torch was applied to the area of parapet wall around the scupper and caused combustion. Mr. Darby points out that Mr. Ablemas explained how adhesion of the flam did not require the application of heat to the scupper. In the result, it is submitted that absent proof of the fact of the application of heat to the area around the scupper, the plaintiffs' theory collapses. [51] In the alternative, if the evidence of the roofers is rejected and I find the roofers worked on the scupper in the southwest corner, then Mr. Darby submits that, on all of the evidence, the southwest corner has not been shown to be the point of origin. He says that one would have to accept that the fire would burn downward from the scupper on the south parapet wall and then burn around the southwest corner. Moreover, the sill plate supporting the scupper should have been destroyed, as well as whatever asphalt adhered to it. Yet, Exhibit No. 45 is a photo of a scupper found amongst the debris in the area of the south parapet wall that seems, in the photograph in evidence, to be attached by a nail to a sill plate. [52] Much of the difficulty in this and similar cases where the point of origin and cause of a fire are the central issues is, as I have earlier set out, made difficult if not impossible by the destructive nature of fire and the sometimes equally destructive nature of fire fighting and investigative measures. Thus, much evidence was led of expert opinion on the question of point of origin and probable cause and on why the various competing theories of point of origin and cause should be rejected. For example, Mr. Ablemas opined that if the fire began at the scupper as a result of the torch coming into contact with the surrounding combustible material, then the fire would likely have burned upward in the West Parapet Wall until it burned through the roofing elements, and then on emerging as flaming combustion, there would have been a great amount of black smoke form the combustion of tar/asphalt roofing membrane. Yet, there was no evidence of any observation of black smoke in the early phases of the fire. [53] Mr. Darby then says that there is evidence from which a structural fire within the office ceiling beneath the addition could be inferred as the most probable point of origin. He refers to a large area of complete destruction, resulting in a large "hole" where the ceiling of the main floor office collapsed. Mr. Ducharme, the framer said that he removed the roofing elements to provide an opening for the stairs but left the rafters and ceiling below in place. Mr. Kinsey from the Kelowna Fire Department agreed that in determining the point of origin, it is helpful to find the most severe fire damage and the lowest point of damage, since fire naturally burns up. Mr. Ayres, too, said that he saw extensive burning and charring in the area around the hole and the kind of "alligatoring" that was also seen by him in the cant strips in the southwest corner. Mr. Smith, in cross-examination, agreed that the degree of destruction to the floor around the hole is more severe than the burning in the southwest corner. Both Mr. Smith and Mr. Ablemas thought there should have been greater investigation of the main floor office ceiling as the point of origin. [54] There are, however, other complicating factors that should be taken into account. One of these is the phenomenon of "drop down burning" which, as I understand it, is the propagation of a second fire below the point of origin caused by flaming materials dropping down and igniting surrounding combustible materials. Thus, it is not always true that the lowest point of damage, as well as the most severe burning, is necessarily conclusive in finding a point of origin. [55] Mr. Ayres considered that the extensive charring around this hole was consistent with a "ventilation generated burn pattern", where the flame seeks the greatest source of oxygen to maintain and expand combustion. However, he assumed that the stairwell opening had been cut before the fire when, on the weight of the evidence, only the old roofing elements had been removed and the ceiling and rafters were left intact. [56] Finally, it must be said that first impressions often drive investigations into point of origin and cause. Mr. Kinsey acknowledged that the Kelowna Fire Department investigation focused on the southwest corner and the West Parapet Wall and not on the ceiling because of witness information that the fire started elsewhere. [57] In the result, counsel says that the facts in evidence equally support a ceiling fire perhaps from the breakdown of the wiring or the florescent fixtures installed within the ceiling. [58] With respect to the plaintiff's experts' evidence that the v-burn pattern evident on the West Parapet Wall corroborated that as the point of origin, counsel for the roofers points out that the scupper is above the base of the v-burn. While he acknowledges that it is possible that a fire in the wall around the scupper could have resulted in a drop down burn on top of the sill plate, he submits that the partially intact character of that sill plate suggests otherwise. In the result, Mr. Darby submits that the v-burn pattern depicted in the southwest corner is likely due to secondary burning based on the following: (a) The northern portion of that v-burn pattern is a result of the air conditioner hole rather than the actual burning of the West Parapet Wall from a lower location. This was the opinion given by Mr. Ablemas and accepted by Mr. Senez in cross-examination. (b) The southern portion of the v-burn is defined by a clean burn on the south parapet wall which, he contends, was either the result of spalling of the stucco during fire suppression or increased energy released by the electrical conductors, or alternatively the result of the electrical conductors protecting that area of the stucco. (c) The three vertical members apparent within the West Parapet Wall, just north of the south parapet wall, due not support a conclusion of early burning as Mr. Senez opined. He concluded that the southern most vertical member was shortest and, therefore, burned longest when Mr. Smith said that he broke that member in the course of his investigation. (d) The electrical conductors would have severed sooner than they did if the fire had started in the southwest corner. (e) Mr. Hoffman observed the initial start of flames at the air conditioner hole considerably after he saw the fire in the addition to the north. If the point of origin was in the southwest corner at the base of the v-burn pattern, the western wall of the addition (as distinct from the western parapet wall) would have ignited, and the fire would have spread into the West Parapet Wall through the air conditioner hole. (f) The extensive damage in the southwest corner resulted from the fire spreading from the addition into the shop through the opening for the electrical conductors and through the air conditioning hole. [59] Similarly, Mr. Darby submits that the pail or bucket theory cannot stand. He submits that the western exterior wall of the addition in close proximity to the pail would have constituted the initial fuel load and the first to be ignited. Yet, Mr. Hoffman did not see flames on that exterior wall until his second or third pass through the shop and office, and after the fire was well-established. [60] I now turn to the defence of Sunrise Construction. [61] Mr. MacMaster submits that the "pail theory" remains the most viable explanation for the point of origin of the fire. In support, he refers to the evidence of all of the experts that there is a visible "v-burn" pattern in the southwest corner of the alcove and that the pail is at or very near to the center of the v-burn pattern. Mr. Senez identified the bottom of the v-burn pattern near the mid-point of the south wall of the alcove and at the point where the south wall and the west intersected. He also identified it as being in vicinity of the electrical conductors, which pass through the west wall at a height at the mid-point or lower of the south wall. Mr. Smith marked the bottom of the v-burn pattern within three to four feet of the southwest corner of the alcove and on the west wall. Mr. Ablemas questioned the significance of the v-burn pattern because there were no photographs of the east side of the west wall. However, he did concede that there was a v-burn pattern visible on the addition side of the west wall of the alcove, and he placed the bottom of that v-burn pattern where the cables passed through the west wall and in substantially the same location as identified by Mr. Smith. [62] Counsel for Sunrise Construction submits that the evidence clearly demonstrates the location of the pail with its top consistent with the low point of the v-burn pattern and says that the combination of the pail and the adjacent fuel load explains perfectly the extensive burn patterns found in the first three or four feet north of the southwest corner. Mr. MacMaster also submits that the pail theory explains why the witnesses first observed flames in the rafters north of that location. He relies upon the opinion of Mr. Ablemas, who says that if it is assumed that flaming combustion began in the pail, then it can be predicted that the adjacent stud and sheeted wall on the west side would be ignited; that the flames would move rapidly up the wall in a vertical direction; that the heat gases and flames would be concentrated above the pail at the level of the rafters; and that the flame would spread more rapidly through the rafters within an open-frame design toward the north, east and northeast. Mr. MacMaster then submits that the pail theory can be seen as the most viable explanation taking into account the fact that the careless disposal of a match or a lit cigarette within the pail could have occurred at any time within 24 hours before the fire was noticed. Numerous Crown West Steel employees smoked as did Mr. Timm, including Mr. Holland and Ms. Brockman. Mr MacMaster forcefully argues that when Mr. Timm said despite having purchased a package of cigarettes the day before the fire and despite smoking some every day, for him to say he did not have cigarettes with him on June 18th is beyond belief. It is then submitted that if Mr. Timm's evidence on this point is rejected, then there is a basis for rejecting his evidence that he did not enter the addition at any time. First of all, Mr. Timm said that he placed the propane tank in the doorway of the addition; secondly, Mr. Karylchuk went into the addition; and finally, on his examination for discovery, Mr. Timm said that he saw people in the office below the addition. [63] Mr. MacMaster goes on to submit that the official conclusions of Mr. Ayres and Mr. Kinsey, on behalf of the B.C. Fire Commissioner's Office and the Kelowna Fire Department, as to the area of origin and the point of origin should be preferred to any other theory. Moreover, he submits that the opinion of Mr. Senez, several years after the event, begins by saying in the first sentence of the second paragraph of his report: Given the size of the structure, the extent of the damage resulting from the fire, and the reported configuration and proximity of the scupper to the bucket, there is insufficient information to establish the specific origin of the fire. Assuming the fire originated in proximity to the scupper and the bucket, there is insufficient information or evidence to distinguish between the scupper and the bucket with regard to the point of origin of the fire. [64] It is also submitted on behalf of Sunrise Construction that, even if the roofers caused the fire, it does not necessarily follow that Sunrise Construction was in breach of its contract with Crown West Steel. It is submitted that Sunrise Construction had limited and well-defined responsibilities to obtain and select tenders for sub-contracts and to co-ordinate and supervise the construction. It is emphasized that Crown West Steel knew and accepted that Sunrise Construction did not employ any construction workers. Moreover, Crown West Steel reserved control with respect to the electrical work, which was to be done by its employee, Mr. Jones, and the stairs which Crown West Steel intended to assemble for use at the north side of the addition. It is submitted as well that the principal of Crown West Steel, Mr. Heuthorst, maintained a strong and controlling role in the engagement of the sub-trades. Mr. MacMaster submits that Crown West Steel acted as its own general contractor and simply retained Sunrise Construction to co-ordinate some of the trades and the construction. In the result, it is submitted that the claim in contract should be dismissed. [65] It is then submitted that Sunrise Construction can only be held the vicariously liable for the negligence of the roofers if the work was inherently dangerous. Absent that element, a general contractor is not responsible for the acts of an independent contractor. Sunrise Construction submits that it is not a general contractor; but even if it is found to be a general contractor, its duty is limited to exercising reasonable care in the selection of the independent sub-contractor. Mr. Hickerson gave evidence that Wally's Roofing enjoyed a good reputation and that he had previously worked with them and was satisfied with the quality of the work performed. [66] Sunrise Construction submits that if the roofers are found to have caused the fire, and if Sunrise Construction was a general contractor charged with responsibility for engaging a sub-contractor for the roofing work, then that roofing work must be found inherently dangerous for Sunrise Construction to be liable for the negligent performance of that work by Wally's Roofing. Therefore, if it is found that the negligence of the roofers consisted of the careless disposal of smoking material, then Sunrise Construction would not be vicariously liable because that would be casual or collateral negligence as distinct from negligence in the performance of the roofing work (see St. John (City) v. Donald, [1926] S.C.R. 371 (S.C.C.)). [67] While Sunrise Construction concedes that in some circumstances the use of a propane torch can be inherently dangerous, the specific facts of that use control the conclusion. The decision of MacDonald J. in Sao Paulo Light S.A. Servicos de Electricidade v. Eastern Stevedoring Co. Ltd. (1961), 30 D.L.R. (2d) 120 (N.S.S.C.) [Sao Paulo], where this is said: ...all such cases the degree of care required is that which a reasonable man, skilled in such things, would exercise in using such a torch in the particular circumstances of time, place and space, and proximity to inflammable objects involved in its use...Thus, for example, it can be affirmed of all the cases in which liability has attached in respect of fires caused by the use of burning torches and similar instruments, it has done so because the fire-creating agency was used without due care in cramped or enclosed quarters or in dangerous proximity to inflammable substances. [68] Sao Paulo was reversed on appeal, but this point was not challenged and was endorsed in this court in McLean v. Stoochinoff (1964), 44 D.L.R. (2d) 306. I want to note that the roofers failed to maintain a fire watch for an hour, failed to have a fire extinguisher handy, failed to damp down the roof, and failed to take any steps to protect against the risk of fire. Mr. MacMaster then submits that if the evidence of the roofers is accepted, they used a detail torch for a very short period of time at a low flame to simply heat the trowel and then heat the flam adhered to the trowel and that they did not apply direct flame to the roof, the walls, or to the scupper itself. In cross-examination, Mr. Schreiner agreed that the use of a torchable membrane in the manner described by Mr. Karylchuk is a common practice in the roofing industry. [69] With respect to a claim against Sunrise Construction under the Occupiers Liability Act, R.S.B.C. 1996, c. 337, Sunrise Construction submits that it is not liable as an occupier for the negligence of its contractor if: 1) it acted reasonably in the selection and supervision of the contractor and 2) the work delegated was work which should have been undertaken. It is also submitted on the authority Milina v. Bartsch, [1985] B.C.J. No. 2762 (S.C.), that the liability of an occupier is governed by the Occupiers Liability Act and not common law, and that to the extent that Sunrise Construction was an occupier, then the plaintiffs are precluded from reliance upon the common law exception of contractor liability predicated upon non-delegable activities. [70] In conclusion, Sunrise Construction submits that the plaintiffs have not established on a balance of probabilities that the roofers performed any work relevant to the point of origin of the fire and that the evidence relied upon by Sunrise Construction establishes that he pail was the point of origin of the fire. Even if smoking activity is suspected, it cannot be determined that it was the smoking activity of Mr. Timm as distinct from Mr. Holland or a stranger, and the claims of the plaintiffs should be dismissed. Decision: [71] I find that the area of origin of the fire was the southern end of the new addition. This accords with the observations of the witnesses who first saw the fire, as well as the findings of all of the experts who identified the area of origin. [72] I find that the point of origin was in the pail in the southwest corner of the alcove in the new addition. I rely particularly on the evidence of Mr. Ayres. He and Mr. Kinsey were the first investigators to attend the site of the fire. They proceeded from the area of least fire damage to the area of greatest damage in the southwest corner, and upon removing the debris from the fire, they discovered the remains of the pail. Upon examination, they found the pail to have contained wood crisps, sawdust and wiring typical of construction rubbish. There was no evidence of an accelerant. In the controlled burn experiment conducted by Mr. Ayres, similar conditions were reproduced, and after discarding a cigarette within sawdust shavings and wood cuttings within the pail, smoldering combustion developed into flaming combustion within six minutes. Too much cannot be made of this because the exact conditions of the contents of the pail in the southwest corner cannot be known. However, it is nevertheless a dramatic demonstration of the process which I find most probably occurred. The controlled burn experiment is less useful in demonstrating the progression of the fire from the pail to the wall structure next to it. The wall material used in the experiment is not the same as the siding on the West Parapet Wall and most likely more combustible. [73] I find the scupper theory as an explanation of the point of origin less probable than the pail theory, though I recognize that, in the conditions described by Mr. Senez and Mr. Smith particularly, it is a possible explanation. My reasons are these. Had the fire commenced in the scupper through the use of the torch, the fire would probably have spread upwards in the wall, breaking out through the roofing membrane. In such a case, a substantial volume of black smoke would have resulted. The fire was fully engaged within the addition well before it broke through the roof, resulting in black smoke. I also find the v-burn above the pail and the severed electrical cables are more consistent with a point of origin in the pail than in the scupper. As well, the degree of char or pyrolysis was identified as greater in a stud found in the southwest corner than elsewhere. All of this leads me to find the point of origin within the pail. [74] I reject the theory that an electrical fault caused the fire. The arc severed cables along the south wall were the result not the cause of the fire. There is no evidence whatsoever to support an electrical fault in the light fixtures over Ms. Brockman's desk in the ceiling. There was no flickering of lights or interruption of electrical service before the fire. Mr. Hoffman made two or three passes through the office after the fire was noticed and observed that the lights remained on. [75] I also reject the theory that a stranger entered the addition and started the fire, either intentionally or carelessly. Even though access to the addition was afforded by the ladder, the office and shop were occupied from as early as 7:15 a.m. by Ms. Brockman, and earlier by Mr. Holland, as well as the others previously described who passed through the addition. [76] I find that the cause of the fire in the pail was the careless discarding of a lit cigarette. I accept Mr. Holland's evidence that he was not smoking in the addition. I do not accept Mr. Timm's denial and find that he was in the addition and in the alcove where he smoked a cigarette and discarded the cigarette in the pail. Whether he was there simply to have a cigarette or for some other purpose, I cannot say. However, I find that when he said he did not have any cigarettes with him on June 18th, he was not telling the truth. I also find that when he said he did not enter the addition, he was not telling the truth. The only explanation for these untrue statements is that he wanted to conceal his responsibility for the fire. This is the only reasonable inference to be drawn after any other fair inference is excluded. [77] In the result, there will be judgment against Mr. Timm and against Wally's Roofing. The claim against Sunrise Construction and Mr. Karylchuk is dismissed. Western Star Trucks Inc.: [78] I now turn to the claim of Western Star Trucks Inc. ("Western Star"). [79] The fire that engulfed the plant and offices of Crown West Steel was a disaster with far-reaching consequences. Not only was the business and undertaking of Crown West Steel brought to an abrupt halt, but prospectively so to was the truck manufacturing business of Western Star. Crown West Steel was the main supplier of frame rails to Western Star, and Western Star kept no significant inventory of frame rails on hand, applying the "just in time" inventory method, which finely dovetailed the productive capacity of Crown West Steel to the supply need of Western Star. Thus, two businesses were very much at risk, as well as were their employees and the families of their employees. In what must be seen as a triumph of latter day industrial capitalism, within a short time Crown West Steel was fully functioning and producing frame rails for Western Star in rented facilities. In all, one and one-half days of production were lost. It was fortuitous that both Western Star and Crown West Steel planned on a two-week shut down commencing June 28, 1999. It was agreed between Western Star and Crown West Steel that Western Star would provide financial support and that Crown West Steel would rebuild as soon as it reasonably could. The essential terms were set out in a short memorandum of agreement. The City of Kelowna accommodated the reconstruction of the Western Star plant and the removal of the fire debris and preparation of the site for new construction. Crown West Steel hired Sunrise Construction as its general contractor and construction began expeditiously, and the new premises were occupied and operational within 12 weeks of the fire. All of this redounds to the credit of all of those who worked so hard and with such skill and confidence to bring it about. However, there were costs incurred by Western Star in mitigating its prospective losses, and Western Star now seeks compensation. [80] Western Star submits that the circumstances of its loss bring its claim within the categories of transferred loss or joint venture or relational economic loss as explained by the Supreme of Court of Canada in Canadian National Railway Co. v. Norsk Pacific Steamship Co., [1992] 1 S.C.R. 1021 [Norsk]. There, recovery for transferred loss is allowed where the property owner is able to allocate to the plaintiff, by contract, the risk of property damage and consequential loss. When the property is damaged by a tortfeasor, the owner suffers no loss, and unless the exclusionary rule is accepted, the tortfeasor may escape liability all together. Madam Justice McLachlin (as she then was) described recovery for joint venture loss as follows at para. 279: The reasoning, as I apprehend it, is that where the plaintiff's operations are so closely allied to the operations of the party suffering physical damage and to its property (which -- as damaged -- causes the plaintiff's loss) that it can be considered a joint venturer with the owner of the property, the plaintiff can recover its economic loss even though the plaintiff has suffered no physical damage to its own property. To deny recovery in such circumstances would be to deny it to a person who for practical purposes is in the same position as if he or she owned the property physically damaged. [81] I now turn to the evidence upon which Western Star relies. Evidence in Support of Western Star's Claim: [82] Crown West Steel customized frame rails for Western Star and had done so since 1992. Prior to that time, Western Star used its own physical and human resources to that end. The frame rails were purchased by Western Star and delivered to Crown West, where the frame rails were drilled to the specifications of the individual customer. Frame rails are the platform upon which the truck is built. Ninety-nine percent of Crown West Steel's production was dedicated to the drilling of frame rails and the fabrication of trucking accessories for Western Star. Western Star, in turn, had used other suppliers for custom frame rails, but at the time of the fire, Crown West was its only supplier. Western Star maintained its inventory according to the "just in time" approach. As a result of the fire, Western Star lost its only source of supply. Western Star also lost 43 trucks worth of frame rails, a computer, a welding jig, and some fifth-wheels. The 43 trucks worth of frame rails and related physical loss amounting to approximately $70,000. However, Western Star also claims loss of profit on the 43 trucks whose frame rails were destroyed at an average profit of $19,000 per truck, or some $817,000. [83] Immediately after the fire, Western Star and Crown West Steel entered into an agreement under which Crown West Steel would continue to customize frame rails for Western Star out of rented premises with fresh equipment financed by Western Star and extra shifts as needed. Absent such an agreement, Western Star calculates the losses would have been in the order of $26 million. [84] The defendants say that the unbridled recognition of economic loss raises the spectre of indeterminate liability described by Cardozoj in Ultramares Corp. v. Touche (1931), 174 N.E. 441 (N.Y.) [Ultramares] of "liability in an indeterminate amount for an indeterminate to an indeterminate class. Policy therefore limits recovery of pure economic loss." [85] The facts to which Sunrise Construction points are these: 1. At any one time Western Star had as many as 500 suppliers, of which Crown West Steel was but one. While Crown West Steel had supplied custom frame rails since 1992, at the end of 1998 it lost that contract to Tower and Western Star was looking for a new supplier prior to the fire and had asked Crown West Steel to provide customization services on an interim basis. Western Star had an inventory of two days worth of customized frame rails, and Crown West Steel had approximately two days worth of customized frame rails at its premises. The fire destroyed frame rails that were expected to be used in the production of 43 trucks. 2. While Sunrise Construction concedes the recoverability of $68,000 to $70,000 representing the value of the physical loss of Western Star's property, it disputes liability for additional labour costs in the approximate of $160,000, equipment and supplies in the approximately amount of $557,000, leasehold costs of $45,000, and certain premiums paid in respect of parts in the amount of $64,000. Sunrise says that it made a business decision to obtain custom frame rails from Crown West on an interim basis and did so knowing, or in circumstances where it should have known, of the risk if for any reason Crown West Steel was unable to deliver. [86] The frame rails that were destroyed were for trucks that would have been scheduled for production for Friday, June 25th, after which both Western Star and Crown West Steel expected to be shut down for maintenance for two weeks, and the frame rails destroyed were also scheduled for trucks that would have been produced following that shut down on July 13, 1999. The evidence was that Western Star earned an average profit of $19,000 per truck. [87] Western Star manufactured trucks customized to the individual purchaser, and with the exception of "stock trucks", the production schedule was geared to trucks that had been pre-sold. [88] Western Star says that the losses it has sustained are not pure economic loss but rather economic flowing from damage to property. Alternatively, Western Star says that the doctrine of parasitic or annexed damages applicable where a plaintiff suffers its own property damage, as well as a direct consequential loss from the property damage of a third party. In the further alternative, Western Star submits that if any part of its loss can be regarded as purely economic, then recovery is available under either the transferred loss or joint venture classifications for relational economic loss defined by the Supreme Court of Canada in Canadian National Railway Co. v. Norsk Pacific Steamship Co., [1992] 1 S.C.R. 1021. Transferred loss is allowed where the property owner is able to allocate to the plaintiff by contract the risk of property damage and consequential loss. When the property is damaged by a tortfeasor, the owner suffers no loss, and unless the exclusionary rule is excepted, the tortfeasor may escape liability all together. [89] Recovery for a loss akin to a joint venture loss is allowed: ... where the plaintiff's operations are so closely allied to the operations of the party suffering physical damage and to its property (which -- as damaged -- causes the plaintiff's loss) that it can be considered a joint venturer with the owner of the property, the plaintiff can recover its economic loss even though the plaintiff has suffered no physical damage to its own property. To deny recovery in such circumstances would be to deny it to a person who for practical purposes is in the same position as if he or she owned the property physically damaged. (Norsk p. 279) [90] Western Star relies upon the decision of the Ontario Court of Appeal in Seaway Hotels Ltd. v. Cragg (Canada) Ltd. and Consumers Gas Co. (1959), 21 D.L.R. (2d) 264 [Seaway Hotels]. There the plaintiff received electrical power transmitted through a cable that was damaged. As a result, the plaintiff suffered the loss of electrical power and refrigeration and food spoilage, as well as a loss of profits from the bar and restaurant which had to be closed. The plaintiff suffered damage to its own property, as well as economic losses which resulted from damage to a third party. The decision in Seaway Hotels was considered by the Ontario Court of Appeal in Ontario (Attorney General) v. Fatehi (1981), 34 O.R. (2d) 129, where this was said Where...the economic loss "flows from" or is "consequent upon" personal injury or damage to property, it is compensable. The personal injury or physical damage is the peg on which the economic loss may be hung. [91] In the further alternative, Western Star submits that if part of its damages is purely economic, then it remains entitled to recovery under the doctrine of relational economic loss and either the subcategory of transferred loss or joint venture loss. Part of the damages that Western Star seeks is the cost of setting up and operating the temporary plants made necessary in mitigation of its losses and as a result of the destruction of Crown West's plant by fire. If it is pure economic loss, then it falls under the relational economic loss category as a transferred loss or joint venture loss. [92] It is submitted that the juris prudence concerning transferred loss places the plaintiff in the position of a property insurer, who can recover by subrogation amounts paid out in indemnification from the tortfeasor. The owner recovers the full value of the damaged property, but the insurer may step into the shoes of the owner and pursue by subrogation the owner's right against the tortfeasor. The tortfeasor obtains no benefit from the owner's insurance. Counsel for Western Star refers to Schiffahrt & Kohlen v. Chelsea Maritime Ltd. (The Irene's Success), [1982] 1 Q.B. 481 (C.A.) [Irene's Success]. There the plaintiff was the purchaser of the coal carried in the ship Irene's Success. The cargo was damaged and the plaintiff's, despite any contractual relationship with the owners, brought an action claiming damages in tort for negligence. The court said this at p. 486: The economic loss suffered by the plaintiffs in the present case is not at one remove from the physical damage to the goods as it was in Weller's case. It is the direct reflection of that damage. [93] The Supreme Court of British Columbia in Triangle Steel & Supply Co. v. Korean United Lines Inc. (1985), 63 B.C.L.R. 66, followed the Irene's Success and allowed the plaintiff recovery for its entire loss. [94] Western Star submits that Crown West Steel would have a valid claim for its costs in setting up the temporary plant until the destroyed plant was rebuilt, and the defendants should not benefit from the fact that Western Star paid those costs in mitigation of both its own damages and that of Crown West Steel. It is submitted such a result is contrary to public policy which encourages and, indeed, requires mitigation. While Western Star concedes that in Norsk, LaForest J. refused a claim for transferred loss and said this: True transferred loss cases involve a claim which is in essence a claim for property damage which the owner himself would have recovered, had the loss not fallen on the plaintiff because of their contract. A true transferred loss case requires that the risk of property damage have passed, as in the case of goods damaged in transit after the risk (but not the property) has passed to the buyer. In such a case, unless the buyer is given a right of action, the carrier will be liable to neither party: not to the seller because he has suffered no loss, nor to the buyer who has no protected interest... [95] In Bow Valley Husky (Bermuda) Ltd. v. Saint John Shipbuilding Ltd., [1997] 3 S.C.R. 1210 (S.C.C.) [Bow Valley], the question of transferred loss "was revisited". The court declined to find liability for a transferred loss because of concerns of indeterminate liability as those were annunciated in Ultramares. However, Western Star submits that, here, it cannot be said that the defendants would face liability in an indeterminate amount for an indeterminate time to an indeterminate class. [96] The second aspect of relational economic loss is where the relationship in issue is akin to a joint venture. Western Star refers to Norsk, where McLachlin J. (as she then was) said at p. 258: ...the authorities suggest that pure economic loss is prima facie recoverable where, in addition to negligence and foreseeable loss, there is sufficient proximity between the negligent act and the loss. Proximity is the controlling concept which avoids the spectre of unlimited liability. Proximity may be established by a variety of factors, depending on the nature of the case...the categories are not closed. [97] While finding that the relationship was not a joint venture, it was akin to a joint venture, and at para. 279, she said this: ...where the plaintiff's operations are so closely allied to the operations of the party suffering physical damage and to its property (which -- as damaged -- causes the plaintiff's loss) that it can be considered a joint venturer with the owner of the property, the plaintiff can recover its economic loss even though the plaintiff has suffered no physical damage to its own property. To deny recovery in such circumstances would be to deny it to a person who for practical purposes is in the same position as if he or she owned the property physically damaged. [98] In answer to Western Star, Wally's Roofing says that, apart for the claim for property damage, the claims for the cost of temporary facilities and increased costs are too remote and not recoverable under one of the recognized exceptions to the bar against recovery for pure economic loss. [99] While Wally's Roofing accepts that Western Star "outsourced" the customization of frame rails to Crown West Steel and provided skilled workers, start‑up management, and equipment, it says that by 1998 Western Star had made a business decision to replace Crown West Steel with an alternate producer, Tower. The role of Crown West Steel was limited to inspection of Tower's work and reworking where necessary. Nevertheless, Tower advised Western Star that it would no longer customize frame rails, and Crown West Steel agreed to provide that temporary service until a new frame customizer could be found. [100] The evidence does not disclose any contractual obligation of Western Star to come to the financial assistance of Crown West Steel following the fire in respect of the loss of 43 sets of frame rails, or in respect of an interruption of supply of frame rails that could last for 12 weeks. It could have sought the services of an alternate supplier. Wally's Roofing says that Western Star made a business decision predicated not upon the loss of one day's production but rather on the prospect of catastrophic losses if the supply of customized frame rails were interrupted for an extended period. It was to replace the supply for up to 12 weeks that Western Star came to the aid of Crown West Steel - not a loss of frame rails for 43 trucks. Wally's Roofing says that there is no evidence that the customized frame rails could not have been obtained from an alternate source. [101] Then Wally's Roofing submits that, even if Western Star were unable to replace the 43 sets of frame rails for 12 weeks, the delay did not result in any proven loss of sales or contractual liabilities. It is argued that Western Star could have provided evidence of consequential losses and did not. [102] In the result, Wally's Roofing submits that having failed to establish consequential losses from physical damage to its property and such damages as it may be entitled to must be for pure economic loss. [103] Wally's Roofing submits that Seaway Hotels, relied upon by Western Star, has not been followed and has been disapproved by Bruce Feldthusen in Economic Negligence: The Recovery of Pure Economic Loss, 4th ed., Carswell, 2000, p. 226, where this said: The decision is not helpful authority because the exclusionary rule was not discussed and the court did not distinguish between physical damage and pure economic loss. If the restaurant had been closed because all food on the menu had spoiled, the damages were consequential economic loss and the decision would be consistent with English and American authorities. [104] It is submitted that the decisions of the Supreme Court of Canada in Norsk and Bow Valley have overtaken and refined Seaway Hotels. [105] Wally's Roofing refers to Martell Building Ltd. v. Canada, [2000] 2 S.C.R. 860 [Martell], where the change in the law resulting from these two decisions is explained: The circumstances in which such damages have been awarded to date are few. To a large extent, this caution derives from the same policy rationale that supported the traditional approach not to recognize the claim at all. First, economic interests are viewed as less compelling of protection than bodily security or proprietary interests. Second, an unbridled recognition of economic loss raises the spectre of indeterminate liability. Third, economic losses often arise in a commercial context, where they are often an inherent business risk best guarded against by the party on whom they fall through such means as insurance. Finally, allowing the recovery of economic loss through tort has been seen to encourage a multiplicity of inappropriate lawsuits. [106] While the categories of economic loss are not closed, the following five have been recognized: 1. The independent liability of statutory public authorities 2. Negligent misrepresentation 3. Negligent performance of a service 4. Negligent supply of shoddy goods or structures 5. Relational economic loss. [107] The categories in which contractual relational economic loss have been allowed are these: a) Where the claimant has a possesory or proprietary interest in the damaged property b) General average cases c) Where the relationship between the claimant and the owner of the property damaged constitutes a joint venture. [108] Western Star's claim, says Wally's Roofing, is a relational economic loss claim or contractual relational economic loss claim that does not fit within the recognized categories. Western Star has no proprietary or possessory interest in Crown West Steel's property, this is not a general average case, and the relationship between Western Star and Crown West Steel is not a joint venture or "akin to a joint venture" to use the phrase employed by Justice McLachlin (as she then was). [109] Wally's Roofing refers again to Professor Feldthusen, supra, at p. 226, where this is said: McLachlin J. relied on numerous factors relevant to the relationship between the CNR and the owner, and the relationship between the plaintiff and the defendant, to conclude there was sufficient application of the joint venture principle in the loosest sense. It is far from clear that such an approach is either just or certain. [110] In two subsequent decisions, the Supreme Court of Canada affirmed its recognition of a joint venture exception to the exclusionary rule but seemed to tighten up the definition considerably. In D'Amato v. Badger, [1996] 2 S.C.R. 1071, the court refused to allow a company co-owned by the injured plaintiff and another to recover the business losses it suffered when the owner was injured and unable to work. In Bow Valley, the two relational loss claimants were oil exploration companies and also the majority shareholders, directly or through subsidiary companies of the owner of the damaged offshore oil rig. They had created the offshore company to take advantage of government financing available to offshore companies. They then contacted with the offshore oil owner to direct it to drill wells in places specified. McLachlin J., speaking for the court, said no more than that "...the Court of Appeal correctly held that the plaintiff and the property owner cannot, on any view of the term, be viewed as joint venturers". The Court of Appeal had rejected any approach based on a piercing of the corporate veil and had adopted the following indicia of joint venture: a) A contribution by the parties of money, property, effort, knowledge, skill and other assets to a common undertaking; b) A joint venture interest in the subject matter of the venture; c) A right of mutual control or management of the enterprise; d) Expectation of profit, or the presence of "adventure" as it is sometimes called; e) A right to participate in the profits; f) Most usually, limitation of the objective to a single undertaking or ad hoc enterprise. [111] Wally's Roofing argues that neither Crown West Steel nor Western Star had any ownership interest in the other, that there was no shared accounting or shared profits and losses, that the management of one was independent of management of the other, that neither was subsidiary to the other, and that neither owned shares in the other or had any financial interest in the other. [112] In Norsk, Justice LaForest said this: There was no legal entity in the nature of a partnership. There was no joint undertaking of any commercial enterprise. There was no duty to share both profits and losses. In my view, where the contactual or extra-contractual relationship between the parties excludes any form of possible joint liability or contribution in cases of loss of this type, a finding of the existence of a joint venture in this context is excluded. [113] Wally's Roofing says that applying the criteria implicitly endorsed by the Supreme Court in Bow Valley, the relationship cannot be seen as a joint venture. - Crown West Steel was a valued supplier but no more - Western Star had no legal or equitable property interest in the land and building - There was no right of mutual control or management - There was no expectation of shared profit - There was no right to share in profits [114] In the result, Wally's Roofing says that Western Star has not brought itself within a recognized category, and thus its claim must be dismissed. [115] If a new category is said to be supported, then a two-stage analysis is mandated by Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.) [Anns] and adopted in Bow Valley as follows: ...(1) whether a prima facie duty of care is owed; and (2) whether that duty, if it exists, is negated or limited by policy considerations. [116] Such a prima facie duty will be found if there is a relationship of neighborhood or proximity between the parties. Wally's Roofing submits that it did not know the terms of any contract between Crown West Steel and Western Star or the allocation of any losses between them, and between them and other parties. It did not know of the inventory arrangements of Western Star and, thus, could not know the nature of the loss Western Star would incur. [117] Wally's Roofing also submits that allowing recovery raises the spectre of indeterminate liability, and as a matter of policy, it is more efficient to place the burden of economic loss on Western Star, which is better placed to anticipate and insure against the loss. Here, Norsk is relied upon where at p. 350 this is said: ...if the business community is insured, then there is no point in shifting the loss from one insurance company to another at high cost. [118] And at p. 352: CN's ability to protect itself...is not limited to its contract with the property owner. CN can also protect itself to some degree through its contractual arrangements with its clients, suppliers and others. It can plan ahead for the case of unavailability of the property in question. Denying recovery will provide incentives to all parties to act in ways that will combine to minimize the impact of losses once they occur, while still providing the critical incentive to the [tortfeasor] to avoid causing in accidents in the first place. [119] Wally's Roofing says that these observations are applicable to Western Star, that it knew or should have known of its vulnerability in having a single supplier of the platform for each truck it manufactured, and that any interruption in supply could harm its business. Similarly, it knew or must have known that adopting a "just in time" inventory system left it vulnerable as well. But Western Star did fully insure against losses flowing from these risks, and this is a fully subrogated claim. Thus, it is submitted that a claim for parasitic damages should not be allowed. Moreover, Wally's Roofing submits that transferred loss is not a recognized category as described in Martell. In both Norsk and Bow Valley, recovery on the basis of transferred loss was rejected. Wally's Roofing refers to the Reasons of LaForest in Norsk where this is said at p. 331: To accept wide recovery for transferred loss as proposed by the plaintiff here would have the effect of entitling the plaintiff to compensation in all cases dealing with contracts for the use of another's property. If loss of use is extended to include the costs of finding alternate sources for the same benefits, it goes considerably beyond what is normally payable to the owner in commercial cases, although admittedly it could be paid to the owner. True transferred loss cases involve a claim which is in essence a claim for property damage which the owner himself would have recovered, had the loss not fallen on the plaintiff because of their contract. A true transferred loss case requires that the risk of property damage has passed, as in the case of goods damaged in transit after the risk (but not the property) has passed to the buyer. In such a case, unless the buyer is given a right of action, the carrier will be liable to neither party... ... The present case is not a true transferred loss case. [The property owner] has collected the property damage it has sustained. The transferred loss claimed in this case is thus not with respect to the property damage claim. Rather, it is a claim for the transferred loss of use, or transferred economic loss. [120] It is then submitted by Wally's Roofing that a transferred loss case involves a transfer of risk prior to the loss, so that the owner does not bear the risk at the time of the accident. The loss claimed by the plaintiff is the same loss the property owner would claim. Here, the losses are different - even if both claimed for a loss of profit the profits would be different. The co-operative steps taken to mitigate their respective losses do not convert a loss of services to a loss of property. [121] I find that of the five recognized exceptions to the rule against recovery of pure economic loss that can be applicable, it is only the relational economic loss exception that need be considered. Applying the decision of Justice LaForest in Norsk, I find that the relationship between Western Star and Crown West Steel was not "akin to a joint venture". There was no joint undertaking, there was no duty to share profits and losses, and there was no shared or overlapping ownership or control. I am also satisfied that in applying the Anns tests, a new category of economic loss should not be recognized. [122] First of all, I am not persuaded that a prima facie duty of care is owed Western Star by Wally's Roofing. Wally's Roofing could not be expected to know of Western Star's vulnerability to an interruption of supply of frame rails nor of the allocation of the risks of such an event. Even if there were a prima facie duty of care, the policy against liability in indeterminate amounts for an indeterminate time of an indeterminate class should not be displaced. As Justice LaForest said of CN in Norsk, Western Star can protect itself by planning ahead for alternate suppliers of frame rails and as they did by insuring against the loss. Here, as I understand it, the loss was fully insured and this is an exercise in shifting the loss from one insurance company to another. There are, therefore, strong policy reasons for excluding the claim of Western Star. [123] I am also satisfied that Western Star mitigated its own prospective losses and that indirectly benefited Crown West Steel, but that is not a transferred loss as explained by Justice LaForest at p. 331 or Norsk. In the result, with the exception of the claim for physical damage to its property, the claim by Western Star is dismissed. [124] I wish to express my appreciation for the assistance of all counsel in the conduct of this case and their careful and helpful submissions on the evidence and the law. "T.R. Brooke, J." The Honourable Mr. Justice T.R. Brooke