The Owners Strata Plan LMS 2262 v. Stoneman Developments Ltd. et al.

2004 BCSC 828 The Ownes, Strata Plan LMS 2262 v. Stoneman Developments Ltd. et al

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: The Owners Strata Plan LMS 2262 v. Stoneman Developments Ltd. et al., 2004 BCSC 828 Date: 20040623 Docket: C996826 Registry: Vancouver Between: The Owners, Strata Plan LMS 2262 Plaintiff And Stoneman Developments Ltd., Bayou Developments Ltd., S & B Developments Ltd., James Hancock Architects Inc., Eric Pattison, Read Jones Christoffersen Ltd., Diana Klein, R.A. Mossakowski, Sterling, Cooper & Associates Ltd., Myles Sterling, Dec Design Mechanical Consultants Ltd., Alliance Roofing Systems Ltd., Eltex Enterprises (1990) Ltd., Preswitt Manufacturing Ltd., Cryovac Canada, Inc., City of New Westminster, Steven Moskalyk, Intertec Testing Services NA Ltd., Clan Glass & Metals Ltd., Preferred Restoration & Emergency Services Inc., and B.C. Building Science & Engineering Ltd. Defendants And Stoneman Developments Ltd., Bayou Developments Ltd., James Hancock Architects Inc., Eric Pattison, Read Jones Christoffersen Ltd., Diana Dlein, R.A. Mossakowski, Sterling, Cooper & Associates Ltd., Myles Sterling, Steven Moskalyk and Intertek Testing Services NA Ltd. Third Parties And Stoneman Developments Ltd., Wade Stoneman and Bayou Developments Ltd. Third Parties And Belgrove Construction Ltd., Inter-Coast Consultants Ltd. and McArthur Vantell Limited Third Parties Before: The Honourable Madam Justice Garson Reasons for Judgment Counsel for the

plaintiffs J.G. Mendes and V. Critchley Counsel for the defendants Bayou Developments Ltd. and Arnold Muller J.J. Campbell Counsel for the defendants James Hancock Architects Inc. and James Hancock G. Miller Counsel for the defendants Stoneman Developments Ltd. and Wade Stoneman T. Peters Counsel for the defendants McArthur Vantell Limited S. Dumont Counsel for the defendant Preferred Restoration & Emergency Services Inc. M. Worfolk The defendant Rudolf Kevesdi appearing in person for himself and R.K. Engineering Ltd. Date and Place of Hearing: May 10-11, and May 25, 2004 Vancouver, B.C. Introduction [1] The applications before the court are to add several corporations and individuals as defendants in this action concerning alleged defective construction of a condominium. The applications are opposed by some respondents on various grounds, including delay, prejudice, and a lack of evidence of an arguable case. [2] The following individuals and companies are proposed defendants in this action: (a) Ericson Window Corporation; (b) Ericson Glass Industries Ltd.; (c) McArthur Vantell Limited; (d) Rudolf Kevesdi; (e) R.K. Engineering Ltd.; (f) Avalar Caulking Services Ltd.; (g) Wade Stoneman; (h) Arnold Muller; (i) All-Span Engineering and Construction Ltd.; (j) Key Glass & Aluminum Ltd.; and (k) James Hancock; (collectively, the "Proposed Defendants"). [3] The plaintiffs also apply

for an order that the style of proceeding, the further amended writ of summons and fourth further amended statement of claim be amended in accordance with the proposed draft amendments. [4] The following parties were served with the applications to add them as defendants but have not filed any response and did not appear at the hearing: (a) Ericson Window Corporation; (b) Ericson Glass Industries Ltd.; (c) Avalar Caulking Services Ltd.; (d) All-Span Engineering and Construction Ltd.; and (e) Key Glass & Aluminum Ltd. [5] In order to add a defendant, the applicant plaintiffs must establish that there exists between the proposed party and the original party a question or issue relating to or connected with the relief claimed in the action or with the subject matter of the action and that there is a real question or issue to be tried in the sense that it is not entirely frivolous. The plaintiffs must also establish that there is a good and sufficient reason for any delay in adding these defendants. [6] There is evidence that Ericson Window Corporation and Ericson Glass Industries Ltd. were the suppliers of windows and doors to the condominium and that water leaked through the windows and doors, requiring repair and replacement. [7] There is evidence that All-Span Engineering and Construction Ltd. was retained by the developers to design and conduct field reviews of the condominium

steel stud framing, which studding is now alleged to be defective. [8] There is evidence that Key Glass & Aluminum Ltd. was retained by the defendant, Preferred Restoration, to undertake repair work to the windows. There is evidence that the repair work was defective and increased the damage to the condominium. [9] I am satisfied on the evidence that: there exists, as between the plaintiffs and these proposed defendants, issues connected to the relief claimed in the original action, there has not been inexcusable delay in seeking to add these defendants, and it is just and convenient to add these defendants, pursuant to Rule 15(5)(a)(iii). [10] I therefore order that the defendants Ericson Window Corporation, Ericson Glass Industries Ltd., Avalar Caulking Services Ltd., All-Span Engineering and Construction Ltd., and Key Glass & Aluminum Ltd. be added as defendants and the pleadings be amended in accordance with Schedule A to the notices of motion dated June 6, 2003, October 31, 2003, and April 29, 2004. [11] The application to add the defendant James Hancock was consented to. [12] The remaining Proposed Defendants oppose the applications to add them as defendants. These defendants have the following general involvement with the condominium development that is the subject matter of this action. [13] McArthur Vantell Limited ("McArthur Vantell") was retained as a consultant by

Preferred Restoration & Emergency Services Inc. ("Preferred Restoration"), who were initially retained by the developer to remedy what was then considered to be a problem of some leaking windows. It is alleged that McArthur Vantell failed to ensure that the remedial work was carried out in a proper manner and/or failed to perform adequate inspection of the remedial work. [14] The allegation against Rudolf Kevesdi and R.K. Engineering Ltd. is that R.K. Engineering was retained as a window structural engineer and that it owed a duty to exercise reasonable care in reviewing and approving the structure and design of the windows and sliding doors used in construction of the condominium. There is evidence that water ingressed through the windows and sliding doors and it is alleged that there are structural problems with the windows, which caused or contributed to the leakage. [15] The allegations against Arnold Muller and Wade Stoneman are that they acted as project managers in respect of the construction of the condominium and participated in and supervised the design, development and construction of the condominium. As well, it is alleged that the disclosure statement contained misrepresentations for which Stoneman and Muller are liable under s. 75 of the Real Estate Act, R.S.B.C. 1996, c. 397. [16] I turn to a consideration of the applications which are defended by the Proposed

Defendants. But before doing so, I will briefly outline the facts which form the background to this action. Facts [17] The members of the plaintiff Strata Plan (collectively known as the "Owners") are owners of the strata lots in the condominium development known as Carnarvon Towers, located at 720 Carnarvon Street in New Westminster (the "Condominium"). The strata plan is composed of 87 strata lots (80 residential units and 7 commercial lots). [18] The Condominium was built during 1994 and 1995. The first date of possession as noted in the New Home Warranty Program ("NHW") Special Project Possession Certificates was December 28, 1995. (The last owner of a residential unit took possession on November 3, 1998). [19] The developer of the Condominium was S & B Developments Ltd., a joint venture between Stoneman Developments Ltd. and Bayou Developments Ltd. (the "Developers"). [20] Water ingress problems were first noted by the Owners in or about October 1996. [21] When the water ingress problems were first noted by the Owners, the Developers obtained a Moisture Ingress Investigation Report from McArthur Vantell dated December 4, 1996. The Condominium was covered by the warranty made available to purchasers through the NHW. The Developers subsequently advised the Owners that they would honour the warranty. [22] The Developers retained Preferred Restoration and McArthur Vantell to

undertake and oversee the repairs thought necessary in 1997. [23] In about December 1996 the plaintiffs received legal advice suggesting that they should independently investigate the water ingress problems. The plaintiffs subsequently received an Exterior Envelope Preliminary Option report dated March 31, 1997, prepared by Morrison Hershfield Limited. [24] The remedial work undertaken by the Developers was not completed until late 1997 or early 1998. Ongoing water ingress was experienced. Consequently, the Owners retained Morrison Hershfield to undertake a building envelope condition assessment. [25] A Building Envelope Condition Assessment report dated September 4, 1998 was prepared by Morrison Hershfield Limited. A summary of this report was given to the Owners in October 1998. This was the first report which indicated in any way that any of the defects in the Condominium had given rise to a dangerous condition. [26] The plaintiffs retained counsel in October 1999 and commenced this action on December 23, 1999. The parties included as defendants were those that counsel for the plaintiffs thought might be found liable based on the Building Envelope Assessment report of Morrison Hershfield dated September 4, 1998. [27] The statement of claim was issued on November 15, 2000. Principles of Law That Govern This Application (a) Statutory Framework [28] An application to add a

party is governed by Rule 15(5)(a)(ii), which reads as follows: (a) At any stage of a proceeding, the court on application by any person may (iii) order that a person be added as a party where there may exist, between the person and any party to the proceeding, a question or issue relating to or connected (A) with any relief claimed in the proceeding, or (B) with the subject matter of the proceeding, which in the opinion of the court it would be just and convenient to determine as between the person and that party. [29] Where as here, it is alleged that a limitation period has expired, the application is also governed by s. 4(1)(d) of the Limitation Act, R.S.B.C. 1996, c. 266, which provides: s. 4(1) If an action to which this or any or act applies has been commenced, the lapse of time limited for bringing an action is no bar to (d) adding or substituting a new party as plaintiff or defendant, under any applicable law, with respect to any claims relating to or connected with the subject matter of the original action. [30] The inter-relationship between these two statutory provisions has been the subject of much judicial commentary. Here, it is alleged by the Proposed Defendants, that the applicable limitation period expired after the issuance of the writ and prior to the filing of this application to add the Proposed Defendants. [31] The following principles emerge from the

authorities which govern this application. [32] First, the plaintiffs must establish a degree of connection between the cause of action in the existing writ and statement of claim and the cause of action against the Proposed Defendants and that there is a real question or issue to be tried as between the plaintiffs and the Proposed Defendants. [33] Second, the plaintiffs must establish that it is just and convenient to add the Proposed Defendants. [34] The determination of what is just and convenient where it is alleged there is an accrued limitation defence includes considerations of the extent of the delay, the reasons for the delay, any explanation put forward to account for the delay, prejudice in defending the action caused by the delay, as well as the extent of the connection between the existing claims and proposed new causes of action (Letvad v. Fenwick (2000), 82 B.C.L.R. (3d) 296 (C.A.) and Teal Cedar Products (1977) Ltd. v. Dale Intermediaries Ltd. et al. (1996), 19 B.C.L.R. (3d) 282 (C.A.)). [35] In Brito v. Wooley (1997), 15 C.P.C. (4th) 255 (B.C.S.C.), Master Joyce (as he then was) conveniently summarized the principles that govern the determination of what is just and convenient where it is alleged that a limitation period has expired. At ¶ 10, 11 and 12 he said: I will begin my analysis with a summary of the applicable legal principles: 1. The addition of a

party to an action under Rule 15(5) eliminates any limitation defence which might otherwise be available to the defendant if separate proceedings were brought: see Lui v. West Granville Manor Ltd. et al. (1987) 11 B.C.L.R. (2d) 273 (C.A.) ("Lui No. 2") at 295; 2. The court may add a new party to an action notwithstanding that its effect will be to eliminate a limitation defence if it is just and convenient in all the circumstances to do so. The existence of a limitation defence is a factor for the court to consider in determining whether it is just to add a party but is not determinative: see Lui No. 2, supra, at 302; 3. The degree of interrelationship between the claim that is sought to be brought through the addition of the party and the existing claim is a factor to be considered as is the delay in making the application and any reasons which are advanced to explain the delay: see Cementation Co. (Can) Ltd. v. Amer. Home Assur. Co. (1989), 37 B.C.L.R. (2d) 172 (C.A.); 4. If a limitation period has expired, then it may be that prejudice to the defendant is to be presumed. However, prejudice to the defendant, whether presumed or demonstrated, is only a factor; it is not necessarily fatal to the application. In the end, the court has a broad discretion to do what is just; see Teal Cedar Products (1977) Ltd. v. Dale Intermediarries Ltd., (1996) 19 B.C.L.R. (3d) 272 (C.A.) per

Finch J.A. In Tri-Line Expressways v. Ansari (1997), 143 D.L.R. (4th) 100 (B.C.C.A.) Lambert J.A. said that any presumption of prejudice (which was first mentioned in Lui v. West Granville Manor Ltd. (1985), 61 B.C.L.R. 315 (C.A.) ("Lui No. 1") "should be confined to the sort of context in which it was first mentioned, namely the context of third party proceedings against a new party on an entirely new cause of action". In my view, the proper approach to applications such as this is as follows: 3. If the defendant alleges that there is an accrued limitation defence and the plaintiff denies that fact and the court cannot determine that issue on the interlocutory application, then the court should proceed by asking this question: assuming that there is a limitation defence, would it nonetheless be just and convenient to add the party even though by doing so the defence is taken away? If the answer to that question is yes then the order should be made. In that event it does not matter whether or not, in fact, a limitation period has expired because in either case it would be just and convenient to add the party and any limitation defence will be gone. [Emphasis added.] If the conclusion is that, assuming a limitation defence has accrued, it would not be just and convenient to deny the defendant the benefit of that defence, then the order should not be made. [36] In this case, all

the Proposed Defendants who contested the application allege that there is an accrued limitation defence. The plaintiffs deny this fact and I cannot determine the issue on this interlocutory application. I shall therefore proceed on the basis that there is a limitation defence available in each case and I will consider the factors mentioned above. [37] The length of the delay is one of the factors to be considered, although even an extraordinary length of delay is not necessarily determinative of the outcome (Yablonski v. Cranbrook, 2002 BCSC 1875). The reasons in Teal, however, do not indicate how the length of delay is to be determined. The plaintiffs and the Proposed Defendants advance different approaches for measuring the length of delay. [38] Plaintiffs' counsel contends that the significant period is the delay that accumulates beyond the expiry of the limitation period, plus one year for service. [39] The Proposed Defendants, on the other hand, maintain that the relevant period is the lapse of time beginning upon the plaintiffs' acquisition of facts upon which it would have been reasonable to commence an action against the Proposed Defendants, which in this case appears to have occurred before the expiry of the limitation period. [40] The cases submitted by the parties indicate that both approaches have been used in recent Supreme Court decisions. Therefore it is

difficult to determine whether one method is to be preferred over the other. In my view, however, it would be inappropriate to adhere rigidly to either one of these methods of calculating the delay, given the discretionary nature of the Court's power to allow addition of parties and the holistic approach to joinder advocated in Teal. [41] In Teal Finch J.A. held at ¶ 41 that: . . . neither the defendant's interest in being secure against claims after a limitation period had expired, nor the plaintiff's deliberate dilatory conduct in applying to add parties, are decisive of whether the application should be allowed. Both considerations may be important factors, but neither would prevent the court from exercising its discretion in the plaintiff's favour. [42] For the Court to constrain its consideration of delay by exclusively relying on one of the methods of measuring delay advocated by the parties would be contrary to the guidelines set in Teal. [43] To focus only on delay that occurred after the limitation period and the period for service would place emphasis on the prejudice caused to the defendants' interest in not being vulnerable to claims that are out of time. According to this approach, delay before the limitation period expired would not feature in the court's reasoning, despite the potential impact that this delay might have on the justness and convenience of adding

the party in question. Similarly, to measure delay exclusively from the date at which the plaintiffs learned the facts upon which it could have reasonably launched an action necessarily focuses the court's attention on the plaintiffs' fault or lack of fault in delaying its claim. [44] An approach that would more closely conform to the guidelines set in Teal would be to look at the entire delay, and consider factors such as the circumstances surrounding the delay, the expiry of the limitation period, and the prejudice to the parties when determining whether in the circumstances of the particular case it would be just and convenient to add the proposed defendant, despite the delay. As dictated by Teal, none of these factors should be considered as having overriding importance, absent a clear evidentiary basis for doing so (¶ 45). [45] I now turn to each of the applications before me with the aforementioned legal principles in mind. McArthur Vantell Limited [46] As mentioned, following substantial completion of Carnarvon Towers, McArthur Vantell was retained by the plaintiffs' building manager, on behalf of the developer, to review moisture ingress problems with the windows in two of the units. Mr. Vantell of McArthur Vantell says that he worked on a "limited retainer" to determine whether water ingress problems in specified windows could be rectified by repairs. McArthur Vantell

produced a "Moisture Ingress Investigation" report dated December 4, 1996, and a Scope of Work Memorandum dated February 5, 1997. [47] The evidence produced on this application establishes that McArthur Vantell did supervise the window repair work performed by Preferred Restoration, which I believe was concluded at the end of 1997. The allegation made against McArthur Vantell is that it failed to ensure that the remedial work was carried out in a proper manner and/or failed to perform adequate inspection of the remedial work. [48] McArthur Vantell defends this application on two principal grounds. First, McArthur Vantell says that there is no valid cause of action against it because although the work that it did is alleged to have been inadequate and it is alleged that McArthur Vantell failed to discover the more serious systemic problems, there is no proof that McArthur Vantell's work caused or contributed to any increase in the damages suffered by the plaintiff, nor is there any proof that McArthur Vantell was negligent in failing to discover the more serious systemic problems. McArthur Vantell also defends this application on the basis that it is not just and convenient to add them because of the delay of the plaintiffs in bringing this application. [49] On the basis of the evidence before me, I am satisfied that there is some evidence that the original repairs to the

building were inadequate and that the professionals involved in those repairs failed to discern the more serious systemic problems discovered later. It is not for the court, on an application such as this, to weigh the evidence so as to make any findings as to whether McArthur Vantell ought, within the scope of its 1996 - 1998 retainer, to have discovered the systemic problems. [50] With respect to the absence of proof of damage, McArthur Vantell relies on a statement in the plaintiffs' Final Building Envelope report prepared by R.D.H. Building Engineering Limited on April 15, 2004 (the "RDH Report"), in which it is said as follows: A zero value has been attributed to the performance problem, 1997 repair. The zero value indicates that the work implemented in 1997 had no bearing on the cost of the rehabilitation performed in 2003. In other words, had the repair work not been implemented in 1997, the cost of the 2003 rehabilitation would have been similar. However, it is important to note that the work performed in 1997 was poorly conceived and implemented, and that corrosion of the fasteners and improper installation of the fasteners resulted in a potential hazardous defect. [51] McArthur Vantell says that the RDH Report, which forms the Scott Schedule and hence may be construed as particulars of damage, asserts no claim for damage against McArthur Vantell. [52] Preferred

Restoration is a defendant in this action. The claim against it by the Owners concerns the alleged negligent repair work performed at the behest of the developer in 1997 and 1998. [53] It is alleged in ¶ 69 of the proposed fourth further amended statement of claim that Preferred Restoration and McArthur Vantell owed a duty to the owners to exercise reasonable care to ensure the remedial work was performed in a good and workman-like manner: 69. [McArthur Vantell] owed the Strata Corporation and the Owners a duty to exercise reasonable care to ensure that remedial work performed on the Condominium would be: a. designed and built in a good and workmanlike manner; b. constructed with suitable materials; c. constructed in compliance with all specifications, industry standards, building codes and statutory requirements, including the British Columbia Building Code and the City's bylaws; d. constructed to adequately protect against water ingress; and e. adequately inspected during and after the remedial work was completed.

70. At all material times, the Defendants owed the Strata Corporation and the Owners a duty to warn them of the Construction Deficiencies.

71. The Defendants breached the foregoing duties to the Strata Corporation and the Owners. [54] Preferred Restoration has already third partied McArthur Vantell. Preferred Restoration's third party notice sets out in more detail the ways in which McArthur Vantell may have failed in its duties to the plaintiff: (a) failing to identify that some or all of the original windows were defective and required replacement; (b) failing to design an appropriate repair strategy to address the deficiencies in the original construction; (c) providing a scope of work to this Defendant that did not resolve the problems with the windows created by the original construction; (d) in creating a design which leaked; (e) developing a water penetration control strategy that was inappropriate for the building; (f) in failing to take all reasonable care to ensure that the said elements of the building envelope were remediated in accordance with the British Columbia Building Code; (g) in supplying assurances and certificates to the Defendant City of New Westminster and/or the developer defendants representing that the repairs to the building envelope complied with the British Columbia Building Code, when such was not the case; (h) such additional particulars as this Defendant may discover and advise. [55] In ¶ 73 and ¶ 74 of the claim the plaintiffs allege that they have suffered and continue to suffer

loss and damage as a result of the breaches of contract and breaches of duty of the various defendants and in ¶ 74 it is alleged that the defendants are jointly and severally liable for the loss and damage suffered by the strata corporation and the Owners. [56] On this application the plaintiffs say that there is evidence to support the plea that McArthur Vantell is jointly and severally liable for the damages alleged by the plaintiffs, although only for the damage to the windows. [57] The plaintiffs maintain that this evidence is contained in the RDH Report, which concludes that the repairs undertaken on behalf of the developer in 1997 were defective, causing the sheathing to deteriorate and creating a hazard. They point in particular to the following quotation: As part of the repair work, a continuous self-adhered style asphalt based membrane was installed behind the metal panels between the windows (implemented by Preferred). The self-adhered membrane was bonded directly to the Dens-glass. At the time of removal in 2003, the Dens-Glass to which the membrane had been applied, was significantly deteriorated in many locations and in some locations mould was present on the interior face of the Dens-Glass . . . . It is probable that the Dens-Glass deteriorated because condensation formed on the interior face of the self-adhered. It is poor design practice to install a vapour

impermeable membrane without an appropriate quantity of insulation on the exterior side. In many cases the metal panels rehabilitated by Preferred Restoration were buckling. The panels were fastened onto the gypsum based sheathing and not the steel stud framing. In several areas, the fasteners were significantly corroded . . . As a result of corrosion of the fasteners and the poor attachment of the panels, it is possible one or more of the panels could have become dislodged from the building; a potentially hazardous defect. The probability of failure of one of the panels would have increased with time had the panels not been replaced in 2003. [58] The plaintiffs maintain that, on the basis of this portion of the report, the evidence establishes that the work undertaken by McArthur Vantell and Preferred Restoration contributed to damage around the windows of Carnarvon Towers. The plaintiffs argue that this contribution to the damage makes McArthur Vantell jointly and severally liable. [59] According to s. 4(1) of the Negligence Act, R.S.B.C. 1996, c.333, unless there has been contributory fault by the plaintiffs, defendants who cause the same damage are jointly and severally liable. The plaintiffs argue that since the alleged negligence of McArthur Vantell was one of the causes of the damage to the windows of the condominium, s.4 of the Negligence Act makes McArthur Vantell

jointly and severally liable. [60] The plaintiffs also rely on the Supreme Court of Canada's decision in Athey v. Leonati, [1996] 3 S.C.R. 458, where it was held that where damage results from two or more causes, the plaintiff does not have to establish that the damage would not have occurred "but for" the actions of the various defendants. The test for causation where there are multiple causes is laid out as follows (at ¶ 13-15): Causation is established where the plaintiff proves to the civil standard on a balance of probabilities that the defendant caused or contributed to the injury . . . . The general, but not conclusive, test for causation is the "but for" test, which requires the plaintiff to show that the injury would not have occurred but for the negligence of the defendant . . . . The "but for" test is unworkable in some circumstances, so the courts have recognized that causation is established where the defendant's negligence "materially contributed" to the occurrence of the injury . . . . A contributing factor is material if it falls outside the de minimis range . . . . [internal citations omitted] [61] I would characterize McArthur Vantell's submissions on this issue as operating on a "but for" test. They rely on the zero value attributed to the cost of the 1997 repair work in the RDH Report to argue that there is no evidence that McArthur Vantell contributed to

the cost of the rehabilitation. Essentially they are saying that if the 1997 repair work had not been completed, the rehabilitation costs would have been the same, and that therefore it is not appropriate to add McArthur Vantell as a defendant in this action. [62] However, as Athey v. Leonati establishes, in cases where there are potentially multiple causes, it is more workable to look at whether the causes materially contributed to the loss. [63] In my opinion, on the limited factual matrix before me, the evidence put forward by the plaintiffs show that there is some evidence that negligence on the part of McArthur Vantell contributed to the damage around the windows. The evidence of Marcus Dell in the RDH Report indicates that the 1997 repair work, which McArthur designed and oversaw, created damage around the windows which amounted to a hazard. Assuming for the purposes of this application that this evidence is true, I would characterize work that creates a hazardous condition as going beyond the de minimis range. I therefore conclude that the plaintiffs have met the low threshold required in this application by establishing that there is a real question to be tried with respect to the proposed defendant McArthur Vantell. [64] The second basis to oppose this application is delay. McArthur Vantell says that the limitation period applicable to a claim against it expired in

January 2004, that being 6 years from the date its work was completed. McArthur Vantell says that the plaintiffs were aware at some time prior to January 1998 that the remedial work undertaken by the developer was unsuccessful and that further investigation and remedial work was required. McArthur Vantell says that by January 1998 at the latest, the plaintiffs were therefore aware of the involvement of McArthur Vantell and of the facts which give rise to the claim now alleged against McArthur Vantell. McArthur Vantell notes that the writ was filed on December 23, 1999, and that plaintiffs' counsel has deposed that he came to the view that McArthur Vantell should be added as a party in November 2001. [65] McArthur Vantell says there is no explanation for the delay after November 2001. McArthur Vantell says that it has suffered prejudice in its ability to defend the claim because it lost its opportunity to verify adequately the alleged damages at a time when its own remedial work had not been replaced by the subsequent remedial work. [66] Plaintiffs' counsel explains the course of proceedings which have led to this application in this way. When plaintiffs' counsel was retained, it was thought that the claim was limited to one involving defective windows and would total about $750,000. It was not until November 2001 that plaintiffs' counsel became aware that the action had become

a substantial building envelope claim and that the potential liability of other defendants was considered. Plaintiffs' counsel received advice from counsel for Stoneman Developments that Preferred Restoration and other parties should be added as defendants. However, McArthur Vantell was not included in the list of proposed defendants at that time. [67] Plaintiffs' counsel now says it was not until early 2002 that it was concluded that McArthur Vantell might bear some responsibility for the plaintiffs' loss. Steps were not taken to immediately add McArthur Vantell as a defendant at that stage because the plaintiffs' attention was focussed on resolving how the remedial work was to be completed and because plaintiffs' counsel thought that McArthur Vantell's liability arose as a result of earlier remedial work which was not completed until 1998 and there was no immediate concern regarding the potential expiry of the limitation period. Plaintiffs' counsel admits that the delay from early 2002 is due to inadvertence on his part. [68] Plaintiffs' counsel says that it is only the incremental delay, that is the delay beyond the expiry of the limitation period, plus one further year for service, that is relevant to a consideration of whether there has been inexcusable delay. The Proposed Defendants say that the consideration of whether there has been inexcusable delay is concerned with

the lapse of time following the plaintiffs' acquisition of facts, based upon which it would have been reasonable to commence action against the Proposed Defendants. Conclusion with Respect to the Application to Add McArthur Vantell [69] As already noted, the correct approach to considering the implications of the delay in joining these proposed defendants is governed by the holistic approach advocated in Teal. The claims against this defendant are interconnected with the claims against the defendants Preferred Restoration & Emergency Services Inc. and Key Glass & Aluminum Ltd. (Key Glass was added on this application by my order above). McArthur Vantell has been third partied by Preferred Restoration. There is some justification for the delay in joining this defendant based on the evolving process of obtaining engineering opinions as to the causes of, and responsibility for, the water ingress problems. To further complicate the matter is the alleged defective repair work with which this defendant was involved. There is no doubt that the plaintiffs were in a position to apply to add this defendant about two years before this application was filed and the only explanation for its failure to do so is counsel's inadvertence. I conclude that the failure to add McArthur Vantell was not a deliberate decision as I find below was the case concerning Stoneman and Muller. Rather it is a

case of counsel's admitted inadvertence. This defendant has been closely involved in the litigation. All remedial work which has been done has been closely documented. In the circumstances of this case, balancing the prejudice to the defendants in defending the case caused by the delay against the interests of the plaintiffs in fairly resolving this litigation and including all proper parties, I conclude that McArthur Vantell should be added as a defendant. Rudolf Kevesdi and R.K. Engineering Ltd. [70] Rudolf Kevesdi says that he is a professional engineer and was employed in January 1995 by Cedric Power and Company Ltd. Mr. Power retired and Mr. Kevesdi became the principal of the engineering company and changed its name to R.K. Engineering Ltd. In doing so, he assumed all liabilities of Cedric Power and Company Ltd. [71] Mr. Kevesdi was the engineer responsible for the work done in connection with Carnarvon Towers. He says that R.K. Engineering was employed by the window installer, Ericson Glass Industries Ltd., to review the window system shop drawings for structural compliance with the applicable building codes and standards. Mr. Kevesdi reviewed, signed and sealed the window drawings on January 5, 1995. He notes the disclaimer on the engineering seal which says: These shop drawings are sealed and signed for structural design only. Cedric Power and Company Ltd. will not be

responsible for any other aspect, including water penetration resistance, thermal characteristics, or other non‑structural requirements and no undertaking is implied by this certificate for inspection or approval of either the manufacture or installation of the work. [Emphasis added.] Mr. Kevesdi notes that Cedric Power and Company Ltd. performed no field work and had no inspection or installation related responsibilities. [72] In his submissions, Mr. Kevesdi referred to the various reports that have been filed in this matter from which it was noted that the windows at Level 8 and above have flexibility of 1/16". He says, in his submissions, that that amount of flexibility is within normal standards. However, there are some allegations contained in the expert reports that the windows did not have adequate stiffness to meet deflection limitations when subjected to wind loads anticipated at upper floors and that the windows required structural upgrading. As already noted, it is not for this court on this type of application to weigh the evidence, nor comment on the evidence, other than to say that there appear to be some facts in issue that meet the low threshold required on an application of this type. [73] Although Mr. Kevesdi did not argue that there had been inordinate delay, I will consider it nevertheless. Plaintiffs' counsel says that he did not consider that there was any

potential claim to be made against R.K. Engineering Ltd. before February 2002 as it was not until January 2002 that the plaintiffs learned through their consultant, Layton Consulting Ltd., that there were structural problems with the windows. As plaintiffs' counsel thought there were no limitation period concerns at that time, plaintiffs' counsel did not seek to immediately add R.K. Engineering as a defendant. [74] I conclude that the plaintiffs have met the low threshold required to satisfy the court that there is a real question to be tried between the parties that is related to the existing claims and that there has been no inordinate delay. Therefore it is just and convenient to add R.K. Engineering Ltd. as a defendant to this action. [75] That leaves the question of the addition of Rudolf Kevesdi as an individual. [76] In Strata Plan No. VR1720 v. Bart Developments Ltd., (1999), 45 B.L.R. (2d) 156 (S.C.), Mr. Justice Edwards held at ¶15‑16: Limited companies cannot exercise professional functions except through qualified individual employees. Those employees must realize it is their skill and experience the clients are engaging and will rely on. They therefore owe a concomitant duty of care to those clients and are potentially liable in tort if they fail meet that duty. As Macfarlane J.A. pointed out [internal citation omitted], it is open to a limited company to limit its

and its employees' exposure in tort by appropriate contract language. No such language was brought to my attention here. Mr. Justice Edwards' decision was affirmed on appeal: 2000 BCCA 100. Finch J.A. (as he then was) observed that the personal liability of the defendant employees could not be resolved without a review of the evidence and circumstances underlying the claim. [77] It is not for this court on this application to determine anything more than whether there is a claim against an employee of a company which raises a triable issue. In my view, based on Bart Developments, such a claim is not entirely frivolous and meets the threshold test for joinder: Owners, Strata Plan LMS 1410 v. Surrey (City), 2003 BCSC 635. Conclusion with Respect to Rudolf Kevesdi [78] Accordingly, I order that Rudolf Kevesdi be joined as a defendant in the within action and the pleadings amended accordingly. Application to add Wade Stoneman [79] The allegation is that Mr. Stoneman was the general contractor or project manager for the Condominium and was personally responsible for, participated in, and supervised the design, development and construction of the Condominium. It is alleged Mr. Stoneman breached certain duties of care associated with his role respecting the project. [80] The allegations of negligence against Mr. Stoneman in his personal capacity are that: Stoneman was, at all material

times, a developer of and contractor for Carnarvon Towers and was personally responsible for, participates in, and supervised the design, development, and construction of Carnarvon Towers. (Paragraph 14 of the third party notice of October 2, 2003.) [81] These allegations, as well the affidavit evidence that the plaintiffs' claim supports these allegations, describe acts or omissions that Mr. Stoneman engaged in as part of his function as the president of the company. The plaintiffs have not provided any evidence demonstrating that Mr. Stoneman's actions were independent of his duties as his company's principal, or that he was operating under an identity or interest separate from that of the corporation. [82] The second set of allegations concern a disclosure statement and read as follows: The Strata Corporation has incurred costs to maintain and repair the Condominium that exceed those costs set out in the disclosure statement. Pursuant to s. 75 of the Real Estate Act, Mr. Stoneman is liable for any losses associated with the material false statement. ... Stoneman Developments was aware of contingent litigation and contingent liabilities in respect of the development thereby rendering the disclosure statement false. Pursuant to s. 75 of the Real Estate Act, Mr. Stoneman is liable for any losses associated with the material false statement. [83] Is there a cause of action

against Mr. Stoneman as general contractor or project manager? [84] The Proposed Defendant maintains that the plaintiffs' pleadings do not meet this test because the evidence advanced by the plaintiffs in support of their pleadings does not distinguish between the actions or omissions of Mr. Stoneman in his capacity as the directing mind of his corporation and actions or omissions independent of the corporation. The Proposed Defendant argues that in order for the principal of a corporation to be separately liable in tort, he or she must be shown to have engaged in tortious actions or omissions that are independent from those of the company. [85] In British Columbia there are two conflicting lines of authority relating to the independent liability of corporate employees acting within the scope of their employment. [86] One line of authority holds that an employee is not personally liable unless his actions are themselves tortious and exhibit a separate identity or interest from that of the company. (Strata Plan LMS 1965 v. 450526 B.C. Ltd., 2002 BCSC 155; Rafiki Properties Ltd. v. Integrated Housing Development Ltd. (1999), 45 B.L.R. (2d) 316 (S.C.); Jam's International Venture Ltd. v. Westbank Holdings Ltd., 2003 BCCA 232.) [87] The opposite line of authority holds that an independent tort is not required, and that an employee or director may be sued personally if his actions

are tortious or exhibit a separate identity or interest from that of the company. (Glenayre Manufacturing Ltd. v. Pilot Pacific Properties Inc., 2003 BCSC 303, leave to appeal refused 2003 BCCA 462, 2004 BCCA 54.) [88] Mr. Peters for Mr. Stoneman argues that the Court of Appeal in Jam's puts to rest the question of whether liability can be visited on officers and employees of limited companies where their actions may be tortious but not otherwise exhibiting a separate identity or interest from that of the company so as to make the act or conduct complained of their own. He argues that, while the evidentiary threshold is low, there must be some evidence that supports the allegation that the intended party, an officer and director of the corporate defendant, acted independently from his role as principal of, and agent for, the corporate body. [89] Melnick J. in Glenayre found support for the proposition that no independent tort was required in the decision of the Supreme Court of Canada in London Drugs Ltd. v. Kuehne & Nagel International Ltd. (1992), 73 B.C.L.R. (2d) 1 (S.C.C.). In London Drugs Iacobucci J. stated at ¶ 185 that: There is no general rule in Canada to the effect that an employee acting in the course of his or her employment and performing the "very essence" of his or her employer's contractual obligations with a customer does not owe a duty of care, whether one

labels it "independent" or otherwise, to the employer's customer. Our law of negligence has long since moved away from a category approach when dealing with duties of care. It is now well established that the question of whether a duty of care arises will depend on the circumstances of each particular case, not on pre-determined categories and blanket rules as to who is, and who is not, under a duty to exercise reasonable care. [90] Leave to appeal Melnick J.'s decision in Glenayre was denied by a single judge of the Court of Appeal, apparently on the basis that, since the law on the separate liability of corporate directors was uncertain, the argument that it was plain and obvious that the claims could not succeed had little prospect of success at appeal (2003 BCCA 363 (¶ 11)). A three-judge panel at the Court of Appeal found that, since there were no errors or misconceptions of fact made by the single justice at the leave application, the panel could not intervene (2003 BCCA 462). [91] Leave to appeal in Glenayre, denied by the three‑judge panel, was on August 14, 2003, several months after the court's decision in Jam's. It could be said that Jam's was not a considered decision in the sense that counsel before the chambers judge, Baker J. and then again before Levine J.A. appear to have conceded the necessity of an independent tort. [92] In the result, I conclude that the law

in British Columbia is not settled on this point, and therefore there may be an issue to be determined between the plaintiffs and Mr. Stoneman which is all that is required to meet the threshold test under Rule 15(5)(a)(iii). [93] The second basis upon which the plaintiffs seek to add Mr. Stoneman as an individual defendant is pursuant to s. 75 of the Real Estate Act, R.S.B.C. 1996, c. 397. [94] Paragraphs 40.1 to 40.7 of the proposed fourth further amended statement of claim allege that Stoneman Development and Bayou, as well as Muller and Stoneman, made material false statements in the disclosure statements concerning two matters. It is said that the actual expenses exceed the estimated budget for the first year of operating expenses of the Strata Corporation. There is evidence that the actual expenses for the first year of operating expenses were less than the estimated expenses in the disclosure statement. Mr. Critchley says that Muller and Stoneman deferred the cost of repairs. We know this, he says, because Preferred Restoration's work cost more than $8,000. [95] The second alleged misrepresentation concerns the disclosure by the developers and Stoneman and Muller that "the Developer is not aware of any outstanding or contingent litigation and is not aware of any outstanding or contingent liabilities in respect of the Development or against the Developer which may affect

the Strata Lots." [96] Mr. Peters, for Mr. Stoneman, says that s. 75 creates a cause of action for individual original purchasers. Mr. Peters filed affidavit evidence on this application that out of 87 current owners only 24 have filed authorizations for the strata corporation to sue on his or her behalf, and of those 24, only five are original owners who received the disclosure statement. Mr. Peters says that the plaintiffs have failed to demonstrate standing to sue in respect to the s. 75 disclosure. The plaintiffs say that in fact 15 of the original owners have signed consent forms. Mr. Critchley, for the plaintiffs, says that pursuant to the legislation in force at the time this action was commenced it was not necessary for the owners to individually authorize the action. Even if it could be said that the previous legislation governs the joinder of defendants now, the failure of the plaintiffs to obtain those consents is a defect that can be cured (Strata Plan LMS 1468 v. Reunion Properties Inc. (2002), 3 B.C.L.R. (4th) 79 (S.C.). I would not refuse to add Mr. Stoneman as a defendant on this basis alone. [97] Mr. Peters also argues that it is not just and convenient to add Mr. Stoneman. He says the limitation period in respect to the cause of action based upon the s. 75 disclosure statement is that of a cause of action based on the tort of misrepresentation. The limitation

period of six years would not, he says, be postponed and therefore expired in January 1998. He says that each of the original purchasers received a disclosure statement when they purchased their unit, some as late as 1998. That disclosure statement identified the principals of the developers. The plaintiffs first received a report respecting moisture ingress on December 4, 1996, as well as subsequent reports in 1997. Mr. Mendes says in his affidavit that he recognized the action had evolved into a "substantial building envelope claim" by November 2001. No steps to apply to add Mr. Stoneman were taken until October 31, 2003. Mr. Stoneman says that he is prejudiced in his ability to defend this action by the delay. First, he is 78 years old and has serious health and memory problems. He has been diagnosed with Polymyalgia Rheumatica, Diverticulosis, Pulmonary Fibrosis (a terminal disease) and depression. He says that although he has been aware of the progress of the litigation because of the involvement of Stoneman Developments as a defendant, he did not actively defend the claim in part because the remaining assets of Stoneman are limited. He says that he would have conducted the defence of the action in a much different way had he been joined as a personal defendant to the action at an earlier date. For example, he would have retained the services of an envelope consultant. He

says that the removal and replacement of the windows was unnecessary and has largely contributed to the cost. His consultant, had he retained one, would have been able to inspect the alleged first faulty repairs while they were in place. [98] Mr. Critchley argues that the only relevant delay is the incremental delay after the expiry of the limitation period plus one year for service of the writ. [99] I conclude that Mr. Stoneman should not be added as a defendant. I concluded above that the correct approach is a holistic view considering the whole time since the cause of action arose. The issues in this case are not interrelated with Mr. Stoneman's personal liability (as a director or pursuant to s. 75) in such a way that it would be inconvenient to try the case without his inclusion as a personal defendant. It cannot be persuasively argued that the plaintiffs were unaware of Mr. Stoneman's identity, the nature of his involvement, and his potential liability from an early stage of the litigation. His involvement is not predicated upon an evolving analysis of the engineering and construction issues. There is no real explanation for the plaintiffs' delay in joining him and there appears to have been a deliberate decision not to have joined him much earlier. (See Spitale v. I.C.B.C., 2003 BCSC 1168 at ¶ 27) Applying the Teal analysis above, I conclude that it is not just and

convenient to join Mr. Stoneman as an individual defendant. Mr. Muller [100] Mr. Campbell, for Mr. Muller, adopts the argument that Mr. Peters made in respect of Mr. Stoneman. Mr. Muller's personal circumstances are somewhat different than Mr. Stoneman's. He does not have any personal health problems. [101] I conclude that Mr. Muller should not be added as an individual defendant for the same reasons that I declined to add Mr. Stoneman. Although Mr. Stoneman's unfortunate health problems are an additional reason not to join him, the main reasons as stated above apply equally to Mr. Muller. Disposition [102] In summary, I make the following orders: 1. Ericson Window Corporation, Ericson Glass Industries Ltd., Avalar Caulking Services Ltd., All-Span Engineering and Construction Ltd., and Key Glass & Aluminum Ltd. will be added as defendants to this proceeding and the style of cause and the pleadings will be amended as applied for by the plaintiffs.

2. McArthur Vantell will be added as a defendant to this proceeding and the style of cause and the pleadings will be amended as applied for by the plaintiffs.

3. Rudolf Kevesdi and R.K. Engineering Ltd. will be added as defendants to this proceeding and the style of cause and the pleadings will be amended as applied for by the plaintiffs.

4. The applications to add Wade Stoneman and Arnold Muller are dismissed. [103] Unless counsel wish to make submissions as to costs, costs of this application will follow the event in respect to Stoneman and Muller, and in respect to the other defendants costs will be in the cause. "N. Garson, J." The Honourable Madam Justice N. Garson