COLCO News Release

For Immediate Release - October 10, 2002

UDI developers celebrate as Harbour House leaky condo case adds more defendants

By James Balderson, COLCO
Contact: james.balderson@myleakycondo.com

The owners of a Vancouver leaky rotten condo complex recently won a court order allowing them to add more defendants in their case against the developers, architects and builders.

Harbour House at Tugboat Landing, LMS 1816, is one of many leaky rotten condo complexes by the the north arm of the Fraser River in southeast Vancouver.

Harbour House was developed by Intrawest-Intracorp in 1994-95 as part of their Tugboat Landing leaky rotten condo development which also includes Tugboat Landing, Pilot House, and Captain's Walk.

The leaky rotten condo complexes were designed by Nigel Baldwin MAIBC of Nigel Baldwin Architects, and Hughes Baldwin Architects.

The Harbour House phase of Tugboat Landing consists of 82 condos: 76 apartments in two buildings and six townhouses.

The contractor for Harbour House was Van Maren, the same contractor which built the Riverwest leaky rotten condo complex.

The owners of Riverwest won, confirmed on appeal, their multi-million dollar lawsuit against the contractor and the municipality of Delta.

Van Maren agreed to pay money to the owners to settle.

Delta now faces a bill in the millions. About a dozen more cases are targeting the Delta treasury.

Like many other leaky rotten condo complexes, Harbour House in Vancouver has an outstanding claim against the New Home Warranty Program (NHW), which continues to flounder in bankruptcy.

NHW was owned and operated by the Canadian Home Builders Association of BC (CHBA-BC).

Evidence from the Barrett Commission of Inquiry into the collapse of NHW shows that CHBA-BC used NHW as a slush fund for their own purposes, thus depleting the funds available for the payment of claims arising from leaky rotten condos built by members of the CHBA-BC.

The Urban Development Institute (UDI) gave Tugboat Landing an Award for Excellence in 1994.

The UDI also gave Awards of Excellence to several other leaky rotten condo complexes.

The CHBA-BC also gave Georgie Awards to many leaky rotten condo projects, including Tugboat Landing.

The current (2002-2003) Board of Directors for UDI includes representatives

from developers of many leaky rotten condo complexes, including:

- Eric Martin from Bosa Development Corporation;

- Scott Cressey from Cressey Development Corporation;

- Don Forsgren from Intracorp Developments;

- Neil Chrystal from Polygon;

- Colin Bosa from Bosa Ventures;

- Bob Ransford formerly with Molnar;

- and Kevin Mahon from Adera.

The directors and other members of UDI will celebrate UDI's 30th anniversary and distribute more Awards of Excellence in Urban Development on November 7th, 2002.

Diana McMeekin and Michael Geller, co-chairs of the UDI Awards Committee for 2002, described the event as "a great evening where friends and colleagues will gather to honour British Columbia's finest projects and urban development achievements."

Geller, now heading a controversial large residential development on Burnaby Mountain for Simon Fraser University, has been quoted as saying that "Everyone is upset and uneasy with the whole very unfortunate leaky condo situation."

Geller is reported as claiming that "in response to the leaky condo situation a number of developers have been going to extraordinary lengths to earn the confidence of consumers."

What Geller really means, of course, is that developers, architects and builders were upset because owners of leaky rotten condos were destroying the confidence of potential buyers by publicizing their plight and fighting back in the courts.

Geller was on the UDI jury which selected the leaky Tugboat Landing development for the UDI Award of Excellence in 1994.

Any confidence purchasers had in the quality of Intrawest's condos at Tugboat Landing disappeared soon after owners occupied the leaky rotten condos.

Cressey's condos in the same area were also hit with leaks and rot.

Diana McMeekin, co-chair of the 2002 UDI Awards committee with Geller, is known in the industry as a marketing expert.

McMeekin has been described as "the creative driving force behind scores of condo brochures over the years".

McMeekin believes the brochure acts as a silent salesman. McMeekin is quoted as saying, "It's what buyers take away with them, it is what they look at later to refresh their memory of what they saw. You can never under-rate its value in helping buyers to reach a final decision."

In commenting on the standards used by the UDI judging committee, McMeekin was reported as saying "the cream rises to the top".

While cream may rise if the milk doesn't sour, the owners of several UDI award-winning leaky rotten condo complexes, like the owners of Harbour House at Tugboat Landing, know that water drips downward and leaky condos rot.

Glitzy brochures produced by McMeekin, UDI Awards of Excellence and CHBA-BC Georgie Awards were misleading and deceptive tools used by the industry to falsely tout the quality of design and construction sold by the developers.

For example, Geller's 1994 UDI jury also chose Princess Gate in Coquitlam, a disastrous Polygon leaky rotten condo complex, for an Award of Excellence.

Polygon, headed by Michael Audain, is a prominent member of UDI and CHBA-BC, and one of B.C.'s most notorious builders of leaky rotten condos.

The UDI's McMeekin, as senior vice-president of sales for Audain's Polygon, played a key role in marketing Polygon's leaky rotten condos in the early 1990's before offering her talents to other developers and builders.

Eric Martin, Vice-president of Bosa Development and the 1994 President of UDI, in commenting on the quality of design and construction in 1994, reportedly claimed "the calibre of nominees [for UDI's] Awards of Excellence, was the highest in the 12-year history of the awards and 'set a new standard for future development in North America'."

Thousands of leaky rotten condos attest to the abysmally low standards used by Martin, Geller, McMeekin and the UDI.

And so it goes: Members of the UDI celebrate while the owners of award-winning leaky rotten condos battle on trying to repair their homes and seek accountability from the industry.

At press time, it was not known if the UDI was inviting the owners of Harbour House to the UDI awards celebration.

However, it was known that COLCO had not received an invitation.

The Coalition of Leaky Condo Owners is compiling a list of award-winning leaky rotten condos.

COLCO is also collecting brochures produced by McMeekin and others which developers used to sell leaky rotten condos.

COLCO is presently tracking about 1,200 leaky rotten condo complexes containing 100,000 leaky rotten condos with total repair bills estimated at two billion dollars.

Premier Gordon Campbell's short-sighted vision of a "new era for BC" does not include a compensation plan for the owners of leaky rotten condos.

Campbell has blocked a federal contribution of 25% of the cost to repair leaky rotten condos - that's 500 million dollars the federal government offered for a compensation plan.

Furthermore, Campbell and crew are considering limiting the financial liability of municipalities so that they will not have to pay for leaky rotten condos because of joint and several liability.

In other words, Campbell wants to cut off or reduce another valuable source of funds for the owners of leaky rotten condos.

More and more it looks as if the Liberal's "new era" for BC, which was to include help for the owners of leaky rotten condos, was promoted and sold to voters just like BC's leaky rotten condos were promoted and sold by developers: false assurances of quality papered over with glitzy brochures and slippery advertisements.

Campbell's current Olympic puffery, planned highway improvements and distracting games, like Roman circuses, will not pay the bills for leaky rotten condos.

For more details about the Harbour House leaky condo case read Justice Slade's "Amended Reasons For Judgment" reproduced below:

Citation:

Strata Plan LMS1816 v. North Fraser Holdings et al.

Date: 20020926

2002 BCSC 1370

Docket: S002611

Registry: Vancouver

IN THE SUPREME COURT OF BRITISH COLUMBIA

BETWEEN:

THE OWNERS, STRATA PLAN LMS 1816

PLAINTIFF

AND:

NORTH FRASER HOLDINGS LIMITED

4118445 BRITISH COLUMBIA LTD.

411853 BRITISH COLUMBIA LTD.

NIGEL BALDWIN

NIGEL BALDWIN ARCHITECTS LTD.

HUGHES BALDWIN ARCHITECTS

VAN MAREN CONSTRUCTION CO LTD.

INTRACORP DEVELOMENTS [sic] LTD. PREVIOUSLY KNOWN AS INTRAWEST REAL ESTATE LTD.

INTRAWEST CORPORATION IN ITS ENGLISH FORM AND CORPORATION INTRAWEST IN ITS FRENCH FORM

DEFENDANTS

AMENDED

REASONS FOR JUDGMENT OF THE

HONOURABLE MR. JUSTICE SLADE

(IN CHAMBERS)

APPEARING:

The Owners, Strata Plan LMS 1816:

COUNSEL:

V.P. Franco

J.R. Trory:

Read Jones Christopherson:Durante Kreuk:

SMB Consultants Inc.:

J.M. Shore

L.N. Matheson

S.L. Boothman

D. Plunkett

Date and Place of Hearing: April 30, 2002

New Westminster, BC

I INTRODUCTION

[1] The plaintiff is comprised of the owners of condominiums in buildings developed as a condominium project.

[2] The project consists of three separate buildings. Buildings 1 and 2 are four-storey apartment buildings. Between the two apartment buildings is Building 3, a block of six three-storey townhouses. There are 82 units in total, 76 apartments and six townhouses. One level of

underground parking extends under all three buildings. It was constructed in 1994 and 1995.

[3] The issues for trial center on responsibility for alleged deficiencies in construction and the related duties of those involved in the development, construction, and marketing of the project. This is what has come to be known as a “leaky condo” case.

[4] The action was commenced on May 10, 2000. The existing defendants are the developers, the architects and the main contractor. The plaintiff now applies to add defendants, including the signatories to a disclosure statement, numerous sub-contractors, including the waterproof membrane installer, and a firm that provides design, construction and inspection services.

II RESPONSES OF THE PROPOSED DEFENDANTS

[5] The plaintiff’s notice of motion is attached to my reasons. I refer, by letter designation, to the proposed defendants as listed in the notice of motion under numbered para. 1 on p. 3:

1. Proposed defendants (a) to (d) are unnamed “John Doe 1, 2, 3, and 4”. They represent categories of sub-contract work on the project, in relation to which the persons carrying out the work are presently unknown.

2. Proposed defendants (e) to (n) include a construction contractor, a developer, and the signatories to the disclosure statement. They take no position on whether they should be added.

3. Proposed defendants (t) to (w), (z) and (bb) to (dd) are subcontractors. They have not responded to the application, though served.

4. The plaintiff is not proceeding with the application to add proposed defendants (ee) and (ff).

5. Proposed defendants (m), (p), (q) and (y) include an engineering firm, materials suppliers, and a roofing company. They are not opposed to being joined as defendants, and the plaintiff agrees that this will be without prejudice to their position on limitations issues.

6. The application in relation to proposed defendants (r), (s) and (aa) is adjourned generally, by consent.

7. Proposed defendant (o), Read Jones Christofferson Ltd., is a firm providing design, construction and inspection services. It brings an application for an order for cross-examination of Daniel Tuson on his affidavit filed in support of the plaintiff’s notice of motion, and opposes the plaintiff’s application pending disposition of its application.

8. Proposed defendant (x), J.R. Trory & Company Ltd., is a waterproof membrane installer. It opposes.

III BACKGROUND

[6] The City of Vancouver issued an occupancy permit for Building 1 on February 13, 1995, and permits for Buildings 2 and 3 on March 30, 1995.

[7] The affidavit in support of the plaintiff’s application alleges, among other things, the following:

(a) shortly after occupancy of the project in 1995, various deficiencies were noted and brought to the attention of the defendant Intracorp;

(b) Intracorp took some steps in an attempt to repair the deficiencies;

(c) the repairs were not successful, and Intracorp refused to repair certain items;

(d) in 1997, the project’s strata management company retained a consultant to test for moisture content in the walls of the buildings. Reports in November, 1997, and September, 1998, indicated the existence of wood rot and mould;

(e) in late 1998, as a result of ongoing complaints of deficiencies, the strata corporation retained another consultant to undertake an assessment of the building envelope. On or about May 12, 1998, the consultant provided the strata corporation with a Building Envelope Condition Assessment, which concluded that there had been a building envelope failure and that extensive repairs were necessary;

(f) on May 10, 2000, the plaintiff filed a writ of summons as against:

i. the developers, North Fraser Holdings Limited, 411845 British Columbia Ltd., 411853 British Columbia Ltd., Intracorp Developments Ltd. previously known as Intrawest Real Estate Ltd., Intrawest Corporation in its English Form and Corporation Intrawest in its French Form;

ii. the architect, Nigel Baldwin, Nigel Baldwin Architects and Hugh Baldwin Architects;

iii. the general contractor, Van Maren Construction Co. Ltd.;

(g) at the time the writ of summons was issued, the plaintiff was unaware of the identities of all the persons involved in the design, construction and inspection of the project and who may have caused or contributed to the deficiencies.

[8] On May 14, 2001, counsel for the plaintiff wrote to counsel for certain of the defendants to confirm the latter’s agreement to identify the sub-contractors who were involved in the construction of the project. On May 18, 2001, counsel for the developers provided lists described in their cover letter as “setting out the various consultants and contractors in relation to the ... project”. The proposed defendants, Read Jones and Trory, are included among those named on that list.

[9] There remain sub-contractors whose identities are unknown to the plaintiff. Potential defendants include the window and door installers, roofing inspector, flashing installer, and sealant applicator.

[10] Remediation of the buildings commenced in February, 2001, and has been completed.

[11] The plaintiff’s notice of motion was filed on November 22, 2001.

[12] The notice of motion of the defendant Read Jones Christopherson was filed on April 26, 2002. The applications were heard on April 30, 2002.

IV APPLICABLE LAW (1) Rule 15(5)

[13] The plaintiff’s application is made under Rule 15(5)(a)(iii). It provides that:

(5)(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.

[14] The following guidelines for the exercise of discretion in determining whether joinder would be just and convenient are repeated in Letvad v. Fenwick, [2000] B.C.J. No. 2369 (C.A.):

- the extent of the delay;

- the reasons for the delay;

- any explanation put forward to account for the delay;

- the degree of prejudice caused by delay; and

- the extent of the connection, if any, between the existing claims and the proposed new cause of action.

(2) Common Question or Issue

[15] It is plain that a question or issue relating to or connected with the subject matter of the proceeding may exist between the plaintiff and each of the named proposed defendants. Such is also the case as between the plaintiff and the potential defendants designated in the application as John Doe 1, 2, 3, and 4. The proposed amended statement of claim, while short on particulars of the specific negligent acts alleged in relation to these proposed defendants, satisfies the threshold test to stand as a pleading.

(3) Just and Convenient

[16] There is, of course, no evidence going to whether it would be unjust or inconvenient to add those proposed defendants who take no position on, or have not responded to, the application. Delay is not presumptively a factor in all applications under Rule 15(5)(a). This issue was discussed by D. Smith J. in Lawrence Construction v. Fong, 2001 BCSC 813:

More recently, in Tri-Line Expressways v. Ansari (1997), 30 B.C.L.R. (3d) 222 (C.A.), Lambert J.A. rejected the proposition that delay for which no good explanation is provided is an insuperable bar to the joinder of a party. At para. 15 of Tri-Line he stated:

... to the extent that unexplained delay may be thought go give rise to a presumption of prejudice, that presumption, which seems to have been first mentioned in Lui v,. West Granville Manor Ltd. (1985), 61 B.C.L.R. 315 (B.C.C.A.) (“Lui No. 1”), at p. 331 should be confined to the sort of context in which it was first mentioned, namely the context of a third party proceedings against a new party on an entirely new cause of action.

[17] With respect to the question of delay as a factor as noted in Letvad, supra, the plaintiff was aware in 1997 that water had entered the buildings. That there had been a building envelope failure was known in May, 1998. The action was filed in May, 2000 to cover the possibility of a two-year limitation period. The application to add the proposed defendants was filed November 22, 2001. A delay of this length calls for an explanation.

[18] The plaintiff says that it was not aware of the identity of the persons who may have contributed to the alleged deficiencies until May, 2001. It can hardly be said that the plaintiff was diligent in the pursuit of this information, having apparently waited one year before requesting it from the defendant developer. All considered, however, it is something of an explanation, and there is no evidence that the proposed defendants who are said to have been involved in the construction and who have taken no position, or not responded, may suffer prejudice in fact.

[19] There is a class of proposed defendants who were not sub-contractors on the project. These are the signatories to the disclosure statement issued in relation to the project. Given their association with the developer, no question of prejudice due to lack of recollection or records could be presumed in relation to them. They take no position, and have not filed any affidavit material.

(4) Limitations

[20] Injustice may result if a proposed defendant is prejudiced by the loss of a limitations defence. (Braunizer v. Canadian Pacific Ltd., [1998] B.C.J. No. 625, at para. 24). Prejudice is presumed in that event, due to the operation of s. 4(1)(d) of the Limitation Act, R.S.B.C. 1996, c. 266:

(1) If an action to which this or any other 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.

[21] The essence of the claim against the proposed defendant sub-contractors is that they owed a duty of care to the plaintiff to complete their work free from deficiencies, that each negligently failed to do so, and that the project was subjected to water ingress related damage (proposed amended statement of claim, paras. 129 and 130). Hence, the claim relates to damage to property as a consequence of defects in construction.

[22] Section 3 of the Limitation Act sets out limitation periods generally, and in respect of specific actions. Based on the pleadings, s. 3(5), which provides for a limitation period of six years, is the governing section.

[23] In Strata Plan VR 2000 v. Shaw (1998), 19 R.P.R. (3d) 305, Levine J. (as she then was) held that the postponement provisions in s. 6(3) to (6) of the Limitation Act applies to claims of damage to property that arise “...not from an external event but from inherent defects in the construction of [the] condominium...”

[24] Section 6(3) applies the postponement provisions of s-s. (4) to, among other things, claims for damage to property. Subsection (4) provides:

(4) Time does not begin to run against a plaintiff with respect to an action referred to in subsection (3) until the identity of the defendant is known to the plaintiff and those facts within the plaintiff’s means of knowledge are such that a reasonable person, knowing those facts and having taken the appropriate advice a reasonable person would seek on those facts, would regard those facts as showing that

(a) an action on the cause of action would, apart from the effect of the expiration of a limitation period, have a reasonable prospect of success, and

(b) the person whose means of knowledge is in question ought, in the person’s own interests and taking the person’s circumstances into account, to be able to bring an action.

[25] In Gladwin Square Jewellers Ltd. v. Chubb Industries Ltd. (1985), 68 B.C.L.R. 74 (C.A.) at para. 11, Lambert J.A. noted that:

Limitation defences are now more factually uncertain than they were before, when a simple calculation of a period of time from a wrongful act was all that was required. The application of s-s. 6(3) may raise difficult issues of fact. If those issues are contested they should be decided on the basis of giving all the interested parties a full opportunity to lead evidence.

[26] In Lawrence Construction v. Fong, 2001 BCSC 813, Madam Justice D. Smith noted that the authorities:

“... generally agree that the issue of whether a limitation period has expired is properly left to the trial judge who, after hearing all of the circumstances, is in the best position to determine the factual basis for the application of s. 6(4)(b).

V OPPOSING DEFENDANTS (1) J.R. Trory

[27] In the proposed amended statement of claim, Trory is alleged to have been responsible for the installation of waterproof membranes and other waterproofing measures.

[28] Trory opposes its joinder as a defendant on the grounds that:

(a) it had no involvement with the construction, or

(b) if involved, its defence is prejudiced by delay due to loss of memory of witnesses, loss of documents, an inability to assess the validity of the claim against it as the remediation is now complete, and the expiry of the applicable limitation period.

[29] It is not possible, on the evidence before me on this application, to determine whether the limitation period has expired. For the reasons set out above, this is a matter for determination at trial.

[30] It is said in Trory’s affidavit material that its principal, Mr. Trory, has no recollection of working on, and cannot locate any files in relation to, the project.

[31] The proposed amendment, as it relates to Trory, complies with the Rules and is sufficient as a matter of law. The test to apply to the application to add a party is to determine whether the pleadings, as amended, disclose a reasonable cause of action (Hunt v. T & N PLC. et al. (1989), 41 B.C.L.R. (2d) 269). The plaintiff is not required to establish an evidentiary foundation to justify the proposed amendment, and could not bolster a deficient pleading with such evidence. By the same token, evidence adduced by the defendant to show the absence of such a foundation will not be considered. (The Owners, Strata Plan LMS 2869 v. Redekop Properties (Lonsdale) Inc. et al. (17 April 2002), Vancouver Registry S001832 (B.C.S.C.).

[32] As for the claim of prejudice due to the absence of recollection and documents, there is, given the nature of the case, little risk of prejudice. The onus is on the plaintiff to prove, with admissible evidence, Trory’s involvement and the specific acts and omissions sufficiently to support a finding of negligence. Trory will have disclosure of all relevant plaintiff’s documents, and other discovery procedures. The possibility of a defendant’s application for summary disposition as the facts unfold cannot be ruled out at this stage of the proceeding.

(2) Read Jones Christopherson

[33] This proposed defendant is alleged to have been retained to provide professional services with respect to the design, construction, and inspection of the structural components of the project. Read submits that it is unable to take a position in response to the plaintiff’s application until its counsel has examined Dan Tuson, the deponent in the affidavit filed in support of the plaintiff’s application.

[34] To the extent that the proposed examination could elicit information relevant to the test in Letvad, supra, it could only go to the reasons for the plaintiff’s delay, and the explanation for the delay. Delay, and the explanation for delay, are to be weighed with the factors of prejudice due to delay and the presence of common of issues in disposing of the application.

[35] In the absence of allegations of actual prejudice due to delay, an examination of the deponent on matters going to the extent of and reasons for the delay could have little bearing on the weight to be attributed to those factors. The Read application is dismissed.

VI “JOHN DOE” APPLICATIONS

[36] The reason offered by the plaintiff for seeking to add defendants by reference to categories of sub-contract work is that this will stop time running on limitations defences. If this is the consequence in law, persons presently unknown may, when named, suffer prejudice in circumstances in which the plaintiff might otherwise have been found not to have been diligent in determining their identity.

[37] Assuming that time started to run before occupancy in 1995, the plaintiff will seek to rely on the postponement provisions of the Limitation Act. An order that stops time running in relation to a potential defendant that could have been identified with reasonable diligence is not contemplated by the overall objectives of the Limitation Act.

[38] If the plaintiff wishes to add further defendants in the future, its application may be determined on the merits at that time.

VII ORDER

[39] I order the addition as defendants of the proposed defendants, with the exception of the proposed defendants listed in the notice of motion under numbered para. 1 on p. 3 and designated by the letters (a), (b) (c), (d), (r), (s), (aa), (ee) and (ff).

[40] The addition of the proposed defendants will be subject to the plaintiff first agreeing that any accrued limitation defences will remain available.

[41] The plaintiff is granted leave to file an amended writ of summons and amended statement of claim, each in the form attached to the notice of motion as Exhibit “A” and Exhibit “B”, respectively, but subject to the deletion of references to those proposed defendants referred to by letter in para. 39 above.

[42] Costs in the cause.

“H.A. Slade, J.” The Honourable Mr. Justice H.A. Slade