Clarke v Canyon Plumbing and Heating Ltd, 2015 ABQB 737

Court of Queen ’ s Bench of Alberta Citation: Clarke v Canyon Plumbing and Heating Ltd, 2015 ABQB 737 Date: 20151119 Docket: 0901 10195 Registry: Calgary Between: Ian M. Clarke and Anne L. Kinsman Plaintiffs - and - Canyon Plumbing and Heating Ltd., 675580 Alberta Ltd., Ecco Development Corporation, and ABC Company Defendants - and - The Town of Cochrane, ABC Company, and XYZ Company Third Parties _______________________________________________________ Reasons for Judgment of J.T. Prowse , Master in Chambers

_______________________________________________________ [ 1 ] In 2002 the plaintiffs purchased a new house in Cochrane, Alberta from Beattie Homes (675580 Alberta Ltd.). The house later suffered damage, apparently as a result of water infiltrating the clay soil under the house’s foundation which caused the clay to expand and the foundation to shift.

It appears that the source of the water may have been a leaking water service line. [ 2 ] The plaintiffs sued Beattie Homes and its subcontractor, Canyon Plumbing and Heating Ltd. (“Canyon Plumbing”), who installed the water service line between the municipal water supply and the house. The plaintiffs did not sue the Town of Cochrane. [ 3 ] The plaintiffs assert that Canyon Plumbing made the following errors when installing the water line: (

a) Bending the pipe that was placed within the compression fitting. (

b) Failing to pass the pipe through the compression nut completely. (

c) Seating the pipe near the edge of the compression fitting rather than in the middle. [ 4 ] Canyon Plumbing in turn issued a third party notice against the Town of Cochrane. The third party notice is a bit vague but counsel for the Town acknowledge that it encompasses two alternative allegations: (

i) that the Town inspected the line but failed to notice the plaintiff’s alleged installation inadequacies, or, (ii) that the Town omitted to inspect the line, notwithstanding that it was either required to conduct an inspection, or it was the Town’s standard practice to do so. Implicit in this alternative plea is the assertion that, had an inspection taken place, the inspector would have noticed the plaintiff’s alleged installation inadequacies. [ 5 ] The Town now applies to have the third party claim summarily dismissed.

Canyon Plumbing’s grounds for seeking indemnity against the Town [ 6 ] Canyon Plumbing’s third party notice asserts a claim for indemnity from the Town on three alternative grounds: (

i) the Town breached a contract with Canyon Plumbing. (ii) the Town breached a duty of care owed directly to Canyon Plumbing. (iii) the Town is liable to contribute to the plaintiffs’ loss pursuant to the Tort- feasors Act . Did the Town breach a contract with Canyon Plumbing? [ 7 ] There is no evidence before the court to support the assertion that the Town had a contract with Canyon Plumbing.

Did the Town breach a duty of care owed directly to Canyon Plumbing? [ 8 ] Did the Town owe a duty of care to Canyon Plumbing with respect to the prospect of economic loss which might be incurred by Canyon Plumbing if Canyon Plumbing was successfully sued for doing careless work? [ 9 ] Canyon Plumbing’s assertion that the Town owed it such a duty of care is highly problematic. [ 10 ] Does an inspector or regulator owe a duty of care to the party being inspected or regulated, as opposed to owing a duty of care to members of the public who were expected to use the product or services being inspected or regulated? [ 11 ] I note that in Los Angeles Salad Co. v.

Canadian Food Inspection Agency , 2011 CarswellBC 1489, 2011 BCSC 779 (affirmed 2013 CarswellBC 197, 2013 BCCA 34 ), the court considered whether a duty of care was owed by an inspection agency to a party who was importing food subject to inspection. The food in question was destroyed by the retailer when the food inspection agency reported that the food might be contaminated.

The importer of the food product brought a claim for damages against the food inspection agency. [ 12 ] During the course of his reasons, where he found no duty of care, the trial judge Harris J. noted that the analytical framework mandated by the Anns test was as follows: 1. Do the facts as pleaded bring the claim within a category of cases in which a duty of care has been recognised? 2. If the answer to 1 is no, was there sufficient proximity between the parties to recognise that the defendants owed the plaintiffs a duty of care? 3.

If the answer to 2 is yes, are there policy reasons which justify refusing to impose a duty on the defendants? [ 13 ] In the Los Angeles Salad case, as in the case at bar, the claim as pleaded was not within a category of cases in which a duty of care had been recognized. The court then proceeded to consider whether there was a sufficient proximity between the parties to recognise a duty of care. [ 14 ] The following observations were made, which apply equally to the case at hand:

34 What unites the building inspection cases is the fact that the building inspection schemes are intended to protect particularinterests of certain persons. The existence of a duty of care follows from those purposes. In my opinion that much is clear from thedecision of the Supreme Court of Canada in Nielsen v. Kamloops (City), (SCC), [1984] 2 S.C.R. 2, 10 D.L.R. (4th) 641(S.C.C.). Similarly, other operational, as opposed to policy, decisions to inspect also create proximity between the inspector and a classof persons and interests benefited by the inspection.

For example, road inspections are intended to protect the interests of road users.Safety inspections of municipal facilities are intended to protect the users of those facilities. A necessary part of the analysis is therecognition of both the class of persons and the type of interest intended to benefit from the inspection; an analysis involving both "who"and "what". Not all interests are the same.

Conduct creating a risk of bodily injury is treated differently from that endangering purelyeconomic interests. 35 This action is not one brought by a consumer who fell ill after eating food that had been inspected by CFIA, which had negligentlyfailed to recognise that the food was contaminated. Such an action would be closer, but not completely analogous to, for example, theroad inspection cases. Similarly, the action is not one brought to protect economic interests consequential on property damage or pureeconomic loss where it is apparent that the inspection scheme is intended to protect purchasers of homes.

This case is materially differentfrom those. In this case the injured party is a supplier of food that was inspected and tested by the defendants to determine whether it wassafe for consumers to eat. The supplier has a statutory and common law obligation to ensure that it does not market or sell food that isunsafe for human consumption or is contaminated. It suffered pure economic loss.

In my view, this case is not analogous to the buildingor road inspection cases either in respect of the intended beneficiary of the inspection or the interest to be protected. [15] In my view, there is no private law duty of care owed by the Town to Canyon Plumbing. Is the Town liable to contribute to the plaintiffs’ loss pursuant to the Tort-feasors Act? [16] If Canyon Plumbing has any right to seek indemnity against the Town, it will have to be found pursuant to the provisions ofthe Tort-feasors Act. [17] The relevant portion of section 3(1)(

c) of Tort-feasors Act states as follows ( I have inserted the names of the parties to aid ininterpretation): any tort-feasor [Canyon Plumbing] liable [to the plaintiffs] in respect of that damage may recover contribution from any other tort-feasor[the Town] who is or would, if sued [by the plaintiffs], have been liable in respect of the same damage, whether as a joint tort-feasor orotherwise, ... [18] And so, in order to maintain its third party claim under the Tort-feasors Act, Canyon Plumbing needs to demonstrate that theTown, if it had been sued by the plaintiffs Ian Clarke and Anne Kinsman, would have been liable to them. [19] I will assume for the purpose of these reasons that the Town owed a duty of care to the plaintiffs as they were in sufficientproximity that failure by the Town would foreseeably lead to physical damage to the plaintiffs’ house.

Would the Town have been liable to the plaintiffs if the plaintiffs had sued the Town for carrying out an improper inspection? [20] In my view, the Town could not have been liable to the plaintiffs for carrying out an inadequate inspection because anyliability for an inadequate inspection would rest with Alberta Permit Pro, an accredited agency who carries out inspections on behalf ofthe Town. [21] The uncontroverted evidence is that the Town did not carry out inspections. That task was delegated by the Town to AlbertaPermit Pro, which was accredited by the appropriate regulator to conduct inspections.

There is no evidence that Alberta Permit Pro wasunqualified to carry out inspections, or that the Town was aware of any such lack of qualifications. Would the Town have been liable to the plaintiffs if the plaintiffs had sued the Town for failing to carry out an inspection? [22] The two questions which arise are: (

A) whether the Town was required to inspect the water service line, or (

B) whether it wasthe Town’s usual practice to inspect the water service line. Was the Town required to inspect the water service line? [23] The Safety Codes Act sets up a system of standards for, amongst other things, residential construction in Alberta. Not onlydoes it allow for the creation of standards, it provides for a system of permits and inspections to try to ensure that the constructionstandards are met. [24] Most people are familiar with the requirement for municipal permits and inspections when carrying out residentialconstruction or renovations.

Depending on the nature of what is being constructed, permits and inspections may be required for suchthings as electricity, natural gas, and plumbing. [25] However, the Town was not required by the Safety Codes Act to inspect the water service line.

Section 14 of PermitRegulation 209/2007 under the Safety Codes Act states that: 14(1) A permit in the plumbing discipline is required to install, alter or add to a plumbing system.

(2) Despite subsection (1), a permit is not required for the following: (

a) to install a water service that connects a building to a municipal or private water supply; [ 26 ] Accordingly the Town could not be found liable to the plaintiffs for failing to instruct Alberta Permit Pro to carry out an inspection. (

b) Was it the Town’s usual practice to inspect water service lines? [ 27 ] Canyon asserts that it was the usual practice of the Town to inspect water service lines installed for new houses. [ 28 ] The Town says that it was not its usual practice to inspect water service lines, that its inspection was limited to the plumbing inside the house, and that at the time the plumbing inspection was done the water service line would have been covered up. [ 29 ] While some of the documentation appears more consistent with the Town’s version of events, it is not entirely clear.

As a result, I assume for the purpose of this application that Canyon’s version is correct, and that it was the Town’s usual practice to instruct its agent Alberta Permit Pro to inspect water service lines. [ 30 ] I discussed the rationale for assuming as true facts asserted by a respondent to a

summary dismissal application in Watkins v. Willow Park Golf Course Ltd. , 2015 ABQB 127 , 2015 CarswellAlta 302 as follows: For the purpose of his

summary dismissal application, Mr. Watkins must take the evidence of Willow Park [the respondent] as being true. This approach was approved by the Alberta Court of Appeal in Sherwood Steel Ltd. v. Odyssey Construction Inc. , 2014 CarswellAlta 1750, 2014 ABCA 320 , [2014] A.W.L.D. 4539, 245 A.C.W.S. (3d) 89, 59 C.P.C. (7th) 221 (Alta. C.A.), at para 8 as follows: A judge may, however, still consider whether to grant

summary judgment even if the affidavit evidence clashes. He or she must assume the relevant facts asserted by the party opposing the

summary judgment application and determine whether the law permits judgment on those facts: Peters v. Wilson Estate , 2011 ABQB 665 (Alta. Q.B.) at paras 6-7 , (2011), 528 A.R. 368 (Alta. Q.B.); Goodfellow Inc. v. Woody’s Hardwood Flooring Ltd. , 2003 ABQB 162 (Alta. Q.B.) at paras 20-21 , (2003), 34 B.L.R. (3d) 318 (Alta.

Q.B.). [ 31 ] It is arguable that, if the Town did regularly inspect water supply lines, and failed to do so in this case, this might constitute a breach of a duty of care owed by the Town to the plaintiffs resulting in foreseeable physical damage to their home, thus supporting Canyon Plumbing’s claim against the Town under the Tort-feasors Act . This claim should be adjudicated following a trial process which will fully ascertain the relevant facts, and not summarily dismissed.

Conclusion [ 32 ] Only if the evidentiary record is clear, and each of Canyon’s claims is without merit, in the sense of being highly likely to fail, should Canyon’s third party notice be summarily dismissed. See: Whitecourt Power Limited v. Elliott Turbomachinery Canada Inc. , 2015 CarswellAlta 1379, 2015 ABCA 252 at para 9 . [ 33 ] As discussed in these reasons, Canyon Plumbing has an arguable claim that: (

i) the Town normally inspected water service lines. (ii) the Town failed to inspect the water service line in question. (iii) the plaintiffs could have sued the Town on the basis that its failure to inspect the water service line resulted in physical damage to the plaintiffs’ house. (iv) Canyon Plumbing accordingly can bring a claim for indemnity against the Town pursuant to the Tort-feasors Act . [ 34 ] Accordingly, I dismiss the Town’s application for

summary dismissal of Canyon Plumbing’s third party claim. Costs [ 35 ] If the parties cannot agree on costs, they may seek a ruling from me in that regard.

Heard on the 27 th day of July, 2015. Dated at the City of Calgary, Alberta this 19 th day of November, 2015. J.T. Prowse M.C.C.Q.B.A. Appearances: Don Dear, Q.C. McLennan Ross LLP for the Defendant Canyon Plumbing Todd W. Kathol Field LLP for the Third Party Town of Cochrane