Owners: Condominium Plan No., 2017 ABQB 316

Court of Queen’s Bench of Alberta Citation: Owners: Condominium Plan No. 0625385 v Oxford Grande Ltd., 2017 ABQB 316 Date: 20170509 Docket: 1403 11062 Registry: Edmonton Between: The Owners: Condominium Plan No. 0625385 and The Owners: Condominium Plan No. 0625385 as Representative Plaintiff Plaintiffs - and - Oxford Grande Ltd., Carrington Holdings Ltd., Carrington Hermitage Ltd., Carrington Construction Edmonton Ltd., ABC Corporation, AGN Engineering Ltd., Andrew Walczak, Jetco Mechanical Limited, Alldritt Development Limited operating as Jetco Mechanical, Dyand Mechanical Systems Inc., K-Jay Electric Ltd.

Defendants _______________________________________________________ Memorandum of Reasons for Decision of the Associate Chief Justice J.D. Rooke _______________________________________________________ I. Introduction [ 1 ] On May 2, 2017, I held a joint hearing of the three applications of three of the groups of the remaining (see below) Defendants (Defendants) to dismiss the action herein on the basis, inter alia , that the limitation period under s. 3 of the Limitations Act , RSA 2000 c.

L-12 (the Act) had lapsed prior to the commencement of the action, and thus the claim was statute barred and the action should be summarily dismissed. At the end of the hearing, I granted those applications, and dismissed the action, with brief oral reasons (relating to the limitations issue, declaring the other issues did not need to be determined, in light of my findings in respect of the

limitations issue), and with the promise of further brief written reasons. These are those brief written Reasons. [ 2 ] The issue herein focuses on what was the “injury” herein under s. 3(1) (a)(

i) of the Act , and when was it known or ought to have been known. Indeed, the elements of s. 3(1) (a)(ii) and (iii) of the Act, relating to whose conduct caused the alleged injury and the warranting of bringing an action, were not real issues argued in the applications. Nor was the issue of agency under s. 3(2) (

b) of the Act, relied upon by the Defendants, argued. [ 3 ] To focus this on discussion, I quote the provisions of s. 3(1) (

a) of the Act : 3(1) ... if a claimant does not seek a remedial order within (a) 2 years after the date on which the claimant first knew, or in the circumstances ought to have known, (

i) that the injury for which the claimant seeks a remedial order had occurred, (ii) the injury was attributable to conduct of the defendant, and (iii) that the injury, assuming liability on the part of the defendant, warrants bringing a proceeding, ... ... the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim. S. 1 defines “injury”, for our purposes, as “(iv) non-performance of an obligation”, or, less applicable in my view, “(

v) in the absence of any of the above, the breach of a duty”. S. 3(2)(b)(ii) provides that the limitation applies when the plaintiff first acquired or ought to have acquired knowledge or “an agent with a duty to communicate the knowledge ... to the principal, first actually acquired that knowledge”. [ 4 ] Let me set the background and the analysis that led me to my decision. II.

Background [ 5 ] This is a class action commenced by the Owners of the named Condominium Plan, as representative plaintiff, on behalf of the Condominium Corporation (Condo Corp.) itself (owner of the condo common property) and the individual 165 condo unit owners (Unit Owners)(collectively, the Plaintiffs), for a residential condominium project in Edmonton, known as Oxford Bay. [ 6 ] Oxford Bay was built on lands originally owned by Oxford Grande Ltd., until transferred to the Condo Corp. on September 8, 2006, and Oxford sold the individual units to the original purchasers of such individual units.

Following design of mechanical systems, including the heating and cooling system for Oxford Bay, by AGN Engineering Ltd. (AGN), commencing February 2004, the condo complex was built in the period of 2004 – 2007, and had its first occupant on or before July 10, 2006, and it was turned over by the builder, Oxford, to the Condo Corp.

Board on April 24, 2007. [ 7 ] The action was commenced by Statement of Claim (SofC) on July 31, 2014 (meaning that the 2 year limitation ended for injuries known, or that should have been known, prior to July 31, 2102) and the Amended Statement of Claim (ASofC) was filed on August 3, 2015, both relating to alleged defects, or deficiencies, or inadequacies, in the cooling system installed at Oxford Bay – specifically that the cooling system did not sufficiently cool the units.

Notwithstanding the style of cause of the action, claims against Dyand Mechanical Systems Inc., and K-Jay Electric Ltd., have been discontinued, thus, the applications are brought by the “remaining Defendants”. [ 8 ] The Defendants, as set out in the SofC and the ASofC, were entities believed to have been involved in the construction of the cooling system at Oxford Bay, and from whose “conduct” the “injury was attributable” and nothing arises about that in this application. [ 9 ] A broad working understanding of the cooling system, taken from paras. 17 - 19 of the Joint Brief of the Applicants (Joint Brief), which I accept for this broad purpose, without approving it, may be helpful to the understanding of the issues herein.

It reads as follows: 17. In the cooling system ... domestic water circulates through one half of a plate heat exchanger (the “Heat Exchanger”), which functions to cool the domestic water to a prescribed temperature. A cooled Glycol solution circulates through the other half of the heat exchanger, cooling the water by absorbing its heat. The heat that is removed from the domestic water by the glycol solution is then carried by the glycol solution as it is circulated up to the roof to a piece of equipment referred to as a chiller, which rejects the heat into the atmosphere.

Pumps circulate the chilled water to the individual suites which is circulated through FCUs [fan coil units], that use the chilled water to cool the air. 18. The Heat Exchanger and the chiller work in conjunction with the FCUs. 19. Each individual suite is equipped with an FCU that provides cooled air to the individual suites. [ 10 ] However, without getting into all the potential causes of the problem, or the problem components of the cooling system, the problem was described by the Unit Owners as varieties of “the air conditioning system does not work”.

The Defendants put it this way in the Joint Reply Brief, at paras. 4 - 6: 4. The Plaintiffs claim the cooling system at Oxford Bay does not lower the temperature in the units as much as they would like. This has been the consistent basis of their complaints since the complex was constructed in 2007, and it is the central allegation in this litigation – that the cooling system does not cool the units enough. While the parties may have used different words to describe the cooling system at the Oxford Bay – chiller, HVAC, cooling system, air conditioning – the parties understood that the problem was

inadequate cooling in the individual units at the Oxford Bay . (Emphasis added.) 5. The Plaintiffs’ Response Brief attempts to obfuscate this point in a few different ways. ... they try to divide the integrated cooling system up into components – the chiller on the roof, fan coil units in the suits [sic] – and claim that their initial, statute-barred, complaints dealt with the former and their allegedly timely complaints concerned the latter. 6. The chiller on the roof, the heat exchanger in the mechanical room, and the individual FCUs are one interconnected, integrated cooling system.

On the material before me on the record, I agree with these categorizations and statement of facts. Indeed, as discussed at the hearing, there is a need, in this case, to step back from the minutia of the detail and look at the essence of the issue. [ 11 ] When the Unit Owners started complaining in 2007 or before, there was speculation by the Unit Owners, and some more informed speculation by those involved in designing and building the cooling system, as to what was or might have been the problem(s), with focus on one or more of the components from time to time.

Thus, we see in various communications – and, indeed, in the SofC and ASofC – emphasis on one component or another, or a combination. III. Analysis and Conclusion [ 12 ] Telescoping ahead to my conclusion, I find that the “injury” under s. 3(1) (a)(

i) of the Act was the non-performance of an obligation, or, possibly, the breach of a duty, relating to deficiency(ies) in, or inadequacy(ies) of, the cooling system, but that the potential causes were just that – the potential causes of the “injury”; they were not the “injury”. This is contrary to the arguments of the Plaintiffs that the “injury” was in relation to one or more of the causes, and the argument that, thus the limitation issue was, in effect, running, until the Plaintiffs had knowledge or, or the means of knowledge of, each cause and each potential cause was effectively eliminated.

This erroneous argument was fueled by some potential causes being effectively eliminated over time, leaving problems with the FCUs and water lines being, allegedly, at least, more of the real problem.

However, in my view, the real “injury” throughout this time was the failure of the cooling system to operate properly, and that, plus all or most of the potential causes were known long before 2 years prior to bringing the SofC. [ 13 ] Putting it another way, while there are references to various components of the cooling system being allegedly deficient, including: components in the common areas (all except the FCUs and piping), the responsibility of the Condo Corp.; and in individual Unit Owners suites, for their pursuit (individually or, ultimately, through this class proceeding) of the fan coil units (FCUs) – including failures in design, labeling and improper or inappropriate sizing, etc., installation of same, and under specification of water supply lines; and acknowledging that the Plaintiffs, or some of them, focused on one or others of the system components as being deficient throughout the litigation, and that expert evaluations may have contributed to such focus; I find that concentration on those potential causes of the injury , were not “ the injury” .

Rather, I find that the injury was, simply put, the failure or inadequacy of the cooling system, and any deficiencies in individual components of the cooling system were just the causes of the injury, not the injury, as contemplated in s. 3(1) (a)(

i) of the Act . [ 14 ] Put yet another way, while the speculations and investigations as to the potential causes of the injury, over time, focused on various deficiencies relating to, inter alia , the chiller, the Heat Exchanger, the glycol (common property components) and the FCUs, and water lines (Unit Owner components, although the water lines may have some aspects of both), and the SofC and the ASofC focused on the FCUs and the water lines, it was clear that these were just potential claims as to the causes of the injury .

In my view, the causes were not the injury, but rather the injury was the failure or inadequacies of the cooling system. [ 15 ] Supportive of this as being the injury, complaints by Unit Owners of an inadequate cooling system started in 2007, and further evidence reveals the following: - Generally - 2007 - complaints of lack of cooling; - After July 19, 2007 – “a number of owners expressed concerns about the inadequacy of the cooling in individual suites”; - The owner of suite 131 “did not feel she was getting air conditioning”; - July 22, 2007 – detailed complaints by Unit Owners, Paul Burwell, Mary McLaughlin and Gerald Sayers, the latter two speculating as to the cause of the problem; - July 23, 2007 – Unit Owner, John Holowchak, alleged the cause of the problem as “mechanical”; - July 25, 2007 – the minutes of the Condo Corp.

Board meeting reference the Condo manager, KDM Management Inc. (KDM), getting complaints about air conditioning – similar references were contained in further Condo Corp. Board meeting minutes, including July 16 and August 20, 2008 (Joint Brief, paras. 52 and 53); - The Condo Corp.

Board was aware by September 2007 that “there was a problem of inadequate cooling in all of the units of the Oxford Bay” (Joint Brief, para. 43), and from “day one” was aware that there was “a design issue involving the cooling system” (Joint Brief, para.66); and - As further evidence of knowledge of an injury constituting an actionable claim, in January 2008, the Plaintiffs took litigious steps against some of the Defendants by invoking the Alberta New Home Warranty Program (ANHWP), and, as late as March 2010, took further steps to mediate and arbitrate a claim through the ANHWP against some of the Defendants.

[16] I will not trace all the activities of the Unit Owners and the Condo Corp. in working with the Defendants and others to try tofind the cause of the problem up until the time of the commencement of the SofC, with some exceptions. These activities are chronicledfrom the perspective of both sides of this litigation in their briefs, and the affidavits and other material that support them. [17] However, some elements are more germane than others. On September 26, 2007, the Plaintiffs retained T & P Mechanical (T&

P) and its mechanical engineer President, Gregory Blais. One of T & P roles, as described in the Joint Brief at para. 38, was to “advise... as to the problems that it identified and to provide recommendations for how to deal with those problems”. In 2008, this role wasexpanded to include “investigating issues with the Heating and Cooling System for Oxford Bay” (Joint Brief, para. 46).

Between 2007and 2009, T & P attended at the premises (Joint Brief, para. 41) “regarding complaints of lack of cooling from individual suite owners”.On May 8, 2009, Blais wrote to the Plaintiffs that the chiller was not the only issue and even its operation at 100% did not/would notsolve the problem of inadequate cooling, and that there were other issues, including “design/piping issues” (Joint Brief, paras. 64 – 65). [18] Also, as noted above, commencing in January 2008, both the Condo Corp. and some Unit Owners pursued legal remediesunder ANHWP, with respect to “HVAC, chiller and the FCUs” (Joint Brief, para. 47) for which there is much detail in the written briefs,but for which only certain things are really specifically relevant to these Reasons, including, inter alia, the following: - Although, perhaps unknown (at least at certain times) to some of the Unit Owners and members of the putative class of thePlaintiffs, ANHWP has no role in alleged defects in design, but only in alleged faulty workmanship; - ANHWP issued a Conciliation Report of October 10, 2008, in essence, denying coverage on the basis of a design defect, not faultyworkmanship, following which, on October 27, 2008, the Plaintiffs filed a Request for Mediation with the ANHWP (relating to theissues of HVAC, chiller and FCU), and, on November 7, 2008, an application to Arbitrate with respect to the Conciliation Report (JointBrief, paras. 54 – 6); and - All of the issues with the HVAC system, including problems with the FCUs in the units and inadequate cooling were part of theinvolvement of the ANHWP (Joint Brief, para. 61). [19] Some of the parties (the Plaintiffs, Carrington Construction Edmonton Ltd., and Oxford Grande Ltd.) purported to settle theissues between them on March 6, 2009, when the Plaintiffs released these Defendants and their employees and agents, and agreed to bebound by the decision of the ANHWP – that is, “to abide by whatever determination is made by ANHWP in its pending reportpertaining to the chiller” (Agreement itself and Joint Brief, para. 57).

The “pending report” was identified as the Addendum ConciliationReport discussed below. IV. Ending of the Limitation Period [20] While, in my view, the decision herein is driven by the facts, and the law is not in dispute, a few legal principles will beinstructive, as set out in the Briefs of the parties (inter alia, the Joint Brief, paras. 122 - 4): - Bradner v.

Alberta (Justice and Solicitor General), 2014 ABQB 211 (Master Hanebury) at para. 43: o The determination of whether a limitation period has expired is a mixed question of law and fact; o A mistake of law by the claimant does not postpone the limitation period; o A claimant does not need to have perfect certainty as to the causes or extent of his injuries in his claim to start the clock running,although more than mere speculation is required (see also Elbow Valley Joint Venture Corp. v.

Walker, Newby & Partners, Inc., 2003ABQB 419 (Master Laycock), at paras. 15 – 17); o Due diligence is relevant to the facts that are known or ought to be known (see also McDonnell v. Csaki, 2014 ABQB 452, (PoelmanJ.), at para. 28); and o It is knowledge of the injury that is key, not knowledge as to whether there is a cause of action (in simple terms, not knowledge as towhether there is fault on the part of the defendants)[1]. - Peixeiro v. Haberman, (SCC), [1997], 3 SCR 549, at para. 18: “... the exact extent of the loss of the plaintiffneed not be known for the cause of action to accrue.

Once the plaintiff knows that some damage [i.e. injury] has occurred ... the cause ofaction has accrued. Neither the extent of damage nor the type of damage need be known” (emphasis added). See also Bavaria Autohaus(1997) Ltd. v. Tiffinger, 2017 ABQB 220 (Master Schulz.). - De Shazo v. Nations Energy Co., 2005 ABCA 241, at paras. 31 -2: perfect knowledge of an injury is not required to trigger alimitation period. - Brar v.

Roy, 2005 ABCA 269: absent promissory estoppel (for which no evidence or argument was provided), ongoingnegotiations do not extend a limitation period. [21] Turning to the facts, while it would be clear that the limitation period did not end until, at least, July of 2009, 2 years after thefirst complaint about lack of cooling, the question is when, otherwise, might it, or did it, end?

This remains the legal question,notwithstanding that during this period the Plaintiffs were trying to resolve the problems and had settled with at least 2 of the Defendantsthrough the March 2009 Settlement Agreement (in itself, an acknowledgement of “injury” under the Act), subject to receipt ofAddendum Conciliation Report. [22] In February 2010, Hemisphere Engineering Inc. (Hemisphere), through the ANHWP process, issued a report regarding itsevaluation of the concern of the lack of cooling and raised a number of concerns with the inadequacy of the FCUs (inadequate flow rates

– note explicit reference as to this in the Hemisphere Report, as argued in the Applicants’ Joint Reply Brief, at paras. 19 and 21), the chiller and the heat exchanger, and concluded that the “original design does not demonstrate full air conditioning capacity”. While this Hemisphere Report seems to be in fairly technical language, not all of which might have been clear to individual Plaintiffs, it certainly was clear to the Plaintiffs’ agent, T & P, through Mr. Blais.

Important as to knowledge, the problems ultimate plead in the SofC were some of those identified in the Hemisphere Report, which speaks loudly to the Plaintiffs’ knowledge, or ability to access it directly or through their agents, T & P, and Blais. See the Joint Brief, paras. 76 - 8. [ 23 ] On March 8, 2010, ANHWP issued its Addendum Conciliation Report (Addendum Report), a copy of which was provided to the Plaintiffs.

At p. 4, ANHWP acknowledged receiving complaints that the cooling system was not able to maintain a cool, comfortable indoor air temperature – the same complaint (the same “injury”, I say) as raised in the SofC (Joint Brief, para. 140). The Addendum Report further provided that ANHWP had: . . . reviewed the final report by Hemisphere ... and has determined the system is operating as designed [ inter alia , and that] . . .no defect in workmanship was demonstrated with the chiller/fan coils. The system is performing as intended.

The amount of cooling capacity is a design/contractual issue, which is beyond the limited scope of the Conciliation Report.... ( Joint Brief, para. 79). In other words, ANHWP denied defects in workmanship and pointed to potential design deficiencies, beyond its coverage. [ 24 ] Thus, the Defendants defended the claims of the Plaintiffs herein on the basis, inter alia , that the AHHWP, on March 8, 2010, had issued the Addendum Report, wherein it was declared that the ANHWP “... requires no action by the Builder, as no defect in workmanship was demonstrated with the chiller/fan coils.

The system is performing as intended...”. In their submission, this satisfied the condition in the settlement agreement, notwithstanding that on March 15 and 30, 2010, the Plaintiffs made applications to further mediate and arbitrate the findings in the Addendum Report. [ 25 ] The Plaintiffs’ agent, Mr.

Blais, was provided with the Hemisphere Report on March 11, 2010, and he advised that, from it, it was clear that the causes of the problem were not simple, but required a more holistic solution. [ 26 ] If the Plaintiffs were not satisfied with the conclusions of the Addendum Report, or, for any other reason, wanted to pursue the matter further from this stage, notwithstanding the purported satisfaction of the condition in the settlement agreement, they clearly knew, or had the ability to know, of the “injury”, if not earlier, certainly as at March 11, 2010.

Indeed, the Plaintiffs acknowledged that, as at this date, they “understood that there was an ongoing problem with the fan coil cooling system, including the chiller and the fan coils, that was not going to be addressed by ANHWP”. See Joint Brief, paras. 82 – 89, and Joint Reply Brief, para. 24.

Thus, I find that the 2 year limitation period started on or about that March 11, 2010, at the latest, as that is the date when they knew or ought to have known, if not earlier, of the “injury”, and, accordingly the action was proscribed on or about March 11, 2012, more than 2 years before the SofC was actually issued on July 31, 2014. [ 27 ] In my view, it does not matter to the issue of the limitation date that the Plaintiffs took other steps, such as mediation (on March 15, 2010) and arbitration (on March 30, 2010, arbitration abandoned on September 28, 2011) within which the Hemisphere Report was referenced (Joint Brief, paras. 92 and 99 - 100).

That the Plaintiffs took those, and many other, steps (as detailed in the Briefs, including replacing the Heat Exchanger and pumps for the glycol solution in April 2011) to seek a resolution of the injury after March 11, 2010, and that further causes of the cooling problems were or may have been later discovered (including undersizing of the FCUs and water lines determined in August 2012, with the significance thereof determined in 2013 - Joint Brief, paras. 103 - 4), does not affect the limitation date operating in respect of the “ injury ” of a deficient cooling system.

This is also notwithstanding that the condition subsequent in the Settlement Agreement, may, in the interval, have been realized as a further bar to both arbitration and litigation. [ 28 ] While, clearly, a collateral matter, it is also evident that the Plaintiffs had legal advice about this litigation, and thus, surely, the limitation period, as early as January 21, 2009, information of which formed a basis for a claim of litigation privilege relating to “legal advice ... with respect to matters that touch upon issues in this litigation”: Joint Brief, para. 106. [ 29 ] In conclusion, on the issue of limitations under s. 3(1) (

a) of the Act , I find that by March 11, 2010, at the latest, the Plaintiffs knew or ought to have known of the injury suffered (lack of adequate cooling), the identities of the Defendants, as parties to and as to the conduct of which, the injury was (at least arguably) attributable, and that the injury warranted proceeding to litigation. As the SofC was not commenced until more than 4 years later, it is dismissed as being statute barred. V. Issues Not Addressed or Not Decided [ 30 ] While the Briefs (e.g. Joint Brief, paras. 108 - 119) addressed the tests for

summary judgment/dismissal under Rule 7.3, no real issue arises herein, so I will not address those tests. [ 31 ] Having determined that the limitation period had expired before the action was commenced, I need not determine other defences raised by the Defendants, including whether: (

a) there was a settlement that settled any or all of the proscribed claims; (

b) there were representations made by Oxford Grande to Unit Owners that were outside (able to support) a claim beyond the “entire agreement” provisions (para. 16) of the Purchase Agreements between Oxford Grande and the Unit Owners, because any such representations are proscribed by the limitation ruling; and (

c) any part of the claims represented unrecoverable pure economic loss, and arguments regarding same, including as to whether the deficiencies posed “an imminent danger to anyone’s health and safety”, because all those potential losses are also proscribed by the limitation ruling.

VI. Other [ 32 ] Costs of the whole of the action will follow from this

summary dismissal of the action, as may be consented to, or taxed before the Assessment Officer. Heard on the 2 nd day of May 2017. Dated at the City of Edmonton, Alberta this 9 th day of May 2017. J.D. Rooke A.C.J.C.Q.B.A. Appearances: James R Vaage and Allyson F. Jeffs, for the Plaintiff/Respondents – The Owners: Condominium Corporation No. 0625385 (in its own right, and as Representative Plaintiff) Paul J. Stein QC, and Taryn Burnett for the Defendants/Applicants - AGN Engineering Ltd. and Andrew Walczak Brian D. Filips and Scott A.

Matheson, for the Defendants/Applicants - Jetco Mechanical Limited and Alldritt Developments Limited, operating as Jetco Mechanical Thomas D. Hamill and Edward Furs, for the Defendants – Oxford Grande Ltd., Carrington Holdings Ltd., Carrington Hermitage Ltd., and Carrington Construction Edmonton Ltd.