Vermilion & District Housing Foundation v Binder Construction Limited, 2017 ABQB 365

Court of Queen’s Bench of Alberta Citation: Vermilion & District Housing Foundation v Binder Construction Limited, 2017 ABQB 365 Date: 20170606 Docket: 0603 10566 Registry: Edmonton Between: Vermilion & District Housing Foundation Plaintiff - and - Binder Construction Limited, the Guarantee Company of North America and Group2 Architecture Engineering Ltd. Defendants - and - Binder Construction Limited and Group2 Architecture Limited Third Parties _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice K.G. Nielsen _______________________________________________________ Table of Contents I. Introduction . 3 II. Parties . 4

III. Pleadings . 4 IV. Evidence . 4 V. Issues . 9 VI. Positions of the Parties . 9 VII. Cause of the Defect 10 A. Observations of the Adhesive . 10 B. Expert Evidence . 10 C. Findings of Fact 12 D. Conclusion . 13 VIII. Source of the Water 13 A. Expert Evidence . 13 B. Findings in relation to the Expert Evidence . 14 1. Source of Water 14 2. Design Requirements . 15 IX. Breach of the Construction Contract or Negligence by Binder 18 A. Terms of the Construction Contract 18 B. Legal Principles . 21 C. Analysis . 22 D. Conclusion . 24 X. Breach of the Architectural Contract or Negligence by Group2 . 25 A.

Terms of the Architectural Contract 25 B. Legal Principles . 26 C. Analysis . 27 D. Conclusion . 30 XI. What Damages, if any, are payable to Vermilion? . 30 A. Damages Claimed . 30 B. Legal Principles . 30 1. Entitlement 30 2. Mitigation . 31 3. Betterment 32 4. Judgment Interest 33 C. Expert Evidence . 33 D. Analysis . 36 1. Flooring Replacement 36 2. Loss of Income . 37 3. Weeping Tile . 39 4. Professional Fees . 41 5. Judgment Interest 42

E. Conclusion . 42 XII. Responsibility For Vermilion’s Damages . 43 A. Terms of the Contracts . 43 1. The Architectural Contract 43 2. The Construction Contract 43 3. The Performance Bond . 43 B. Legal Principles . 44 1. Apportionment of Fault 44 2. Liability of Surety . 47 C. Analysis . 47 1. Apportionment as between Binder and Group2 . 47 2. Liability of Guarantee Company . 49 D. Conclusion . 50 XIII. Conclusion . 50 XIV. Costs . 51 I. Introduction [ 1 ] Vermilion & District Housing Foundation (Vermilion) is a foundation carrying on business in the Town of Vermilion, Alberta.

Vermilion as owner undertook construction of a project known as Vermilion Supportive Housing Addition and Modernization (the Project). Following completion of the construction of the Project, problems were encountered with the resilient sheet flooring (RSF), also known as vinyl flooring, which was installed in portions of the Project (the Defect). Vermilion seeks to recover from the contractor, or its surety, and the architect the costs it allegedly incurred to remedy the Defect and loss of income suffered while the Defect was being remedied. II.

Parties [ 2 ] Vermilion entered into a contract with Group2 Architecture Engineering Ltd. (Group2) dated March 26, 2003 (the Architectural Contract).

Pursuant to the Architectural Contract, Group2 provided architectural and structural engineering services to Vermilion in relation to the design and construction of the Project. [ 3 ] On behalf of Vermilion, Group2 retained AMEC Earth and Environmental Ltd. (AMEC) to carry out a geotechnical investigation for the site of the Project and to provide a report on its investigations (the Geotechnical Report). [ 4 ] Vermilion entered into a stipulated price contract with Binder Construction Limited (Binder) dated March 4, 2004 (the Construction Contract).

Pursuant to the Construction Contract, Binder was to provide the total construction and related services required to construct the Project. [ 5 ] Binder was required under the Construction Contract to obtain a performance bond (the Performance Bond). The Guarantee Company of North America (Guarantee Company) is the surety who provided the Performance Bond to Vermilion. [ 6 ] Binder entered into a subcontract agreement with Midwest Floor Covering (Midwest) dated March 15, 2004 (the Flooring Subcontract).

Pursuant to the Flooring Subcontract, Midwest was obliged to supply and install all RSF and carpet as per the plans, specifications and addenda for the construction of the Project. [ 7 ] Midwest entered into a sub-subcontract with Evans Flooring pursuant to which Evans Flooring undertook to install all of the RSF and carpet on the Project. III. Pleadings [ 8 ] Vermilion sued Binder, Guarantee Company and Group2, alleging breaches of the Architectural Contract and of the Construction Contract, as well as breach of duties of care owed by both Binder and Group2.

Generally, Vermilion alleged that Group2 failed to properly draft plans and specifications, and to properly inspect, supervise and approve the work. It alleged that Binder failed to adhere to the plans and specifications, and to properly supervise, inspect and approve the work.

[ 9 ] Binder issued a Third Party Notice to Group2, alleging negligence or breach of duty and claiming indemnity and contribution based on joint and several liability. Group2 issued a Third Party Counterclaim against Binder, alleging negligence and breach of contract. Both Binder and Group2 claimed indemnity or contribution under the Contributory Negligence Act , RSA 2000, c C- 27 and the Tort-feasors Act , RSA 2000, c T-5f. [ 10 ] Binder also issued, but later discontinued, a Third Party Notice to Midwest. IV.

Evidence [ 11 ] Vermilion operates various facilities which provide housing for seniors in the Town of Vermilion and other places. One of those facilities was an 82 bed senior’s lodge. In 2002, Vermilion identified a need for a facility which would provide an assisted living level of care. In consultation with the local health authority, it was ultimately determined that the Project would be constructed.

This would entail modernization of the existing senior’s lodge (the Renovation) and addition of a 40 bed assisted living complex (the Addition) on land owned by Vermilion immediately adjacent to the existing facility. When completed, the modernized senior’s lodge and the additional 40 bed facility would be an integrated complex. [ 12 ] Group2 commenced its design of the Project shortly after Vermilion awarded the Architectural Contract to it. As part of the design process, Group2 met with representatives of Vermilion to gain insight and direction as to the nature of the facility as envisioned by Vermilion.

As a result, various design principles were developed, including that the Addition would be constructed in four separate care units or “houses” each consisting of 10 separate rooms for residents. While each of the houses would be somewhat independent, all were to be connected and were to form part of the overall complex. [ 13 ] It was a further design principle that each house would have an outdoor space designated for it.

The residents of each house were to have easy access to the outdoor space. [ 14 ] These design principles led Group2 to recommend that the Addition be constructed with a slab on grade, even though the existing portion of the facility was at a higher elevation and was constructed either with a basement or crawlspaces. [ 15 ] Therefore, the design prepared by Group2 called for a concrete slab on grade for the floors in the whole of the Addition. [ 16 ] The foundation system designed to support the one storey structure of the Addition consisted of a concrete spread footing, also called a pad, on which was constructed a concrete pier.

The pads and piers were generally to be installed 5.355 metres apart around the perimeter of the Addition. A continuous grade beam was constructed on the piers. The grade beam supports the superstructure of the Addition. The slab on grade tied into the grade beam with the top of the slab on grade being at the same elevation as the top of the grade beam. In general, the distance from the top of the slab on grade and grade beam to the bottom of the pad was to be 1.7 metres.

The pad and pier were wholly below and the grade beam was partially below the final grade of the site of the Project. [ 17 ] As designed by Group2, the concrete slab on grade was generally 125 mm thick. The concrete slab on grade was to be supported on three different layers of material (the Assembly). The layer of the Assembly immediately below the slab on grade was to be a 150 mm thick base coarse aggregate layer consisting of 20 mm of crushed gravel. Below the base coarse aggregate layer was to be a 150 mm subbase aggregate layer consisting of either 75 mm pit run gravel or 75 mm coarse gravel.

This subbase aggregate layer was to be placed on either the in situ clay materials or imported clay material which had been approved by AMEC. The aggregate layers and the clay layer were to be compacted to densities as specified in the Construction Contract Specifications (the Specifications).

Post- construction investigations conducted in attempts to determine the cause of the Defect revealed that the subbase aggregate layer of 75 mm pit run or coarse gravel was not installed as called for in the design of the Assembly. [ 18 ] The Geotechnical Report recommended that a permanent sub-drainage system, being a weeping tile system, be installed for all below grade structures.

In addition, the Geotechnical Report recommended that consideration be given to the installation of a polyethylene vapour barrier (Vapour Barrier) as a precaution against potential migration of water vapour through the concrete floor slab. It was recommended that the Vapour Barrier be placed on top of the granular base gravel immediately below the slab on grade. [ 19 ] Craig Webber, the architect from Group2, and Patrick Romerman, the structural engineer from Group2, were involved in the design for the Project. Both testified that neither the weeping tile nor the Vapour Barrier was necessary for the Project.

Group2 did not specify weeping tile in its design as there were no basement structures contemplated in the Project. The Vapour Barrier was not necessary as the Assembly met the ASTM F1869 design standard with respect to the migration of water vapour through the slab on grade. That standard required that vapour transmission through the slab be less than 3 pounds per 1,000 square feet per 24 hours. [ 20 ] Further, both Mr. Webber and Mr.

Romerman testified that the Assembly met the design criteria mandated by the Alberta Building Code 1997 , declared in force by Building Code Regulation , AR 50/98 under the Safety Codes Act , SA 1991, c S-0.5 (the Building Code).

Section 5.8.2.1.1 of the Building Code required that “where a building element separates interior spaces from the ground, materials, components or assemblies shall be installed to prevent moisture transfer into the space”. Mr. Romerman’s evidence was that the design of the Assembly would prevent unacceptable moisture transfer through the slab on grade. [ 21 ] Binder commenced construction of the Project in March 2004. It received a Substantial Completion Certificate dated March 29, 2005, confirming that the Project or a substantial part thereof was ready for use.

As at that date, exterior finishing, landscaping and paving remained to be completed as well as certain rooms within the Project. [ 22 ] Midwest, through its subcontractor, undertook the installation of the RSF in the Renovation in the summer of 2004 and in the Addition in early 2005. [ 23 ] The Specifications and the Construction Contract plans (the Plans) called for different types of RSF in various portions of the Project. The Specifications designate the flooring as RSF1, RSF2, RSF3, RSF4 and RSF5. These are various products known as either

Mannington products or Tarkett products which are produced by different manufacturers. [ 24 ] The Specifications called for the use of adhesives as recommended by the manufacturers of each type of RSF to glue the RSF to the slab on grade. [ 25 ] The majority of the RSF throughout the Project was RSF4, being Tarkett Sommers Acczent. The recommended adhesive for use with the RSF4 flooring was a product known as Aquafix. [ 26 ] Jeffrey Dubyk, the principal of Midwest, testified that the Tarkett RSF and the Aquafix were ordered from the supplier in Edmonton, Erv Parent Co. Ltd. [ 27 ] Mr.

Dubyk further testified that Midwest obtained the Mannington RSF and the adhesive to be used on it from a distributor by the name of Primco. Mr. Weber testified that he understood that the adhesive recommended by the manufacturer was to be a product known as V82 or V85. Mr. Dubyk testified that the adhesive used with the Mannington RSF was, in fact, a product known as Chembond. [ 28 ] Problems with the RSF, variously described as “bubbling” or “rippling”, were identified during the course of substantial inspections conducted in February and March 2005, and into the summer of 2005.

The rippling was particularly evident in areas subject to cart or wheelchair traffic. In addition, adhesive material from below the RSF was observed to be oozing between seams. Minutes from a site meeting on September 8, 2005 describe the adhesive as having “gone to mush”. Mr. Dubyk attended at the Project and observed the problems with the RSF.

He described the adhesive which he saw as “wet and gooey”, “soupy” and “emulsified and watery”. [ 29 ] Investigations were undertaken in the fall of 2005 and early 2006. [ 30 ] Samples of the adhesives used with both the Tarkett flooring and the Mannington flooring were taken and sent for analysis. [ 31 ] Schonox, the manufacturer of Aquafix, reported that upon analysis the sample received could not be identified as Aquafix nor as any other material produced by Schonox.

It stated that the sample appeared to be from a competitor of Schonox. [ 32 ] Mapei Inc., a distributor of adhesives, identified the sample it analyzed as Chembond 1671 Pressure Sensitive Flooring Adhesive, a product distributed by Mapei Inc.

It went on to state that from the analysis it had conducted, there appeared to be an excessive amount of moisture evident in the sample which was not characteristic of the Chembond and that in the opinion of Mapei Inc., the problem experienced on the Project could not be related to the adhesive. [ 33 ] Midwest arranged for an inspection of the RSF to be conducted on January 12, 2006 by the Alberta Floor Covering Association (1979).

It concluded that excessive moisture from groundwater or a high water table and hydrostatic pressure appeared to have forced moisture through the floor slab which was trapped under the RSF, causing the adhesive to break down. [ 34 ] During the course of investigations of the Defect, AMEC was retained to conduct an under slab investigation. It drilled five coreholes through the concrete slab on grade.

On October 21, 2005, it reported average moisture contents of: 3.6% in the concrete cores, 7% at the gravel surface, 6.2% at 150 mm depth of gravel, 13.5% at the clay surface, 13.3% at 200 mm depth of clay, and 12.1% at 300 mm depth of clay. [ 35 ] In early 2006, Vermilion arranged for representatives of Alberta Infrastructure and Transportation (Infrastructure) to conduct investigations in relation to the Defect.

In May 2006, Infrastructure reported that its investigations did not reveal any mould growth within the exterior or interior wall cavities or underneath the RSF, cork or carpeted floor areas within the four houses or the connecting corridor to the original facility. There was also no indication of moisture problems within the exterior or interior wall cavities or floor substrates, being the concrete slab on grade or the wood subfloors. Further, in June 2006, Infrastructure advised that moisture readings which it had taken in unset flooring glue under the RSF were found to contain 25% to 45% moisture content.

Moisture meter readings taken on the bare concrete indicated a moisture content of 15%. [ 36 ] The Specifications called for the flooring to be installed on dry concrete floors with a maximum moisture content of 7%. Test results verifying the moisture conduct were to be submitted to Group2 for review prior to the installation of the flooring.

There is no evidence that any such moisture tests were taken prior to the installation of the RSF nor that any reports were ever submitted to Group2. [ 37 ] Neither Group2 nor Binder determined the cause of the Defect or made any recommendations to Vermilion as to how to remedy the Defect. [ 38 ] Vermilion retained AD Williams Engineering Inc. (Williams) to investigate the matter and to make recommendations to Vermilion as to how to remedy the Defect. [ 39 ] On March 21, 2007, Williams provided a report which concluded: 1. the failure of the RSF was as a result of failure of the adhesive; 2. the failure of the adhesive was due to moisture levels exceeding that which the adhesive would accommodate; 3. the excess moisture in the adhesive was as a result of moisture migrating upward through the concrete slab on grade and becoming trapped under the RSF; 4. replacement of the flooring could not be accomplished until the moisture problem was addressed; and 5. had a vapour barrier been installed under the slab, the risk of adverse effects from moisture would have been significantly reduced. [ 40 ] In July 2008, Williams recommended the installation of a weeping tile system (the Weeping Tile) to prevent water from

migrating horizontally under the slab on grade. Williams was retained to design and inspect the construction of the Weeping Tile. Vermilion entered into a contract with Ramco Foundation Repairs (Ramco) to install the Weeping Tile as designed by Williams. The final contract amount was $490,108.92. [ 41 ] This work was undertaken in the summer of 2009. [ 42 ] The performance of the Weeping Tile was monitored by Williams and was found to be satisfactory. Williams then recommended that the RSF which had encountered problems be replaced.

Williams was retained by Vermilion to prepare contract documents with respect to the replacement of the RSF and some of the carpet within the Project. Vermilion entered into a contract with CWP Constructors Ltd. (CWP) to replace the defective flooring. The total cost for replacing the floors and certain storage rental charges was $456,886.64. [ 43 ] Vermilion seeks recovery of the costs it incurred to install the Weeping Tile and to install the replacement flooring.

In addition, Vermilion seeks damages for income lost while various rooms in the Addition were vacant to accommodate both investigation of the Defect and installation of the replacement flooring. The replacement of the flooring was accomplished by essentially having all of the residents in the 10 rooms in one house vacate at the same time. The remedial work was then undertaken. Residents would be moved into the house where the flooring had been replaced and then flooring would be replaced in the next house. This was done sequentially until the flooring had been replaced in all four houses.

The loss of income claim by Vermilion is based on the following vacancies: 1. one room during November and December 2006; 2. one room during January to August 2007; 3. one room during November and December 2010; 4. five rooms during January 2011; and 5. ten rooms during February to December 2011. The total loss of income claimed by Vermillion is $419,397. [ 44 ] Vermilion also seeks recovery in relation to the following: 1. professional fees paid to Williams of $132,140.90; and 2. professional fees paid to a consultant by the name of Art Boyarzin of $7,643.83. V.

Issues [ 45 ] The following issues must be determined: 1. What was the cause of the Defect? 2. Was Group2 in breach of the Architectural Contract or negligent? 3. Was Binder in breach of the Construction Contract or negligent? 4. What damages, if any, are payable to Vermilion? 5. Who is responsible for Vermilion’s damages? VI.

Positions of the Parties [ 46 ] Vermilion argues that the Defect was caused by errors on the part of Binder in the construction of the Project, or errors on the part of Group2 in the manner in which the Project was designed, or a combination thereof. [ 47 ] Vermilion alleges that Binder breached the Construction Contract or breached its duty of care to Vermilion in failing to: carry out moisture tests on the slabs on grade prior to installing the RSF; construct the Assembly in accordance with the Specifications; complete the site grading in accordance with the Specifications; and use the proper adhesive for the RSF. [ 48 ] Vermilion alleges that Guarantee Company is responsible pursuant to the Performance Bond for any damages attributable to Binder. [ 49 ] Vermilion alleges that Group2 failed to ensure that the design for the Project properly addressed the potential for moisture migration through the slab on grade by means of the installation of a weeping tile system, or vapour barrier below the slab on grade.

Further, Vermilion alleges that Group2 failed to properly inspect the work of Binder and failed to provide a proper site grading plan. [ 50 ] Binder argues that the Defect was caused by moisture migration through the slab on grade which occurred due to Group2’s failure to properly address either groundwater or surface water migration in its design by including the installation of both a weeping tile system and Vapour Barrier. Further, Binder argues that the grading design was inadequate to provide the necessary positive slope away from the Addition.

[ 51 ] Guarantee Company supports Binder’s position and argues that the Defect was caused by flaws in the design prepared by Group2. [ 52 ] Group2 submits that it designed the Project in accordance with the duties imposed upon it and in compliance with the Building Code. It takes the position that the Defect was caused either by the use of the wrong adhesive or a failure to properly install the adhesive and the RSF.

Alternatively, Group2 argues that if the Defect was due to moisture migration through the slab on grade, this was due to the failure of Binder to construct the Assembly as designed and to follow the site grading plan prepared by Group2. VII. Cause of the Defect A. Observations of the Adhesive [ 53 ] All of the witnesses involved in the construction of the Project who observed the adhesive from the time the Defect was first identified until the RSF was replaced gave consistent descriptions.

The adhesive was variously described as being “wet and gooey”, “soupy”, “emulsified and watery” and “the consistency of pancake syrup”. [ 54 ] While not called as witnesses at the trial, the authors of several documents detailing investigations of the adhesive made comments as to its condition. [ 55 ] Marv Megley of Mapei Inc. reported that the Mapei Inc. laboratory confirmed that the adhesive sample which the laboratory had examined was Chembond 1671, and “an excessive amount of moisture was present in the adhesive samples”. [ 56 ] John Propp of ERV Parent Group, who attended the Project described “several locations revealing significant moisture to the point of visible water on the surface of the slab”. [ 57 ] Following the site inspection by Alberta Floor Covering Association (1979), it stated: “Adhesive has re-emulsified and become pasty and watery under the sheet goods installed over concrete substrate.

It appears that there is excessive moisture in and on concrete”. [ 58 ] Colin Wildgrube of Infrastructure, following site visits, commented that the unset glue which was found in all flooring areas “has the consistency of putty which separates into two distinct layers (medium brown oily top layer and cream coloured putty like bottom layer)”. B. Expert Evidence [ 59 ] The parties obtained several expert opinions with respect to the condition of the adhesive. [ 60 ] Neil McKay of Williams, a professional engineer, was called as a witness for Vermilion.

He was qualified to give an opinion with respect to this matter as a civil engineer. In the report which he authored dated March 21, 2007, he stated: The consistent observation is that the adhesive has been exposed to elevated moisture levels and is now contaminated with water. The vinyl sheet flooring has created an impervious barrier to moisture migrating through the slab and the moisture is trapped between the slab and the flooring. [ 61 ] During the replacement of the RSF, Brendon Kusiak of Williams collected samples of the adhesive and of the RSF with adhesive on the back.

In October 2011, he forwarded the samples to Dr. Edward Higgins of EDH Technical Services Inc. for examination and testing. [ 62 ] Dr. Higgins was called as a witness by Vermilion and qualified as an expert in polymer adhesive coatings and adhesive testing. [ 63 ] Dr. Higgins provided a report dated March 27, 2012 with respect to his investigations and conclusions. Tests were conducted on four samples of adhesive which were provided by Mr. Kusiak in vials, as well as on adhesive from the back of rectangles of RSF.

The tests conducted on the adhesive were compared with generic samples of Aquafix. [ 64 ] Two samples directly from the container of the generic Aquafix were tested and found to have moisture contents of 30.61% and 30.95%. [ 65 ] Two samples of the generic Aquafix adhesive were applied by Dr. Higgins in a test and were allowed to dry from a liquid paste to a cohesive solid that began to have adhesive bonding quality.

These two samples were found to have moisture contents of 18.37% and 19.05%. [ 66 ] Four samples from the vials of adhesive from the Project were tested and found to have moisture contents of 28.65%, 39.04%, 39.46% and 46.20%. Three samples of adhesive from the backs of the RSF rectangles from the Project were tested and found to have moisture contents of 45.33%, 66.94% and 90.91%. [ 67 ] Dr. Higgins explained that the “bond line” is the point of interface between the RSF and the concrete slab on grade where adhesive is applied.

He commented on the results of his investigation as follows: Table 4 [Aquafix Generic Control Samples Dried in Air] data demonstrates that moisture contents in generic bond lines should not exceed a threshold level of 18 to 19 % moisture in order to develop cohesive strength. Moisture content in bond line liquid samples 1, 2,

3 and 4, summarized in Table 2 [vial Adhesive Liquid Samples from the Project] were markedly higher (28.65% to 46.2%) than the threshold levels for the strength development (18 to 19 %) as found in the generic mastic, (Table 4 Aquafix). Table 5 [Flooring Samples Removed from Concrete with adhesive on the back from the Project] samples 2, 3 and 5 show that normal spread levels were in line with typical installation specifications (in the order of 0.026 g/cm 2 ). However, the moisture levels found in these intact vinyl sample bond lines were also elevated.

In this case, fugitive water increased the moisture content to between 45.33 % and 90.91 %. ... Conclusion The flooring samples examined suffered from washed out bond lines. Within the bond line, the adhesive was too wet to have significant cohesive strength. Most commercial ... vinyl flooring mastics would respond to this level of moisture similarly. ... In my opinion, the adhesive that was investigated failed because of excess bond line water.

Further, any commercial vinyl laying mastic, generally represented by Aquafix in this report would have failed under the moisture conditions captured in the bond line samples. [ 68 ] In his report, Dr. Higgins also stated: Anecdotally, it was observed that, when spread on a surface and air dried, these samples received in sealed vials [from the Project], dried out and functioned normally to harden with expected cohesive strength. [ 69 ] Dr. Higgins testified that in using the term “anecdotally” he meant that he had spread out a portion of the adhesive from a vial and observed its performance.

It hardened up and became sticky and tacky. Once it dried, it allowed cohesion in a normal fashion. Dr. Higgins had done no measurements, calculations or other analyses in coming to this conclusion. C. Findings of Fact [ 70 ] It is impossible to conclude with any certainty which adhesive was actually used throughout the Project. It appears that only two tests were conducted on adhesive samples to determine the type of glue used. [ 71 ] Mapei Inc. concluded that the sample it analyzed, being the adhesive used with the Mannington RSF, was Chembond 1671.

Schonox was unable to determine the type of adhesive used with the Tarkett RSF. [ 72 ] Neither Dr. Higgins nor anyone else analyzed the adhesive to determine the type used in various locations of the Project. [ 73 ] Mr. Dubyk testified that Aquafix had been used in relation to the Tarkett RSF. However, exhibits entered at the trial indicated that there was a back order for 27 of the 40 pails of Aquafix ordered by Midwest. There was no documentary evidence that the back ordered pails of Aquafix were ever received for this Project. Mr. Dubyk testified that the back ordered pails were in fact received.

However, he was not the principal of Midwest involved in the Project and the installation of the RSF was undertaken by Evans Flooring. Mr. Dubyk had a recollection of visiting the Project but was unable to provide any details of such visits. [ 74 ] Therefore, I find that Chembond 1671 was used as the adhesive for the RSF on a portion of the Project.

It is impossible to make any further findings as to the type of adhesive used throughout the Project. [ 75 ] What is inescapable from the evidence outlined herein, however, is that the adhesive in various areas throughout the Project was not adhering properly and that such condition was due to excess moisture in the adhesive. [ 76 ] All observations of the adhesive were to the effect that it was watery and soupy. [ 77 ] Dr. Higgins concluded that excess moisture was found in all of the samples tested, whether such samples were of adhesive placed in vials by Mr.

Kusiak or of adhesive removed from the back of rectangles of RSF. It is of interest to note that the five samples tested by Dr. Higgins came from five separate rooms within the Project. As designed, Mannington product was specified for some of those rooms and Tarkett product was specified for others. [ 78 ] Whatever RSF was installed and whatever adhesive was used to install it, the adhesive experienced the same difficulties. That is, it did not properly adhere. Such adhesion difficulties were due to excess moisture content. Dr.

Higgins opined that most commercial vinyl flooring adhesives would respond similarly to the level of moisture he observed. [ 79 ] Having considered all of the evidence, I find on a balance of probabilities that the failure of the adhesive to properly adhere was due to excess moisture content within the adhesive. [ 80 ] This conclusion is reinforced by Dr. Higgins’ anecdotal observations and observations by Mr. Wildgrube of Infrastructure. Dr.

Higgins’ anecdotal observation was that when the adhesive samples were spread on a surface and air dried, they functioned normally, hardening and reaching the expected cohesive strength. Mr. Wildgrube reported moisture contents in the unset adhesive under the RSF of 25% to 45%.

Further, he reported that a sample that Infrastructure obtained from the site was allowed to air dry and the adhesive set after approximately one day. [ 81 ] I appreciate that testing undertaken by AMEC in October 2005 and investigations by Infrastructure conducted in May and June 2006 indicate that the concrete slab on grade and underlying gravel and clay did not exhibit excessive moisture contents at those times.

The results of AMEC’s investigation suggests an average moisture content of 3.6% for the concrete, 7% for the gravel at surface and 6.2% at 150 mm, and a range of 12.1% to 13.6% for the clay at various depths from the surface to 300 mm. Further, the investigations by Infrastructure found moisture readings of the bare concrete floor slab to be 15% and that there was no evidence of mould in either the exterior or interior wall cavities or underneath the RSF or carpet areas.

[ 82 ] Notwithstanding these findings, as set out previously in this section, it is clear that moisture was present in the adhesive itself and that such moisture was observed to be present from shortly after substantial completion of the Project to the date of replacement of the RSF. D. Conclusion [ 83 ] The cause of the Defect was the failure of the adhesive used in conjunction with the RSF to properly adhere due to excess moisture content. VIII. Source of the Water A. Expert Evidence [ 84 ] As noted above, Mr. McKay was qualified as an expert to give an opinion with respect to this matter as a civil engineer.

He opined that the presence of moisture under the RSF resulted from moisture migrating upward through the concrete slab on grade. Further, he testified that if a vapour barrier had been installed under the slab on grade, the risk of adverse effects from moisture would have been significantly reduced. Mr. McKay acknowledged that his expertise with respect to both concrete and geotechnical matters was limited. [ 85 ] Ramon Facundo, also of Williams, was qualified as an expert generally in the area of civil engineering with a specialty in geotechnical engineering. Mr.

Facundo was involved in investigations following Mr. McKay’s investigations and he reached similar conclusions. A report dated July 4, 2008, which was reviewed by Mr. Facundo, set out the following conclusion: The vertical migration of water through the concrete slab on grade from the subgrade is as a result of water wicking through the fill soil and concrete slab, bringing water up from the subgrade.

The cause of water migration may be attributed to the minimal or lack of elevation difference between the ground and the floor elevation, and to the absence of a proper subsurface drainage system. [ 86 ] Following construction of the Weeping Tile, Mr.

Facundo reviewed a further report which concluded that: 1. moisture was migrating upwards through the concrete slab on grade; 2. groundwater was not the source of the infiltrating water; 3. proper construction practices were not established to ensure that surface grades adjacent to the building were positively sloped approximately 2% - 6% and for downspouts to carry rainwater from the roof away from the foundation for a minimum of three metres; 4. the source of water was attributed to be surface runoff; 5. the building floor elevations were constructed low; 6. the Weeping Tile was effectively diverting the surface water. [ 87 ] David Watkin was retained on behalf of Binder to provide an expert opinion with respect to the ordinary prudent practice for a designing architect or engineer.

Mr. Watkin is an architect and was qualified as an expert to give an opinion on the standard of care of an architect in building design, particularly as design relates to protection against ingress of water and moisture. [ 88 ] After having reviewed the Geotechnical Report, Mr. Watkin concluded that Group2 should have included a vapour barrier, gravel drainage mat and weeping tile water collection system, as outlined in the Geotechnical Report, in its design for the Project. Further, Mr. Watkin concluded that the floor system as designed by Group2 did not comply with the Building Code. Mr.

Watkin was of the opinion that in failing to incorporate the recommendations in AMEC’s Geotechnical Report, Group2 “also chose to ignore all the requirements of

Part 5 of the 1997 Alberta Building Code”. [ 89 ] Nick Trovato was retained on behalf of Group2 to provide an expert opinion. Mr. Trovato was qualified as an expert in civil engineering with a speciality in structural engineering and a further speciality in building sciences, which includes the ingress of moisture into buildings, and with expertise in the area of Building Code issues, including

interpretation and compliance with Building Codes. [ 90 ] Mr. Trovato’s opinion was that the Geotechnical Report contemplated a weeping tile system under basement floor slabs. He concluded that the recommendations in the Geotechnical Report for a weeping tile system were not applicable as there was no basement on the Project. Further, in Mr. Trovato’s opinion, the installation of a vapour barrier was optional pursuant to the Building Code. Mr.

Trovato’s opinion was that the Assembly met the requirements of the Building Code in that it was designed to separate the interior space of the Project from the ground so as to prevent moisture transfer. Finally, Mr. Trovato concluded that the lack of testing of the moisture content of the concrete slab on grade prior to the installation of the RSF precluded Group2 from considering any options to address excess moisture in the concrete slab. B. Findings in relation to the Expert Evidence 1. Source of Water [ 91 ] As set out previously, water was collecting below the RSF and compromising the adhesive.

[ 92 ] The Geotechnical Report indicated that groundwater was, at its highest, approximately six metres below the surface of the Project site. There was no evidence to suggest that this finding was in error, nor that there was any significant change in the groundwater elevation after preparation of the Geotechnical Report. [ 93 ] I find on a balance of probabilities that the source of the water was surface water on the site.

The only reasonable conclusion on the whole of the evidence is that surface water was migrating, or had migrated, through the concrete slab on grade and was trapped by the vinyl sheet flooring. No other potential source of the moisture which compromised the RSF was identified in the evidence. [ 94 ] Again, I accept that there was evidence from both AMEC in October 2005 and Infrastructure in May and June 2006 suggesting that the concrete slabs were relatively dry. Further, after having reviewed the Geotechnical Report and evidence collected in the investigations, Mr.

Trovato testified that the moisture contents were fairly consistent and if anything were somewhat drier than at the time of construction. In his view, if there was moisture propagating upwards, one would expect to see it in both the soil and the concrete. In this case, the concrete slab and soils appeared to be consistently dry. [ 95 ] In Mr. McKay’s report dated March 21, 2007, he opined that the vinyl sheet flooring had created an impervious barrier to moisture migrating through the slab, trapping the moisture between the slab and the flooring.

There was no evidence that an absence of excessive moisture in the concrete slab on grade and underlying gravel and clay at the times when they were tested would necessarily be inconsistent with moisture having migrated through the structure at some point, and having been trapped between the slab and the flooring. [ 96 ] Therefore, while it may be true that the moisture contents in the concrete slab on grade and underlying gravel and soils did not exhibit excessive moisture contents at the time of testing, the overwhelming evidence is that moisture was present in the adhesives below the RSF and, based on the evidence before the Court, the source of such moisture could only be migration through the soils and concrete slab. 2.

Design Requirements [ 97 ] In the introduction to the Geotechnical Report, dated July 25, 2003, AMEC indicated that the purpose of the Report was to identify the soil and groundwater conditions at the borehole locations and to provide geotechnical recommendations relative to the design and construction of the proposed development. [ 98 ] Mr.

Romerman, a structural engineer who supervised the structural design, was qualified as a structural engineering expert with a speciality in smaller buildings of four storeys or less as it relates to foundations and the effect of moisture on the foundations, and the effect of moisture on the buildings, including buildings constructed on slab on grade. He testified that AMEC was retained early in the design process so that Group2 would have information relevant to the design process in order to enable it to make decisions relative to the design.

Further, the decision was made to construct the Project with a slab on grade after receipt of the Geotechnical Report. Therefore, the Project was not designed with a basement. [ 99 ]

Section 5.4 of the Geotechnical Report entitled “Basement Sub-drainage System” recommends a weeping tile drain system for all below grade structures. Mr. Romerman’s evidence was that Group2 did not call for the installation of a weeping tile system because there were no below grade structures on the Project. [ 100 ] Further, the Geotechnical Report recommended that with respect to concrete floor slabs, consideration be given to the installation of a polyethylene vapour barrier directly on top of the granular base gravel and under the concrete slab. [ 101 ] Mr.

Romerman testified that Group2 did consider the installation of a polyethylene vapour barrier on this project. He stated that at the time of the design of the Project, only 50% of similar projects called for the installation of a vapour barrier below a slab on grade. [ 102 ] The design of the Addition was to have no elevation differentials between rooms within the Addition, including all washrooms. This was to allow for easy access of the senior citizen occupants to any place within the Addition. Mr.

Romerman testified that the use of vapour barriers below slabs on grade can result in differential curing of the slab on grade which can in turn result in curling of the slab on grade. If the slab on grade in the Addition had curled, this would have had an impact on the mobility of the occupants of the Addition. [ 103 ] Given this concern, Group2 considered other alternatives to prevent migration of water vapour through the slab on grade. The alternative chosen by Group2 was the Assembly. Mr.

Romerman testified that the design of the Assembly was such that the lowermost layer of pit run gravel in the Assembly provided a capillary break with respect to moisture transmission and provided a barrier for the transmission of fines from the clay material. The second layer of 20 mm of crushed gravel was also an element to address moisture migration. Mr. Romerman’s evidence was that the Assembly met the applicable design standards relating to moisture transmission through concrete slabs. [ 104 ] Mr.

Weber of Group2 was qualified as an expert in architecture with a specific reference to institutional buildings having occupancies of various types. [ 105 ] Mr. Weber’s evidence was to the same effect as Mr. Romerman’s evidence as to why a weeping tile system was not called for on the Project and how Group2 chose to address the issue of migration of water vapour through the slab on grade. [ 106 ] Mr. Watkin opined that Group2 should have designed the Project so as to include the recommendations of AMEC with respect to both installation of a weeping tile system and a polyethylene vapour barrier.

He stated that the inclusion of such elements would not only be prudent practice, they would be compulsory for compliance with the applicable Building Code requirements. [ 107 ] Mr. Trovato expressed the view that a weeping tile system was not required and that the Assembly met the requirements of the Building Code with respect to moisture migration. [ 108 ] For several reasons, I prefer the opinion of Mr. Trovato to that of Mr. Watkin.

[ 109 ] First, Mr. Watkin was qualified to provide an expert opinion with respect to the ordinary prudent practice for a designing architect or engineer. Mr. Trovato was qualified as an expert in civil engineering with a speciality in structural engineering and a further specialty in building sciences, which includes the ingress of moisture into the building with expertise in the area of Building Code issues, including

interpretation and compliance with Building Codes. Stated simply, the issues with respect to the inclusion of both a polyethylene vapour barrier and a weeping tile system on the Project fall much more squarely within Mr. Trovato’s expertise than Mr. Watkin’s. [ 110 ] Second, Mr. Watkin agreed on cross-examination that the Addition did not have a basement and, therefore, the

section of the AMEC report calling for a weeping tile system did not apply. That is, he agreed that AMEC was recommending a weeping tile system if a basement were to be constructed. [ 111 ] Third, Mr. Watkin based his opinion, in part, on a conclusion that in addition to not calling for the polyethylene vapour barrier or the weeping tile system, Group2 had also not called for the inclusion of a gravel drainage mat as identified by AMEC. This conclusion is wrong. The Assembly requires two distinct layers of gravel.

From the core hole testing conducted by AMEC in October 2005, it is clear that a layer of gravel existed in the five core hole locations investigated by AMEC. There is no evidence to suggest that these core holes are atypical of the site and that a gravel layer was not placed at other locations on the site. Further, under cross-examination, Mr. Watkin acknowledged that the crushed gravel layer below the slab on grade was a drainage layer. [ 112 ] This AMEC report, of course, clearly identifies that only one layer of gravel existed in four of the five core holes. [ 113 ] Fourth, Mr.

Watkin opined that Group2 had ignored the requirements of, in particular,

Part 5 of the Building Code with respect to moisture migration. This conclusion is also wrong. Both Mr. Romerman and Mr. Weber testified that they had considered the matter of moisture migration and discounted the use of a polyethylene vapour barrier for reasons related to the use and occupancy of the Project.

Section 5.8.2.1 of the Building Code provides that unless it can be shown that the health or safety of building users, the intended use of the building or the operation of the building will not be adversely affected by moisture migration, the design must call for “materials, components or assemblies” to be installed to prevent moisture transfer into the building. [ 114 ] Mr. Romerman and Mr. Weber both testified that the Assembly was designed specifically to prevent moisture transfer through the slab on grade. They testified that it met the applicable design standards and explained how it did so.

There is no evidence to suggest that the Assembly would not have met that design standard, had it been constructed as designed. [ 115 ] In Mr. Trovato’s opinion, a vapour barrier was not compulsory and could be waived provided that the requirements of

Section 5.8.2.1 of the Building Code were met. Under questioning by the Court, Mr. Trovato stated that the Assembly met the requirements of this

section of the Building Code. He stated that the Assembly would be a way of addressing moisture ingress under the slab on grade in these soil conditions. Further, he stated that the Assembly as constructed, that is with only one layer of gravel as opposed to two, would also constitute an assembly within the Building Code which would address moisture ingress but that it would not be as effective as the Assembly as designed. [ 116 ] Finally, I have some concerns with respect to Mr. Watkin’s evidence given that he stated in cross-examination that he had never given evidence in Court before.

He was then presented with a case, Isotech Consulting Engineers Ltd v 672850 Alberta Corp , 2001 ABQB 288 , [2001] AJ No 453. David Watkin Architect Ltd. was a party to that litigation and Mr. Watkin testified in the trial. The trial judge in that matter stated that Mr. Watkin’s explanation “defies belief and is simply not credible”. [ 117 ] When presented with this decision, Mr. Watkin stated that the case “was so long ago, I couldn’t remember it”. While this factor may not bear directly on his opinion in this matter as expressed in his report and his testimony, it does impact on his credibility in this trial.

In my view, it is unlikely that someone who had been a party to an action (even if it was some 15 years previous) and whose credibility had been questioned, would forget such an event. [ 118 ] The final area of design to consider is the surface drainage surrounding the Addition. Specification 02300-3.7.2 provided for a slope of 1.67%. The Williams Report dated September 22, 2009, which Mr. Facundo reviewed, stated that surface grades adjacent to a building should be positively sloped approximately 2% to 6%. Mr. Trovato in cross-examination stated that the ideal grading away from a foundation is 5%.

He acknowledged that this is not always achievable and that sometimes it is necessary to go to as low as 2%.

The evidence establishes that the slope of 1. 67% was inadequate. [ 119 ] For all of the foregoing reasons, I conclude the following with respect to the Group2’s design: 1. it was not compulsory under the Building Code that a polyethylene vapour barrier be installed below the slab on grade in the circumstances of this case; 2. the Geotechnical Report did not mandate the inclusion of a weeping tile system for a slab on grade construction on the Project; 3. the Assembly as designed met the requirements of the Building Code; and 4. the specified slope was inadequate. IX.

Breach of the Construction Contract or Negligence by Binder A. Terms of the Construction Contract [ 120 ] The following provisions of the Construction Contract are particularly relevant to the claim against Binder:

ARTICLE A-1 – THE WORK The Contractor shall: 1.1 perform the Work required by the Contract Documents for Vermilion Supportive Housing Addition & Modernization located at Vermilion, Alberta which have been signed by the parties, and for which Group2 Architecture Engineering Interior Design is acting as and is hereinafter called the “ Consultant ” and 1.2 do and fulfill everything indicated by this Agreement ....

ARTICLE A-3 3.1 The following are the Contract Documents referred to in

Article A-1 of the Agreement – THE WORK: [There is then a list of all of the documents included in the Contract Documents .]

DEFINITIONS ... 2. Contract Documents The Contract Documents consist of those documents listed in

Article A-3 of the Agreement – CONTRACT DOCUMENTS and amendments agreed upon between the parties. ... 4. Contractor The Contractor is the person or entity identified as such in the Agreement. ... 5. Subcontractor A Subcontractor is a person or entity having a direct contract with the Contractor to perform a part or parts of the Work , or to supply Products worked to a special design for the Work . ... 7. Consultant The Consultant is the person or entity identified as such in the Agreement... 9. Work The Work means the total construction and related services required by the Contract Documents ... GENERAL CONDITIONS OF THE STIPULATED PRICE CONTRACT

PART 2 ADMINISTRATION OF THE CONTRACT GC 2.2 ROLE OF THE CONSULTANT ... 2.2.2 The Consultant will visit the Place of the Work at intervals appropriate to the progress of construction to become familiar with the progress and quality of the work and to determine if the Work is proceeding in general conformity with the Contract Documents . ... 2.2.5 The Consultant will not be responsible for and will not have control, charge, or supervision of construction means, methods, techniques, sequences, or procedures, or for the safety precautions and programs required in connection with the Work in accordance with the applicable construction safety legislation, other regulations, or general construction practice.

The Consultant will not be responsible for the Contractor ’s failure to carry out the Work in accordance with the Contract Documents . The Consultant will not have control over, charge of, or be responsible for the acts or omissions of the Contractor , Subcontractors , Suppliers , or their agents, employees, or any other person performing portions of the Work . ...

PART 3 EXECUTION OF THE WORK GC 3.1 CONTROL OF THE WORK 3.1.1 The Contractor shall have total control of the Work and shall effectively direct and supervise the Work so as to ensure conformity with the Contract Documents . 3.1.2 The Contractor shall be solely responsible for construction means, methods, techniques, sequences, and procedures and for co- ordinating the various parts of the Work under the Contract .

GC 3.8 SUBCONTRACTORS AND SUPPLIERS 3.8.1 The Contractor shall preserve and protect the rights of the parties under the Contract with respect to work to be performed under subcontract, and shall: .1 enter into contracts or written agreements with Subcontractors and Suppliers to require them to perform their work as provided in

the Contract Documents ; .2 incorporate the terms and conditions of the Contract Documents into all contracts or written agreements with Subcontractors and Suppliers ; and .3 be as fully responsible to the Owner for acts and omissions of Subcontractors , Suppliers , and of persons directly or indirectly employed by them as for acts and omissions of persons directly employed by the Contractor .

PART 6 CHANGES IN THE WORK ... 6.1.2 The Contractor shall not perform a change in the Work without a Change Order or a Change Directive .

PART 1. SPECIFICATIONS

Summary of Work

Section 01110 1.1 WORK COVERED BY CONTRACT DOCUMENTS 1.1.1 Work under this contract covers all required and necessary work to construct a new sprinkled, single storey wood frame 40 bed supportive housing facility, total gross area approximately 2,409 m 2 . Also includes renovations to existing kitchen and dining areas and site development. Location: Vermilion, Alberta Material and Equipment

Section 01600 1.3 SUBSTITUTIONS 1.3.1 No substitutions will be performed without prior written approval of Consultant. Site Earthwork

Section 02300 3.7

SCHEDULE OF GRADING ... 3.7.2 Slope grade away from building a minimum of 50 mm in 3 metres unless indicated otherwise on drawings. ... 3.7.5.4 Within building area under slabs-on-grade: .1 Use Type 2-a or 2-c materials to underside of base coarse aggregate. Compact to 97% SPMDD. .2 Provide base coarse of Type 3-b material, 150 mm minimum compacted thickness. Compact to 99% SPMDD. Resilient Flooring

Section 09650 2.1 MATERIALS ... 2.1.8 Primers and adhesives: waterproof, of types recommended by manufacturers of each type of resilient flooring for specific material on applicable substrate, above, at, or below grade. 3.1 INSPECTION ... 3.1.2 Ensure concrete floors dry – maximum 7% moisture content. Submit test results for Consultant review prior to proceeding. 3.1.3 Installation of resilient flooring by the contractor shall imply acceptance of surfaces to be covered and any repairs to these surfaces required after shall be made by the contractor at no cost to the owner. B. Legal Principles

[121] A contractor must act according to the terms of the contract and the directions of the consultant authorized under theconstruction contract. In the absence of an express provision to the contrary, a contractor is in breach of the contract if it does not carryout the performance obligations in the contract or if it performs work which does not meet the requirements of the express terms andspecifications and the implied terms of the contract.

A contractor who undertakes to carry out the work according to specifications mustadhere strictly to all the details, and is not entitled to make substitutions or changes without the owner’s consent. If the contractor holdsitself out as qualified to do the work, then a failure to do so competently is a breach of contract. Whether work or material supplied bythe contractor is defective or not is a question of fact in each case, depending on the proper

interpretation of the specifications, and onexpert or other relevant evidence as to what is reasonable: TG Heintzman and I Goldsmith in Heintzman and Goldsmith on CanadianBuilding Contracts, 5th ed (Toronto : Carswell, 2014-) at 4-35, 5-2, 5-5, 7-29, 7-30, and cases cited therein. [122] Unless the contract or the circumstances indicate otherwise, the contract will contain an implied term that the work will be donein a good and workmanlike manner, the workmen employed on the work will possess the ordinary skill of those exercising the particulartrade, and the materials will be of good quality and reasonably fit for the purpose for which they are used: Heintzman and Goldsmith at4-50.

In G Ford Homes Ltd v Draft Masonry (York) Co (1983), (ON CA), 43 OR (2d) 401, 1 DLR (4th) 262 (CA),Cory J., as he then was, observed that a contractor undertaking to do work implicitly undertakes that it will be undertaken with care andskill or in a workmanlike manner and will be reasonably fit for the purpose for which it is required, unless the circumstances of thecontract exclude such liability. [123] The conduct of a contractor may constitute not only a breach of contract but also negligence: Heintzman and Goldsmith at 7-2.Generally speaking, there is a duty of care owed by a contractor to an owner: University of Regina v Pettick (1991), (SK CA), 90 Sask R 241, 6 CCLT (2d) 1 (CA).

What is undertaken by the contract will indicate the nature of the relationship that givesrise to the common law duty of care, but the nature and scope of the duty of care that is asserted as the foundation of the tortious liabilitydoes not depend on specific obligations or duties created by the express terms of the contract - the distinction is between what is to bedone and how it is to be done: Central Trust Co v Rafuse, (SCC), [1986] 2 SCR 147 at 204, [1986] SCJ No 52. [124] In Fraser-Reid v Droumtsekas, (SCC), [1980] 1 SCR 720 at 726, [1979] SCJ No 125, Dickson J. for themajority stated the relevant question as being: “Did the builder act as a competent and careful builder would have acted in what he did ordid not do?”, citing Batty v Metropolitan Property Realizations Ltd, [1978] 2 All ER 445 (CA) and Dutton v Bognor Regis UnitedBuilding Co Ltd, [1972] 1 All ER 462 (CA). [125] An owner may sue a building contractor alternatively or concurrently in contract and tort, and a contractor who is negligent inthe performance of a contract to build is liable in tort to any person suffering resultant injury to person or property, unless such liability islimited by the contract: Dominion Chain Co v Eastern Construction Co (1976), (ON CA), 12 OR (2d) 201, [1976] OJNo 2104 (CA), aff’d without reference to this point (SCC), [1978] 2 SCR 1346, Dabous v Zuliani (1976), (ON CA), 12 OR (2d) 230, 1 CPC 48 (CA), Central Trust Co; BG Checo International Ltd v British Columbia Hydro & PowerAuthority, (SCC), [1993] 1 SCR 12, [1993] SCJ No 1.

C. Analysis [126] There is no dispute that Binder is a large and experienced contractor. Binder undertook to construct the Project according to theterms of the Construction Contract.

In addition to the express terms of the Construction Contract, it contains an implied term that thework would be done in a good and workmanlike manner, the workmen employed on the work would possess the ordinary skill of thoseexercising the particular trade, and the materials would be of good quality and reasonably fit for the purpose for which they were used. [127] Pursuant to the Construction Contract, Binder undertook to construct the Project in accordance with the Contract Documents.The Contract Documents included the Plans and Specifications prepared by Group2. [128] Pursuant to General Condition 3.1.2, Binder was solely responsible for the construction means, methods, techniques, sequencesand procedures and for coordinating the various parts of the work. [129] Pursuant to General Condition 3.8.1, Binder was responsible to Vermilion for the acts and omissions of its subcontractors,which included Midwest. [130] Specification 02300-3.7.5.4 called for the installation of two layers of gravel below the slab on grade of the Addition.

Each ofthe layers of gravel was to be of a minimum compacted thickness of 150 mm. [131] It is now clear that only the layer immediately below the slab on grade was installed by Binder. In its Written Argument, Binderconceded that this is the case. [132] Binder, however, argues that AMEC, who was providing soil testing services during the course of construction of the Project,approved the substitution of clay soil for the second layer of gravel.

In this regard, Binder relies on a letter from AMEC to Group2 datedMay 6, 2004. [133] That letter does not approve the substitution of clay fill material for the second layer of gravel called for in Specification 02300-3.7.5.4. Rather, it simply indicates that a sample of the clay soil from the Project site was analyzed and determined to be suitable fillmaterial in accordance with the recommendations set out in the Geotechnical Report. That is, in the opinion of AMEC, the clay materialfrom the Project site was suitable for fill material in locations where clay fill was specified.

According to the Specifications, the subbaseaggregate layer was to be placed on either the in situ clay materials or imported clay material which had been approved by AMEC. [134] General Condition 6.1.2 provides that Binder shall not undertake a change in the work without a Change Order or a ChangeDirective. Again, Binder concedes in its Written Argument that no Change Order or Change Directive as defined in the ConstructionContract was issued deleting the second layer of gravel and authorizing the substitution of native clay material for the gravel.

[ 135 ] The deletion of the second layer of gravel was in breach of Binder’s obligations pursuant to Specification 02300-3.7.5.4. Binder breached the Construction Contract in this regard. [ 136 ] Specification 09650-3.1.2 provided that tests were to be conducted on the concrete slab on grade prior to installation of the RSF. The concrete was to have a maximum moisture content of 7%. [ 137 ] The required testing was never conducted by Binder or its subcontractor, Midwest.

As stated, Binder is fully responsible for the acts or omissions of Midwest. [ 138 ] Binder was in breach of Specification 09650-3.1.2 in failing to conduct the required moisture content tests on the concrete and in failing to provide the test results to Group2. [ 139 ] Specification 02300-3.7.2 provided that the slope away from the Addition was to be a minimum of 50 mm in 3 metres. This is a slope of 1.67%. [ 140 ] As previously noted, the Williams Report dated September 22, 2009, which Mr.

Facundo reviewed, stated as follows: It is concluded that proper construction practices were not established to ensure that surface grades adjacent to a building are positively sloped approximately 2% - 6% and for downspouts to carry rainwater from the roof away from the foundation for a minimum of 3.0 m. [ 141 ] Mr. Trovato in cross-examination stated that the ideal grading away from a foundation is 5%.

He stated that sometimes that was not achievable and that it was necessary to go to as low as 2%. [ 142 ] Williams reported on a site survey of the Project which determined that on the south side of three of the houses of the Addition, there were negative slopes towards the building. These were also identified as three catchment areas where water would pond against the foundations of the Addition. This is evident from site photos which are part of the Williams Report dated September 22, 2009. [ 143 ] Mr.

Trovato testified that ensuring that the site grading is in accordance with the site grading plan is a responsibility of the contractor. In order to avoid settlement adjacent to the foundations of a building, the contractor would be responsible for compacting the soil around the perimeter of the building and should test to ensure that the compaction is to such a level as to avoid settlement in the future. [ 144 ] The slopes as required by Specification 02300-3.7.2 were not achieved by Binder, given the finding of negative slopes towards the foundation of the Addition.

Binder breached the Construction Contract in relation to Specification 02300-3.7.2. [ 145 ] There was also a breach of the Construction Contract in relation to the use of Chembond as the adhesive for the Mannington products. Specification 09650-2.1.8 provided that the adhesive to be used was to be as recommended by the manufacturer of the RSF. In this case, the recommended product was either V82 or V85 adhesive depending on the nature of the flooring substrate. Mr. Dubyk testified that in fact Chembond was used with the Mannington RSF.

This is confirmed by the tests conducted by Mapei Inc. [ 146 ] Specification 01600-1.3.1 provides that no substitutions will be performed without prior written approval of Group2. There is no documentary evidence to suggest that Binder or its sub-contractor ever obtained approval for the substitution of Chembond. Further, Mr. Weber testified that no one approached Group2 to obtain such approval and that such approval would not have been granted as manufacturers are clear that the adhesive is part of the assembly in relation to the flooring product, and would have been tested by the manufacturer.

Substituting a different product that had not been tested by the manufacturer would have implications on both the durability of the floor and potentially the warranty of the floor. [ 147 ] It appears that the substitution of Chembond was initiated by Midwest. There is no evidence to suggest that any employees of Binder were aware of such substitution.

However, pursuant to General Condition 3.1.8.3, Binder is responsible for the acts and omissions of Midwest. [ 148 ] Therefore, the use of Chembond in conjunction with the Mannington RSF constituted a breach by Binder of the Construction Contract. [ 149 ] I have found under heading VII. Cause of the Defect, above, that the difficulties with the RSF were due to excess moisture in the adhesive used. That is, I have not found that the cause of the Defect was related to the type of adhesive used with the RSF.

Therefore, while Binder breached the Construction Contract with respect to the substitution of Chembond, I do not find that any damages flow from this breach. D.

Conclusion [ 150 ] Binder breached the Construction Contract by failing to install the second layer of gravel below the slab on grade, failing to carry out moisture testing of the concrete slab on grade prior to installation of the RSF, failing to achieve the positive slopes on the final site grading, and substituting Chembond as the adhesive used with the Mannington RSF. [ 151 ] The failures to install the second layer of gravel, carry out moisture testing of the concrete slab prior to installation of the RSF and achieve positive slopes on the final site grading all contributed to the Defect. [ 152 ] I further find that Binder was also negligent in these respects, as it did not exercise reasonable care and skill in ensuring that these aspects of the construction were accomplished, as would be expected of an experienced contractor.

X. Breach of the Architectural Contract or Negligence by

Group2 A. Terms of the Architectural Contract [ 153 ] The Architectural Contract was entered into between Vermilion and Group2 as architect for the Project. The following terms of the Architectural Contract are particularly relevant to the claim against Group2: Professional Services A10 In addition to the Architect ’s responsibilities as described in the General Conditions, including GC1, the Architect will provide services as described in the following Schedule(

s) affixed to this Contract :

Schedule of Architect’s Services [The

Schedule of Architect’s Services sets out all of the services to be provided by Group2 on the Project.] ... Consultants The Architect shall coordinate the services of the following consultants: A12 Consultants Engaged by the Architect : ...Structural Engineering – Group2 Architecture Engineering Interior Design A13 Consultants engaged by the Client : ...Geotechnical ...Testing Agency During Construction

DEFINITIONS General Review/Field Review General Review/Field Review means review during visits to the Place of Work (and where applicable, at locations where building components are fabricated for use at the Project Site) at intervals appropriate to the stage of the construction that the Architect in his or her professional discretion, considers necessary to become familiar with the progress and quality of the Work and to determine that the Work is in general conformity with the construction documents.

General Conditions GC1.3 The Architect shall not: .1 be required to make exhaustive or continuous on-site reviews; .2 be responsible for the acts or omissions of the Contractor , Subcontractors , suppliers or any other; .3 be responsible for persons performing any of the Work , or for failure of any of them to carry out the Work in accordance with the Contract Documents; and .4 have control, charge or supervision of, or responsibility for construction means, methods, techniques, sequences, or procedures ... in connection with the Work .

Schedule of Architect ’s Services 5 CONSTRUCTION PHASE – CONTRACT ADMINISTRATION During the construction phase – contract administration, the Architect shall: General Review/Field Review Services 5.5 have access to the work at all times whenever it is in preparation or progress; ... 5.7 carry out and coordinate as applicable, the General Review/Field Review of the Work ; 5.8 examine, evaluate and report to the Client upon representative samples of the Work ;

5.9 keep the Client informed of the progress and quality of the Work, and report to the Client defects and deficiencies in the Workobserved during the course of the site reviews; ... 5.12 render written findings within a reasonable time, on all claims, disputes and other matters in question between the Client and theContractor relating to the execution or performance of the Work... 5.14 have the authority to reject work which does not conform to the Contract Documents...and to require special inspection or testingof work... ... 5.16 prepare change orders and change directives for the Client’s approval and signature in accordance with the Contract Documents...

B. Legal Principles [154] Unless otherwise expressly stated in the contract for professional services, the architect owes a duty to exercise the skill, careand diligence which may reasonably be expected of a person of ordinary competence, measured by the professional standards prevailingat the time, and not by what may be known or seen only with the benefit of hindsight.

Architects do not guarantee that their work will besuccessful; if they have exercised reasonable judgment, competence and diligence in doing the work, the fact that the work provesunsatisfactory will not render them liable to the client for breach of contract or negligence: BM McLachlin et al, in the Canadian Law ofArchitecture and Engineering, 2nd ed (Toronto Butterworths, 1994) at 101 to 102 and cases cited therein. [155] Further, unless the contract provides otherwise, the architect must supervise the work and inspect it sufficiently often to ensurethat the project is being constructed in conformity with the plans and specifications and the contractor's contractual obligations.

Thearchitect does not guarantee that every departure from the design will be noted and corrected, but only those that reasonable supervisionwill disclose. The more extreme the consequences and the greater the risk, the higher the duty of care. Architects are not obliged tosupervise each detail, but should inspect important aspects of the work before they are hidden from view.

If important work has beencovered over before inspection, they should direct that it be revealed so that they can inspect it, where this can reasonably be done.Depending on the circumstances, the duty to inspect is not confined to visual inspection, but extends to making such enquiries as arenecessary to ascertain that the work has been satisfactorily performed: Canadian Law of Architecture and Engineering at 126-29 andcases cited, Roco Developments Ltd v Permasteel Engineering Ltd (1983), (BC SC), 46 BCLR 103, [1983] BCJ No1851 (SC), Kon Construction Ltd v Terranova Developments Ltd, 2015 ABCA 249, 43 CLR (4th) 17 (CA). [156] A contract between the owner and a professional architect contains an implied term that the architect possesses a reasonablelevel of professional skill and that the architect will use reasonable care and diligence in carrying out its work.

Accordingly, if thearchitect has undertaken to supervise the building project, it has the implied duty to reasonably ensure that the building is properlyconstructed by carrying out inspections.

Because of their close relationship, the architect will likely owe a duty of care to the owner intort in respect of the functions that the architect assumes for the owner, including to carefully supervise the construction and ensure thatthe specifications are complied with: Heintzman and Goldsmith at 13-2, 13-3, 13-5 and cases cited therein. [157] As is the case with a contractor, an owner may sue an architect alternatively or concurrently in contract and tort, and an architectwho is negligent in the performance of a contract is liable in tort to any person suffering resultant injury to person or property, unlesssuch liability is limited by the contract: Dominion Chain Co; Dabous; Central Trust Co.

In particular, an architect may be liableconcurrently in contract and tort for failure to properly supervise a building contract: Twin Cities Mechanical & Electrical Inc vProgress Homes Inc, 2005 NLTD 134, [2005] NJ No 254. The architect owes a duty to the owner to ensure the building is constructedin compliance with the plans and specifications: Foyer Valade Inc v Red River Construction Company (1997), (MBKB), 120 Man R (2d) 81, 34 CLR (2d) 230 (QB). C. Analysis [158] To a certain extent, I have addressed the matter of Group2’s liability with respect to the design for the Project under theheading VIII.

Source of the Water, above. I found that an adequate design of the Project did not to require a weeping tile system. I alsofound that the Assembly as designed by Group2 addressed the Building Code requirement to prevent moisture migration through a slabon grade. [159] Further, I rejected Mr.

Watkin’s opinion that Group2 was required to include in its design a vapour barrier and a weeping tilewater collection system, and that it failed to include a gravel drainage mat. [160] In making the above noted findings I found, implicitly, that with respect to these design matters, Group2 met its duty to exercisethe skill, care and diligence which may be reasonably expected of an architect of ordinary competence measured by the standards in 2003being the time when the professional services were rendered. [161] However, I do find that Group2 did not design the Project with adequate site grading.

I accepted the expert evidence to theeffect that the slope adjacent to a building should be 2% to 5% or 6%. As Specification 02300-3.7.2 provided for a slope of 1.67%, thedesign of Group2 failed to meet even the minimum slope as attested to by both Mr. Facundo and Mr. Trovato. [162] Clearly, water management on the site of the Project was a significant issue. It was decided that Group2 would forego thevapour barrier for reasons relating to the desire to achieve as flat a slab on grade as possible, so as to accommodate the design wishes ofVermilion and the occupants of the Project.

This made it all the more imperative that other protective measures be adequate. There was

no evidence that a slope of 2% or more would have posed undue issues for Vermilion or its occupants. Therefore, I find that Group2 did not exercise the skill, care and diligence which would be reasonably expected of an architect of ordinary competence with respect to the slope specification. [ 163 ] Consequently, I find that Group2 breached its duty of care with respect to the site grading design for the Project. [ 164 ] The Architectural Contract also provided that Group2 would provide inspection services with respect to Binder’s work. Pursuant to Clause 5 of the

Schedule of Architect’s Services, Group2 was obliged to provide General Review/Field Review Services. Such services were defined in the Architectural Contract as reviews during visits to the site of the Project at appropriate intervals “to become familiar with the progress and quality of the Work and to determine that the Work is in general conformity with the construction documents”.

Further, General Condition 1.3.4 of the Architectural Contract makes it clear that Group2 did not have supervision of, or responsibility for, the “construction means, methods, techniques, sequences or procedures” in connection with the Work. [ 165 ] The Construction Contract in General Conditions 2.2.2 and 2.2.5 essentially repeated the obligations of Group2 in relation to review of the work undertaken by Binder. [ 166 ] I have found under heading IX.

Breach of the Construction Contract or Negligence by Binder, above, that Binder committed three breaches of contract which related directly to the cause of the Defect. These breaches are: 1. the failure to install a second layer of gravel in the Assembly; 2. the failure to carry out testing of the slab on grade to determine the moisture content of same prior to the installation of the RSF; and 3. the failure to carry out the final site grading to achieve the slopes away from the Addition as specified. [ 167 ] As I stated previously, I preferred the evidence of Mr. Trovato in all respects to that of Mr. Watkins.

In cross-examination, Mr. Trovato confirmed that it is appropriate or prudent that after the final grading is done, someone check it in order to verify that the site grading plan and its requirements have been met.

Responsibility for that would lie, ultimately, with the architect who designed the grading. [ 168 ] Therefore, while Binder was under an obligation to achieve the specified grading, responsibility to inspect and verify the grading would also lie, ultimately, with Group2. [ 169 ] On the evidence of its own expert, Group2 was in breach of its obligations to provide General Review/Field Review in relation to the site grading. [ 170 ] The Assembly and the grading away from the Addition were integral parts of the system to manage the surface water on the site.

Despite periodic site visits by representatives of Group2, the absence of the second gravel layer and the slopes of the final grading were only identified during the course of this litigation. [ 171 ] Further, moisture testing of the slab on grade was required to ensure that the moisture content of the concrete would not have an adverse impact on the installation of the RSF. The test results were to be submitted to Group2 for review prior to the installation of the flooring. Such testing was not carried out by Binder or the sub-contractors involved in the installation of the RSF.

There was, therefore, no opportunity for anyone to determine if the moisture content of the concrete would have an adverse impact on the RSF. The fact that problems were encountered almost immediately upon installation of the RSF in the Addition would suggest a presence of moisture in the concrete at that time. While Group2 might argue that it had no opportunity to d

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