Beal v Valette Holdings Ltd, 2017 ABQB 437

Court of Queen’s Bench of Alberta Citation: Beal v Valette Holdings Ltd, 2017 ABQB 437 Date: 20170713 Docket: 1103 19486 Registry: Edmonton Between: David Beal, Michelle Beal, Luke Beal, Infant, by his Litigation Representative Michelle Beal and Reid Beal, Infant, by his Litigation Representative Michelle Beal and Her Majesty the Queen in Right of Alberta as represented by the Minister of Health and Wellness Plaintiffs - and - Valette Holdings Ltd, R&D Plumbing & Heating Ltd, Alberta Permit Pro Inc, Municipality of Vermilion-River and Superior Safety Codes Inc Defendants - and - Superior Safety Codes Inc, R&D Plumbing & Heating Ltd and Valette Holdings Ltd Third Party _______________________________________________________ Reasons for Decision of S.L.

Schulz , Master, Court of Queen's Bench of Alberta _______________________________________________________ [ 1 ] This is an application for

summary judgment and

summary dismissal brought by the Defendants (excluding Alberta Permit Pro Inc) and the Third Parties. The Statement of Claim alleges personal injuries suffered by the exposure to carbon monoxide as a result of, among other things, the negligent installation of the furnace, gas and plumbing inspections that were not done or were done negligently, and the failure of the Municipality to ensure the proper inspection of the residence by Alberta Permit Pro Inc and Superior Safety Codes Inc. [ 2 ] For the reasons that follow, I deny the

summary judgment and

summary dismissal applications.

Background [ 3 ] The Statement of Claim alleges Valette Holdings Ltd (“Valette”) acted as the developer/general contractor of a residence (the “Beal Family Residence”) purchased by the Plaintiffs David and Michelle Beal as a home for themselves and the infant Plaintiffs (collectively the “Beal Family”). [ 4 ] A building permit was granted to Valette by the Municipality of Vermillion-River (the “Municipality”). The building permit required, among other things, gas and plumbing inspections and a final building inspection.

Valette retained R&D Plumbing Inc to install the furnace in the Beal Family Residence. [ 5 ] The Municipality retained Alberta Permit Pro Inc to conduct the building permit inspections, but terminated the contract with Alberta Permit Pro for poor performance. Despite the termination for poor performance, the Municipality permitted Alberta Permit Pro to conduct further inspections on open permits.

The Municipality then retained Superior Safety Codes Ltd. (“Superior”) to conduct safety inspections. [ 6 ] The Beal Family took possession in June of 2007. [ 7 ] In December, 2009, the Beal Family discovered that a vent cap was missing on the chimney flue to the furnace.

The Beal Family alleges that it suffered serious personal injuries as a result of carbon monoxide exposure from the negligent installation of a furnace in their home, specifically a missing vent cap on the chimney flue to the furnace. [ 8 ] At issue is whether the vent cap was installed on the furnace, whether the gas and plumbing inspections were actually done and whether there was bad faith exhibited by the Applicants. The Applicants rely on

section 12 of the Safety Codes Act , RSA 200, c S-1 (“ Safety Codes Act ”) to claim indemnification for acts done in good faith. Additionally, the Municipality relies on

section 530 of the Municipal Government Act , RSA 2000, c M-26 (“ Municipal Government Act ”) for the proposition that it is not liable for failing to inspect.

Summary Judgment and

Summary Dismissal [ 9 ] Counsel for the Plaintiffs argues that the Beal Family deserves its day in Court at a trial. This is not the test on a

summary judgment or

summary dismissal application. [ 10 ] Since Hryniak v Mauldin , 2014 SCC 7 (“ Hryniak ”), the overriding test to be applied on a

summary judgment application is whether a determination can be made by the Court that is fair and just to both parties based on the existing record ( see Hryniak , para 49 ). A key aspect is whether the circumstances require oral evidence in order to properly resolve the case, or conversely, whether the claim or defence is so compelling that the likelihood it will succeed is very high. The principle of proportionality urges the Court to give a remedy where it can. [ 11 ] The Alberta Courts have considered Hryniak on numerous occasions, developing the case law around specific requirements.

From a practical perspective, one of the most useful approaches is the roadmap developed by Master Schlosser in 1214777 Alberta Ltd v 480955 Alberta Ltd , 2014 ABQB 301 at paragraph 17 , and adopted by Justice Graesser in Stangenberg v Bellamy Software , 2016 ABQB 160 at paragraph 61 et seq . These two cases propose 6 steps to be considered by the Court on a

summary judgment application: 1. The Court is to presume that the best evidence from both sides is before the Court. 2. Can a negative inference be drawn from the absence of evidence on certain points? 3. Is all of the evidence admissible? 4. Is there a conflict in the evidence [on a material fact] and, if so, whether, (

a) the conflict has been resolved on cross examination, or, (b), whether the evidence giving rise to the conflict is purely self-serving and is otherwise unsupported. 5. The next step is to examine the evidence. 6. Has the [Applicant] proven all elements of the cause of action and the [Respondent] either has no defence or is missing critical elements of proof necessary to maintain that defence?

Application of the Law to the Facts [ 12 ] The preliminary issue raised in this litigation is whether the vent cap was installed on the furnace and whether the gas and plumbing inspections and the final inspection were conducted. [ 13 ] Gas and Plumbing Inspection Reports were to be kept for three years according to the Quality Management Plan for the Municipality, however the inspection reports are missing and cannot be produced. If the inspection reports did exist at one time, they are now missing without explanation.

The Applicants themselves do not have personal knowledge as to whether the inspections were actually done. They have not introduced evidence from past or present employees who have personal knowledge that the inspections occurred, nor have they provided an explanation as to why that evidence is not available. Instead, the Applicants rely on the reference to the inspections in the Permit Services Report and ask the Court to infer from those reports that the inspections were done.

The Applicants further ask the Court to infer that the vent cap must have been in place at the time of the inspections, otherwise it would have been obvious and the furnace would not have passed inspection. The Applicants argue that the documents prepared in the ordinary course of

business are preferable to the self-serving evidence of Michelle Beal. [ 14 ] In direct contradiction to this evidence, the Beal Family denies that the inspections took place. Michelle Beal deposes that arrangements were not made to inspect the home on July18, 2007, the date the Applicants allege an inspection was conducted by Superior, or indeed on any date after the Beal Family took possession of the home on June 13, 2007. She swears she had never heard of Superior before this lawsuit began.

Michelle Beal points to stickers on the electrical panels in neighboring homes with dates and signatures from Superior relating to various permits and inspections, and deposes to the absence of those stickers, signatures and dates in the Beal Family Residence. No occupancy certificate was issued before the Beal Family took possession. The Beal Family asks the Court to conclude that the inspections did not occur. [ 15 ] The Beal Family further argues that the business records relied on by the Applicants contain unexplained discrepancies and are therefore unreliable.

They point with suspicion to the fact that the actual inspection reports were not maintained for the period of time required by the Quality Management Plan.

They question why former employees who may have personal evidence of what happened have not been brought forward by the Applicants in violation of the “best foot forward” principle. [ 16 ] The Beal Family urges that the combination of these concerns makes the Permit Services Report unreliable, demonstrate negligence on the part of the Applicants, and at the very least, constitute a genuine issue for trial. [ 17 ] The Court must choose between these two conflicting versions of events to determine the issue of whether the gas and plumbing inspections and the final inspection were conducted and whether the Applicants were negligent.

The only way to choose between these two versions is to hear and evaluate the evidence at trial, particularly from Michelle Beal and possibly from any former employees of the Applicants. [ 18 ] But this is not the end of the issue. The principle for conflicting evidence on

summary judgment applications requires the conflict in the evidence to be on a material point which presents a genuine issue to be tried. The Applicants argue that it does not matter whether the inspections were done negligently, completed or even done at all. They rely on Condominium Corp No 9813678 v Statesman Corp , 2009 ABQB 493 , at para 19-20 to argue that they are immune from liability and mere negligence is not sufficient to upset the immunity granted by

section 12 of the Safety Codes Act : 12(1) No action lies against...accredited municipalities...accredited agencies...for anything done or not done by any of them in good faith while exercising their powers and performing their duties under this Act. (2) ...[A]n accredited municipality...and an accredited agency acting in good faith under this Act [is] not liable for any damage caused by a decision related to the system of inspections, examinations, evaluations and investigations, including but not limited to a decision relating to their frequency and the manner in which they are carried out . (3) ...[A]n accredited municipality...that engage[s] the services of an accredited agency [is] not liable for any negligence or nuisance of the accredited agency that causes an injury, loss or damage to any person or property.

(4) Subject to this section, nothing done pursuant to this Act affects the liability of any person for injury, loss or damage caused by any thing, process or activity to which this Act applies. S 12 of the Safety Codes Act; Emphasis added [ 19 ] The Municipality further relies on

section 530 of the Municipal Government Act to claim immunity for inspections, conducted or not conducted: 530(1) A municipality is not liable for damage caused by (

a) a system of inspection, or the manner in which inspections are to be performed, or the frequency, infrequency or absence of inspections , and (

b) a system of maintenance, or the manner in which the maintenance is to be performed, or the frequency, infrequency or absence of maintenance.

S 530 of the Municipal Government Act , Emphasis Added [ 20 ] The Beal Family relies on the very thorough review of the case law in the decision of Justice Ross in Condominium Corporation 0125331 v W De Silva Properties Inc , 2010 ABQB 181 at paras 17 to 22 for the proposition that good faith can be expressed as the absence of bad faith, can include negligence, and must be determined within the factual and legislative context: [17] Good faith can be expressed as an absence of bad faith: Vancouver Board of Variance & Parking v Vancouver (City), 2006 BCSC 1260 at para. 35 , affirmed 2008 BCCA 197 at paras. 79-82 , 293 D.L.R. (4 th ) 37, leave denied [2008] S.C.C.A.

No. 321...The interrelationship of good and bad faith is illustrated by Lebel J. in Finney v. Barreau du Quebec, 2004 SCC 36 at para 39 , [2004] 2 S.C.R. 17: “...a fundamental breakdown of the orderly exercise of authority, to the point that absence of good faith can be deduced and bad faith presumed .” [Emphasis added.] [18] In Entreprises Sibeca Inc. v.

Frelighsburg (Municipality), 2004 SCC 61 , [2004 3 S.C.R. 304 Deschamps J. observed at para 26 that bad faith does not require that one party intentionally seek to harm another: 26... the concept of bad faith can encompass not only acts committed deliberately with intent to harm, which corresponds to the classical concept of bad faith, but also acts that are so markedly inconsistent with the relevant legislative context that a court cannot reasonably conclude that they were performed in good faith.

What appears to be an extension of bad faith is, in a way, no more than the admission in evidence of facts that amount to circumstantial evidence of bad faith where a victim is unable to present direct evidence of it. [Emphasis

added.] [19] Again, bad faith and good faith are alternatives. Context determines bad faith’s meaning, scope and character. Justice Deschamps noted at para. 25 that “[t]he concept of bad faith is flexible, and its content will vary from one area of the law to another.” In Finney v.

Barreau du Quebec , Lebel, J. concluded at para. 42 that the Barreau du Quebec’s negligent failure to respond to complaints amounted to bad faith: “[t]he very serious carelessness it displayed amounts to bad faith, and it is liable for the results.” The court also spoke of “gross carelessness and serious negligence” (para.45). [20] The conclusion in Finney v. Barreau du Quebec that bad faith can be proven where a party acts in a manner that is inconsistent with its obligations aligns with the comments of the Alberta Court of Appeal in Trosin v Sikora , [2005 ABCA 410] at para. 14.

In that case the court indicated negligent conduct alone can provide evidence of an absence of good faith and correspondingly the existence of bad faith... ... [22] Action or inaction that would demonstrate bad faith is tested in relation to a party’s obligations, legislative or otherwise: Finney v. Barreau du Quebec, Entreprises Sibeca Inc. v Frelighsburg (Municipality) . In Trosin v Sikora , at para. 14, the Court of Appeal concluded that in certain instances, negligence can prove the existence of bad faith.

That negligence may need to be unusual and obvious, but the rule is nevertheless clear, negligence alone can be a foundation for a finder of fact to conclude a party has not acted in good faith. The court in Tosin v Sikora does not state that requirement is for “gross negligence” or “criminal negligence”.

Further, the Supreme Court of Canada has indicated that bad faith is a flexible concept, and logically so should be the required evidence that demonstrates bad faith. [Emphasis contained in the original] [ 21 ] I prefer the analysis set out by Justice Ross, relying on the Supreme Court of Canada, to the authorities raised by the Applicants. It is clear that good faith is to be determined contextually and can be founded in negligence alone.

Most importantly, good faith must be determined in the context of the legislation and the factual situation. [ 22 ] It is in the determination of the factual context that the conflicting evidence becomes material, and it is in this context that the conflict in the evidence prevents the Court from making a determination that is fair and just to all parties on the affidavit evidence before it. There must be a thorough airing of the factual matrix at trial to resolve this matter. Additionally, the issue of good faith should be determined before the Court considers whether

section 530 of the Municipal Government Act immunizes the Municipality given that a lack of evidence concerning bad faith was a factor in the consideration of

section 530 by Justice Lee in McNulty v Edmonton (City) , 2011 ABQB 297 ,

Section B. [ 23 ] The result is the dismissal of the

summary judgment applications. Conclusion [ 24 ] The applications for

summary judgment are dismissed. [ 25 ] The Plaintiffs are entitled to taxable costs to be assessed. Dated at the City of Edmonton, Alberta this 13 th day of July, 2017. S.L. Schulz M.C.Q.B.A. Appearances: Angela Saccomani/Elizabeth Tatchyn Biamonte Cairo & Shortreed LLP for the Plaintiffs Anatoliy Vlasov

Brownlee LLP for the Defendant, Municipality of Vermillion River Connor Glynn/Michelle Andresen Parlee McLaws LLP for the Defendant/Third Party, Valette Holdings Ltd Beverly McAmmond Dean Duckett Carlson LLP for the Defendant/Third Party, R&D Plumbing and Heating Ltd David Sommerfeldt Dentons for the Defendant/Third Party, Superior Safety Codes Inc