Gouthro v Kubicki, 2022 ABKB 690

Court of King’s Bench of Alberta Citation: Gouthro v Kubicki, 2022 ABKB 690 Date: 20221019 Docket: 1503 02998 Registry: Edmonton Between: Geoff Gouthro, Tara Gouthro, Azhia Davis, a Minor Plaintiff by Her Litigation Representative, Geoff Gouthro, and Meadow Gouthro, a Minor Plaintiff by Her Litigation Representative, Geoff Gouthro Plaintiffs/Respondents - and - Derek Kubicki, Superior Safety Codes Inc., and John Does I-V, North Point Plumbing and Heating Ltd., Bill and Bob's Holdings Ltd., and Brookeside Exteriors Inc.

Defendants/Appellants - and - Summit Electrical and Maintenance Ltd., North Point Plumbing and Hearing Ltd., Bill and Bob's Holdings Ltd., Freetek Construction Ltd., Top To Bottom Construction Ltd., and Brookeside Exteriors Inc. Third Party _______________________________________________________ Judgment

of the Honourable Justice J.S. Little _______________________________________________________ I. Introduction [ 1 ] The Defendant Bill and Bob’s Holdings Ltd. (B and

B) appeals two decisions of then Master (now Applications Judge) Summers. In the first, for which written reasons were given January 16, 2020 ( 2020 ABQB 46 ), he dismissed B and B’s application to amend its Statement of Defence to plead the Limitations Act. In the second, for which written reasons were given March 30, 2020 ( 2020 ABQB 205 ), he dismissed B and B’s application for

summary dismissal of the action and a third party claim against it. Both applications were made together but heard separately. The

summary dismissal application was on the grounds of both a limitation argument and a merits argument, so after dealing with the limitations argument the Applications Judge needed to deal only with the merits. [ 2 ] The lawsuit is by the owner of a newly constructed house which he purchased from the builder and defendant Kubicki. B and B was a foundations subcontractor. The allegation is that shortly after taking possession, the owner noticed a sewage smell emanating from the crawlspace, the surface of which consisted of sand with plastic on top.

Eventually, moisture from that crawlspace caused mould, forcing the owners to leave the house which they subsequently lost to foreclosure. [ 3 ] The facts found by the Applications Judge are succinctly stated in paragraph 4 of ABQB 46 and paragraph 3 of 2020 ABQB 205 , reproduced below: • The defendant Derek Kubicki (“Kubicki”) retained B & B to carry out foundation work and other construction with respect to a crawlspace for residential property owned by Kubicki in the Town of Wabasca, Alberta. • B & B agreed to supply the material and labour in accordance with blueprints and foundation plans.

The blueprints defined the parameters that B & B was required to comply with, including the requirement to use gravel fill in the crawlspace, to install a two-inch concrete floor and floor drain and the installation of a 6 mm polyethylene water barrier over the fill of the crawlspace. • Pursuant to instructions from Kubicki, B & B did not pour a concrete floor in the basement, install a floor drain, install a polyethylene sheet and instead of placing gravel between the foundation footings, used sand instead.

There is some question as to who initiated these changes: B & B asserts that Kubicki initiated them; the plaintiffs assert that B & B proposed these changes to Kubicki in order to come within the contract price B & B quoted to Kubicki. • The work performed by B & B was inspected by Superior Safety Codes Inc. and no deficiencies were identified. • B & B issued an invoice to Kubicki for the work it performed and the invoice was paid by Kubicki. • The plaintiff Geoff Gouthro (“Gouthro”) purchased the residence from Kubicki in April 2011.

The plaintiffs other than Gouthro lived in the residence with him. • The plaintiffs experienced health problems soon after moving into the residence. • On or about March 2, 2013, the plaintiff Tara Gouthro noticed the smell of sewage emanating from the crawlspace of the residence. Shortly thereafter Gouthro entered the crawlspace at which time he observed water and sewage in the crawlspace. • Within approximately one month Gouthro called somebody to check the plumbing and it was discovered that a pipe had pulled apart. • Gouthro made an insurance claim but coverage was denied by the insurer.

Gouthro was told that the damage was caused by “contractor failure”. • At some point after discovering water and sewage in the crawlspace of the residence, but before any action was initiated, Gouthro contacted Kubicki. Kubicki told Gouthro that he would have to “sue people” and essentially said “get lost”. • On or about August 21, 2013 the plaintiffs retained the services of Superior Safety Codes Inc. to inspect the residence and provide a report regarding the damage.

That inspection identified several defects in the construction of the residence. • In October 2013, Gouthro obtained a quote to “see what it was going to take to fix the house”. • As the plaintiffs considered the residence uninhabitable, the plaintiffs re-located to Shelburne, Nova Scotia. • Within approximately one year of being made aware of water and sewage in the crawlspace of the residence, Gouthro ceased owning the residence. [ 4 ] On the basis of those facts, the Applications Judge determined that: 1.

As to the limitations argument, the claim added against B and B some time after commencement of the action related to the conduct, transaction, or events described in the original statement of claim for the purposes of section 6(5) of the Limitations Act, and B and B did not meet its burden of proving that it did not have knowledge of the claim within the three year (two years plus one year for

service) period prescribed by the Limitations Act (2020 ABQB 46 at paras. 48 and 65) 2. As to

summary dismissal on the merits, B and B owed a duty to the Plaintiffs, and B and B had not satisfied its burden to prove onthe evidentiary record before him that its work did not create or contribute to the damage suffered by the Plaintiffs (2020 ABQB 205 atparas. 17 and 18). [5] B and B have, with the consent of the respondents, but subject to submissions respecting costs, introduced additionalevidence not before the Applications Judge. That evidence is referred to as Adolf’s Affidavit. Ms.

Adolf is a professional engineer whowas retained by B and B to review and prepare a report on the work done by B and B and to review a report (Ladner Report) prepared byMs. Ladner, an expert retained by the Plaintiffs. II. Standard of Review [6] Appeals from Applications Judges are hearings de novo, and no deference is owed to their decision: …For over a hundred years, Alberta courts have characterized any deference to the decisions of provincially-appointed masters asfettering the discretionary jurisdiction of federally-appointed s 96 judges.

As a result, the decision of a master in Alberta has always beensubject to review by a s 96 judge, who has always heard the appeal on a de novo basis. Agrium v Orbis Engineering Field Services, 2022 ABCA 266 at para 30. [7] The standard of review is correctness: Agrium at para 15. III. January 16, 2020 Decision – Limitations [8] The Applications Judge based his decision on an

interpretation of sections 3 and 6 of the Limitations Act. [9] Respecting

section 3, which deals with when a claim “warrants bringing a proceeding”, he applied to the facts thesubjective/objective factors outlined by Clackson, J. in Owners Condominium Plan 9421549 v Main Street Developments Ltd., (AB KB), 2004 ABQB 962, which was, in fact, a case relied upon by B and B. The Applications Judge (2020 ABQB 46at para 42) simply drew a different conclusion than did B and B on applying those factors. That is not an error of law. I adopt hisreasoning and conclusions. [10]

Section 6 deals first with whether a claim brought after what would otherwise be an expired limitations period maynevertheless be made by reason that the claim is “related to the conduct, transaction or events described in the original pleading”. TheApplications Judge correctly found that the added claim did so relate: “In fact, the added claim against B and B is essentially identical tothe original claim made against the John Doe defendants” (2020 ABQB 46 at para 48). That is not an error of law. I adopt his reasoningand conclusion. [11]

Section 6 deals secondly with whether B and B had sufficient knowledge of the added claim within the extended limitationperiod such that it was not prejudiced in maintaining a defence on the merits. Again, the Applications Judge, based on the fact that bythen B and B had already been third partied by the defendant Kubicki, held that it was not so prejudiced. He relied upon then JusticeSchutz’s decision in Poff v Great Northern Data Supplies (AB) Ltd., 2015 ABQB 173 that it is the substance of the claim and not theprocedure by which it is formalized that is determinative of such knowledge.

That is not an error of law. I adopt his reasoning andconclusion. [12] Further, I accept the respondent’s argument that raising the issue at this appeal amounts to a collateral attack on the August22, 2016 Order of then Master Schlosser. At the time, B and B was a third party through Kubicki, the builder, and the Schlosser Orderpermitted the Plaintiffs/Respondents to amend their statement of claim to add B and B in the stead of the John Doe placeholders. B andB was served with notice of that application but did not attend or make submissions.

B and B cannot now be heard to raise a limitationsargument that it could have made at that time before that Applications Judge. IV.

Summary Dismissal [13] Counsel for B and B before me and before the Applications Judge relied upon its

summary of the test for

summary judgmentestablished by our Court of Appeal in Weir Jones, 2019 ABCA 49:

a) Summary determination is an appropriate procedure when the record and the issue allow the judge to make the necessary findingsof fact, allow the judge to apply the law to the facts, and

summary disposition is a proportionate, more expeditious and less expensivemeans to achieve a just result.

b) To be fair, a disposition does not need to be obvious, or highly likely, or beyond doubt.

c) Whether there is a “genuine issue requiring a trial” can be determined by asking if there is a realistic prospect that a trial will resultin a better record than that before the court during the

summary disposition. d) “Fairness is a two-way street”; any perceived right of a plaintiff to have his or her matter decided at a trial is matched with an equalright of the defendant not to be subjected to the cost and delay of having a trial on a meritless claim. (2020 ABQB 205 at para 5)

[ 14 ] In my view, the application of B and B for

summary dismissal fails at the first step because neither I nor the Applications Judge can make the necessary findings of fact from the record. [ 15 ] As a matter of law, the issue as to whether B and B owed a duty of care to an ultimate purchaser, despite there being no privity of contract, is really not contentious. The Applications Judge relied upon the decision in Vargo v Canmore (Town), 2011 ABQB 649 which in turn relies on the Supreme Court of Canada decision in Winnipeg Condominium Corp.

No. 36 v Bird Construction Co ., 1 SCR 85 for the proposition that a contractor, or anyone else responsible for design and construction, owes a duty of care to subsequent occupants beyond the contractual obligations owed to the builder. [ 16 ] In the case at hand, though, there is a factual dispute about who made the decision to disregard the original blueprints which called for gravel and concrete and to replace those with sand. It may have been Kubicki, or it may have been B and B.

The record does not allow me to make that finding of fact. [ 17 ] But what B and B really hangs its hat on is that the facts are clear from the experts’ reports that it was not negligent in its construction – sand was as good as gravel and concrete.

Besides being counter-intuitive, the record does not allow me to make that necessary finding of fact. [ 18 ] B and B also argues that the existence of an invoice from B and B to Kubicki that refers to the work it did, not the work required by the blueprints, somehow satisfies its obligations to subsequent owners. [ 19 ] The Ladner Report concludes that the original blueprints met Code requirements for crawl spaces but that the crawl space was not constructed to those requirements and that construction deficiencies, including the substitution of sand for gravel and the failure to pour a concrete skim or use other ballast to hold down a plastic barrier, likely contributed to the moisture and subsequent mould issues (page 7). [ 20 ] The Adolf’s Affidavit, which was not before the Applications Judge, refers to the scope of work performed by B and B as being reflected in that disputed invoice and states that it “appears to be” in conformance with the blueprints except for the substitution of sand for gravel because gravel was not readily available in the Wabasca area and that it “appears to be” in accordance with building codes (page 2).

But a conclusion that B and B’s scope of work did not include the installation of a plastic sheet and ballast/concrete because its invoice did not refer to those is based on circular reasoning. [ 21 ] Despite ample opportunity to do so, B and B has not questioned the author of the Ladner Report, and its arguments before me that that report lacks reliability have no foundation. [ 22 ] Serious issues for trial include determining: 1. The blueprints off of which the house was to be constructed. 2.

What the scope of work was for B and B as foundation subcontractor, ie. not just what it did but what a reasonable foundation subcontractor would have done. 3.

Whether variations from the blueprints, if there were variations, were within variations that might have been made by a reasonable foundation subcontractor and, if not, were they the cause or at least a contributing cause to the moisture and mould problems on which point the experts disagree. [ 23 ] I cannot resolve those issues from the contradictory evidence presented at either the application before the Applications Judge or at the hearing of this appeal. V. Conclusion [ 24 ] For those reasons, the appeal is dismissed. [ 25 ] The Plaintiff is entitled to its costs.

Counsel for the respondent in his brief states that he will seek enhanced costs. If the parties are unable to agree on costs, they may seek a further ruling from me. Heard on the 15 th day of September, 2022. Dated at the City of Edmonton, Alberta this 19 th day of October, 2022. J.S. Little J.C.Q.B.A. Appearances:

Nicholas A. Clarke for the Appellant Ivan Ioudine for the Respondents, Plaintiffs