The Owners, Strata Plan BCS 1165 Plaintiff v. National Home Warranty Group Inc., Royal & Sun Alliance Insurance Company of Canada, and in French Royal & Sun, 2015 BCSC 1122

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: The Owners, Strata Plan BCS 1165 v. National Home Warranty Group Inc., 2015 BCSC 1122 Date: 20150629 Docket: S115538 Registry: Vancouver Between: The Owners, Strata Plan BCS 1165 Plaintiff And National Home Warranty Group Inc., Royal & Sun Alliance Insurance Company of Canada, and in French Royal & Sun Alliance Du Canada, Societe D’Assurances, Travelers Guarantee Company of Canada/La Compagnie Travelers Garantie Du Canada, Onni Imperial Landing Development Limited Partnership, Onni Development (Imperial Landing) Corp.

Onni Project Management Services Ltd., KMBR Architects Planners Inc., D. Greenwood Brown, Eric Stacey, BC Building Science Partnership, BC Building Science & Engineering Ltd., SRC Engineering Consultants Ltd., 0599202 B.C. Ltd., 0649813 B.C. Ltd., Universal Polymers Inc., Pacific Polymers International Inc., Soprema Inc., GSI Holdings Inc., GBP Holdings Inc., Almetco Building Products Ltd., 3090723 Nova Scotia Limited 0113426 B.C. Ltd., VFS Waterproofing Ltd., Allstar Mechanical Ltd., D.M.S. Mechanical Ltd., and City of Richmond. Defendants And: C.M.J.

Heating Ltd., Summit Sheet Metal Ltd., Goertzen Enterprises Ltd., Sid Aluminum Building Products Ltd., Nightingale Electrical Ltd., Weatherguard Gutters Inc., Inline Drywall Systems Inc., East & West Alum Craft Ltd., Astra Concrete Pumping 1998 Ltd., Burrard Glass Ltd., Reno Mauro, James Kapitza, Edward Goertzen, Jagdish S. Sidhu, Douglas Nightingale, Russell McCann, Dan Shoemay and Rick Kennett Third Parties Before: The Honourable Mr. Justice Skolrood Reasons for Judgment on Application for Directions Counsel for the Plaintiffs: J.G. Mendes N.

Rozenberg Counsel for the Defendant, Travelers Guarantee Company of Canada: D. Laudan Counsel for the Defendants, KMBR Architects Planners Inc., Eric Stacey and D. Greenwood Brown: A. Hobkirk Counsel for the Defendant, Soprema Inc.: S.S. Deol Counsel for the Defendants, Onni Project Management Services Ltd, Onni Imperial Landing Development Limited Partnership and Onni Development (Imperial Landing) Corp.: B. Allard S. Marescaux Counsel for the Defendant, Royal & Sun Alliance Company of Canada and National Home Warranty Group Inc.: A. Maltas Counsel for the Defendant/Third Party, GSI Holdings Inc.: J.

Campbell Counsel for the Defendant/Third Party, GBP Holdings Inc.: J. Taylor Counsel for the Defendant/Third Party, D.M.S. Mechanical Ltd. and Reno Mauro.: S. Foote Counsel for the Defendant/Third Party, City of Richmond: S. Haakonson Counsel for the Defendant/Third Party, BC Building Science & Engineering Ltd: S. Wheeldon

Counsel for the Defendant/Third Party, Allstar Mechanical Ltd.: M. Van Nostrand Counsel for the Third Party, Sid Aluminum Building Products Ltd.: No Appearance Counsel for the Third Parties, Rick Kennett, and Burrard Glass Ltd.: Y. Pappas-Acreman Counsel for the Third Party, Astra Concrete Pumping 1998 Ltd.: M. Barbero Place and Date of Trial/Hearing: Vancouver, B.C. April 24, 2015 Place and Date of Judgment: Vancouver, B.C.

June 29, 2015 Introduction [ 1 ] This application is brought in the context of large, multi-party litigation involving alleged defects in the construction of a condominium complex located in Richmond, British Columbia (the “Complex”). The members of the plaintiff strata corporation are owners of strata lots in the Complex. [ 2 ] Included in the long list of defendants are the developer of the Complex, the general contractor, the architects, the building envelope consultants and various other professionals and contractors who were involved in the design and construction of the Complex.

Numerous third party claims have also been issued against various other parties involved in the construction of the Complex. [ 3 ] Also named as defendants are National Home Warranty Group Inc. (“National”), Royal & Sun Alliance Insurance Company of Canada, and in French, Royal & Sun Alliance Du Canada, Societe D’Assurances (“Royal”) and Travelers Guarantee Company of Canada/La Compagnie Travelers Garantie du Canada (“Travelers”). [ 4 ] National, Royal and Travelers (collectively the “Warranty Providers”) issued common property warranties (the “Warranties”) for the Complex pursuant to the Homeowner Protection Act, S.B.C. 1998, c. 31 (the “ HPA ”) and the Homeowner Protection Act Regulation, B.C.

Reg. 29/99 (the “ HPA Regulation ”). [ 5 ] The plaintiff wishes to bring a

summary trial application under Rule 9-7 of the Supreme Court Civil Rules , B.C. Reg. 168/2009 to determine whether certain of the alleged defects fall within the coverage provided by the Warranties (the “Warranty claims”). [ 6 ] The plaintiff has brought the current application seeking directions concerning its proposed

summary trial. In its notice of application, it seeks the following relief: The Plaintiff applies for directions concerning a

summary trial seeking the following relief:

a) a declaration that the waterproofing of the Plaintiff’s parkade has: i. defects in its materials and labour, and ii) building envelope defects as these terms are defined in the common property warranty certificates issued by Travellers and National (collectively the “Warranty Providers”); an order that the Warranty Providers remediate the parkade waterproofing defects in accordance with the scope of work recommended by Warren Knowles, P.

Eng. of RDH Engineering Ltd.; in the alternative, judgment against the Warranty Providers for the cost of remediating the parkade waterproofing defects in accordance with the recommended scope of work of Mr. Knowles. [ 7 ] The plaintiff goes on in its notice of application to set out a proposed

schedule for the exchange of

summary trial materials. [ 8 ] In the alternative, the plaintiff applies for an order pursuant to Rules 5-3(1)(

p) and 12-5(67) that the trial be heard in two phases, with the trial of the issues identified above proceeding first and all other issues to be tried at a later date. The plaintiff seeks a further order pursuant to Rule 12-2(9)(

h) that the evidence-in-chief in both phases of the trial be given by way of affidavits. Legal Framework [ 9 ] As noted, the plaintiff has not brought a

summary trial application but rather seeks directions with respect to a proposed

summary trial on the Warranty claims. [ 10 ] Rule 9-7 deals with

summary trials. It provides in part: Application

(2) A party may apply to the court for judgment under this rule, either on an issue or generally… … Adjournment or dismissal

(11) On an application heard before or at the same time as the hearing of a

summary trial application, the court may (

a) adjourn the

summary trial application, or (

b) dismiss the

summary trial application on the ground that (

i) the issues raised by the

summary trial application are not suitable for disposition under this rule, or (ii) the

summary trial application will not assist the efficient resolution of the proceeding. … Preliminary orders

(12) On or before the hearing of a

summary trial application, the court may order that (

a) a party file and serve, within a fixed time, any of the following on which the party intends to rely in support of the application: (

i) an affidavit; (ii) a notice referred to in subrule (9), (

b) the person who swore or affirmed an affidavit, or an expert whose report is relied on, attend for cross-examination, either before the court or before another person as the court directs, (

c) cross-examinations on affidavits be completed within a fixed time, (

d) no further evidence be tendered on the application after a fixed time, or (

e) a party file and serve a brief, with such contents as the court may order, within a fixed time. … Judgment

(15) On the hearing of a

summary trial application, the court may (

a) grant judgment in favour of any party, either on an issue or generally, unless (

i) the court is unable, on the whole of the evidence before the court on the application, to find the facts necessary to decide the issues of fact or law, or (ii) the court is of the opinion that it would be unjust to decide the issues on the application, (

b) impose terms respecting enforcement of the judgment, including a stay of execution, and (

c) award costs. [ 11 ] As can be seen, under rule 9-7(2), a party may apply for judgment either on one or more issues or generally. [ 12 ] Rule 9-7(11) contemplates the court making a preliminary determination of whether the issues raised are suitable for

summary determination or whether the

summary trial application will assist the efficient resolution of the proceeding. [ 13 ] In practice, it is rare for the court to make a preliminary determination of suitability, rather the court will generally prefer to hear the

summary trial application and then determine the question of suitability on the basis of the entire record. The practical reason for doing so is that it is difficult to determine suitability in the absence of the complete

summary trial application materials. [ 14 ] In British Columbia (Minister of Forests) v. Chief Ron M. Derrickson, 2000 BCSC 719 , the respondents brought an application seeking a preliminary determination of whether they could bring a constitutional challenge by way of a

summary trial. They said that if they were successful in the preliminary application, they would then marshall the evidence for the

summary trial. Mr. Justice Sigurdson questioned whether the court has jurisdiction to make a preliminary ruling as to the suitability of a

summary trial without the evidence to be relied on at such an application and ultimately he dismissed the application (at para. 11). [ 15 ] Rule 9-7(15) sets out the options available for the court on the actual hearing of the

summary trial application, including dismissing the application where the court cannot determine the necessary facts or where it would be unjust to decide the matter summarily. [ 16 ] When considered as part of the

summary trial application, the factors set out in Rule 9-7(11)(

a) and (

b) and Rule 9-7(15)(a)(

i) and (ii) are often conflated into what is generally termed the suitability analysis. As noted by Madam Justice Gropper in Westsea Construction Ltd. v. 0759553 B.C. Ltd. , 2012 BCSC 1799 at para. 93 , the judge hearing a

summary trial application has the discretion to

determine if the matter is suitable for

summary trial, and must make that determination even if the parties themselves agree that thematter is suitable. [17] While the question of suitability arises in every

summary trial application, it takes on particular significance when a party seeksjudgment by way of

summary trial on only one or some of the issues in the proceeding, leaving the balance of the issues or claims toproceed to a conventional trial. [18] This situation was recently considered in Greater Vancouver Water District v. Bilfinger Berger AG, 2015 BCSC 485 [GVRD].There, Madam Justice Griffin reviewed the history and evolution of the

summary trial rule in British Columbia as well as the principlesgoverning

summary trial applications emanating from the still leading case of Inspiration Management Ltd. v. McDermid St. LawrenceLtd. (1989), (BC CA), 36 B.C.L.R. (2d) 202 (C.A.) [Inspiration Management]. She also considered the Supreme Courtof Canada’s decision in Hryniak v. Mauldin, 2014 SCC 7 where the Court spoke in favour of the concept of proportionality in litigationand a more robust approach to Ontario’s

summary judgment rule. [19] Based on her review of the relevant authorities, Madam Justice Griffin summarized the factors to be considered on a

summarytrial application brought in respect of only a portion of a case (at para. 110):

a) whether the court can find the facts necessary to decide the issues of fact or law;

b) whether it would be unjust to decide the issues by way of

summary trial, considering amongst other things: i. the implications of determining only some of the issues in the litigation, which requires consideration of such things as: (1) the potential for duplication or inconsistent findings, which relates to whether the issues are intertwined with issues remaining fortrial; (2) the potential for multiple appeals; and (3) the novelty of the issues to be determined; ii. the amount involved; iii. the complexity of the matter; iv. its urgency; v. any prejudice likely to arise by reason of delay; and vi. the cost of a conventional trial in relation to the amount involved. [20] In terms of the plaintiff’s application for directions, Rule 9-7(12) provides that the court may make a number of differentpreliminary orders concerning the conduct of the

summary trial application but, as I read the sub-rule, it is concerned primarily withprocedural aspects of the application and does not authorize the court to make an advance determination of suitability, nor does itcontemplate the court issuing general directions concerning the application. [21] However, Rule 5-3, which deals with case planning orders, does give the court broad discretion to make a variety of ordersconcerning the conduct of an action, including, pursuant to Rule 5-3(1)(p), orders authorizing or directing the parties of record to try oneor more issues in the action independently of others and, pursuant to Rule 5-3(1)(v), any order that the court considers will further theobject of the Rules. [22] As set out in the plaintiff’s notice of application, Rule 12-5(67) also authorizes the court to order that one or more questions offact or law arising in an action be tried before the others. [23] Whether a party seeks to bring a

summary trial application on some but not all issues in a proceeding, pursuant to Rule 9-7(2),or applies for severance of one or more issues under Rule 12-5(67), the analysis is similar. In Bramwell v. Greater VancouverTransportation Authority, 2008 BCSC 1180, Madam Justice Allan provided the following succinct

summary of the principles governingseverance of one or more issues: [11] There is ample authority for the proposition that an applicant must establish that there exist extraordinary, exceptional or compellingreasons for severance, and not merely that it would be just and convenient to order severance: MacEachern v. Rennie, 2008 BCSC 1064;Hynes v. Westfair Foods Ltd., 2008 BCSC 637; and Westwick v. Culbert, [1992] B.C.J. No. 2121. [12] It is true that some recent cases have held that a judge’s discretion to sever an issue or issues is not restricted to “extraordinary orexceptional circumstances”: Nguyen v.

Bains, 2001 BCSC 1130; Enterprising Minds Technology Inc. v. Lululemon Athletica Inc.,2006 BCSC 1168. However, there must be some compelling reasons to order severance, such as a real likelihood of a significant savingsin time and expense. (See as well Burg Properties Ltd. v. Economical Mutual Insurance Company, 2013 BCSC 209 at para. 27) [24] Ultimately, whether the issue arises by way of an application to sever under Rule 12-5(67) or a

summary trial applicationbrought with respect to only one or some of the issues raised, the court must determine whether it is in the interests of justice to proceedin that manner.

Pan Pacific and The Q Home Warranty Cases [ 25 ] The parties referred me to two previous decisions in which

summary trial applications were brought, and rejected, in similar home warranty cases. [ 26 ] In The Owners, Strata Plan BCS 1348 v. Travelers Guarantee Company of Canada, 2014 BCSC 1468 (“ Pan Pacific ”), the plaintiff, by way of a

summary trial application, sought declarations that certain portions of a strata development located in Whistler, B.C. fell within the definition of “new home” in the HPA , the HPA Regulation and the warranty in issue and a further declaration concerning the

interpretation of a particular exclusion provision contained in the warranty. [ 27 ] In dismissing the

summary trial application, Mr. Justice Cohen made the following observations: [75] … In some circumstances, trying an issue via a

summary trial proceeding will be appropriate, but in other circumstances, for example where there are multiple parties or where the factual matrix is incomplete, the conclusion may be that the issue cannot be resolved expeditiously without a full conventional trial with the latter outcome being the most just and proportional option. [76] In the present case, I am entirely persuaded by Travelers’ argument that the plaintiff’s application is not appropriate for

summary trial disposition. [77] In my view, this case is the very kind of case that the authorities suggest would not be a suitable candidate for a

summary trial proceeding. [78] I find that the issues raised in the plaintiff’s application interrelate with the issues that will be dealt with at the full trial… … [84] As Travelers submits, the plaintiff must establish that the allegations made by it are in fact “defects”. Travelers points out that a defect, under the statutory definition, requires either a breach of the building code or a requirement for repair or replacement because of WVC’s negligence or a person for whom WVC is legally responsible.

As Travelers noted, this determination is a similar question to the one that the plaintiff seeks to resolve in this application.

If the whole of the South Wing is WVC’s responsibility, in particular on the basis that its failure to undertake repairs of the South Wing might be blameworthy, then this determination tends to prejudge an issue that is not before the Court, namely whether the alleged problems in the South Wing are in fact defects. [85] I agree with Travelers’ point that such findings would tend to tie the hands of the trial judge at the full trial, or, at the very least, they would give rise to potentially inconsistent results based on different evidence being reviewed at the

summary and full trials. [ 28 ] A

summary trial application was also dismissed in The Owners, Strata Plan LMS 4443 v. Travelers Guarantee Company of Canada, 2013 BCSC 296 (“ The Q ”). In that case, the plaintiff sought a declaration that coverage under the warranty in issue was not conditional on proof of water penetration through the building envelope of the subject condominium complex. In dismissing the application, Mr. Justice Pearlman said: [63] Here, the Owners apply for a declaration that would provide a partial

interpretation of the Warranty. The relief sought will not resolve the litigation, nor will it determine Travelers’ liability to the plaintiff. By embarking upon a partial determination of one aspect of coverage, the court would be “litigating in slices”. The issue raised on this application is intertwined with the

interpretation and application of the Warranty as a whole, including its notice requirements. [64] The Court should not be asked to make a determination regarding coverage under the Warranty in the absence of all of the facts relating to the application of the Warranty to the specific claims made by the plaintiff. [65] The determination of the narrow issue raised on this application is unlikely to materially reduce the time required for the trial of this action. Regardless of the result, the Owners will still be required to present their expert and lay evidence relating to the condition of the building envelope, its alleged defects, proof of material damage, the

interpretation and application of the Warranty, the damages they claim from Travelers and their claims against all of the other defendants in this action. … [71] In my view, the Court should have the benefit of the full factual matrix of the specific claims advanced by the plaintiffs, the nature of the alleged defects, and a full understanding of the extent to which the

interpretation of the Warranty and its application are intertwined with the plaintiffs’ claims against other defendants, and the third party claims, before deciding the issue raised on this application. [72] The

summary determination of the issue raised on this application will not assist in the efficient resolution of this litigation. It is unlikely to shorten the trial. The plaintiff must still lead evidence to prove that its claims meet the conditions of the Warranty, and that it has satisfied the reporting requirements under the Warranty. Further, the plaintiff also has multiple claims against the defendants other than Travelers for breach of contract and negligence, and against all of the defendants, including Travelers, for breach of a duty to warn. A

summary determination of the question of whether the plaintiff must establish water penetration into or through the building envelope within the five year term of the Warranty will almost certainly be appealed, resulting in the loss of the current trial date. [ 29 ] The plaintiff here submits that its proposed application is distinguishable from the

summary trial applications rejected in Pan Pacific and The Q. It says that its application would determine its entire claim under the Warranties in relation to the parkade, as distinct from only a portion of its claim, and that a finding on whether the parkade waterproofing was defective would substantially narrow the remaining issues to be dealt with in a subsequent trial.

[ 30 ] The plaintiff acknowledges that the issues it seeks to address in its

summary trial application are intertwined with other issues raised in the litigation, specifically the various tort claims. However, the plaintiff submits that the defendants and third parties who might be impacted by findings made in the

summary trial will have an opportunity to submit evidence and participate fully in the

summary trial. Thus they will not be prejudiced by any findings made at the

summary trial. Discussion [ 31 ] As noted, the plaintiff is not seeking an advance ruling that it’s proposed application is suitable for

summary trial as such a determination cannot be made in the absence of the full

summary trial materials, in particular the evidence to be relied on by all parties. [ 32 ] However, the plaintiff has requested what is in effect a preliminary opinion of the court, in the form of “directions,” about the likely success of its proposed application. I understand this request to be borne out of a well-founded concern on the part of the plaintiff that it not embark on a complex and expensive

summary trial process if that process is bound to fail. [ 33 ] While unusual, I am prepared in the circumstances of this case to provide my preliminary views on the plaintiff’s proposed

summary trial application. [ 34 ] Based on the relief that the plaintiff says it would seek on its

summary trial application, as set out in its current application for directions, it is my view that the proposed application is unlikely to succeed. I base this view on a number of factors:

a) While I acknowledge that the plaintiff’s proposed application differs in a number of respects from the applications rejected in Pan Pacific and The Q , many of the concerns expressed by Justices Cohen and Pearlman in those cases nonetheless exist in this case as well, in particular the interrelationship of the issues that arise under the Warranty claims and those that arise in the tort claims;

b) In its proposed application, the plaintiff seeks a declaration that the waterproofing in the parkade has defects in its materials and labour as well as building envelope defects. “Defect” is defined in the Warranties to mean “any design or construction that is contrary to the Building code or that requires repair or replacement due to the negligence of a Builder or person for whom the Builder is responsible at law.” This definition requires a determination of who and/or what caused the water ingress into the parkade which will also be a central issue in the tort claims. Thus, the tort defendants and third parties may be materially affected by findings at the

summary trial;

c) Similarly, the plaintiff seeks specific orders concerning remedial measures. Determination of these issues will likely impact any subsequent consideration of which tort defendants are responsible as well as the quantum of the claims against them; and

d) The plaintiff’s response to this concern, that those parties may lead evidence and participate in the

summary trial, raises the spectre of a lengthy, complex and expensive

summary trial that will do little to promote the underlying objective of Rule 9-7 of the efficient resolution of disputes. [ 35 ] In short, it is my view, for reasons similar to those articulated in Pan Pacific and The Q, as well as in GVRD , that the plaintiff’s proposed

summary trial application would amount to “litigation in slices” in a manner that the courts have regularly warned against. [ 36 ] These same considerations weigh against the plaintiff’s alternative application that the trial be split and that the Warranty claims be tried in advance of the remaining claims.

As set out above, the test for severance requires extraordinary, exceptional or compelling reasons such as a real likelihood of a significant savings in time and expense. [ 37 ] For the reasons set out above, it is my view that severing the Warranty claims is unlikely to result in significant savings in time or expense and there are no compelling reasons why the Warranty claims should be tried separately.

Indeed, there are compelling reasons why those claims should be tried together with the other claims in the action. [ 38 ] Before leaving this point, I want to address the plaintiff’s submission that compelling it to engage in a lengthy trial process in order to obtain protection under the Warranties largely defeats the purpose of what was intended to be a statutory consumer protection remedy created by the HPA . [ 39 ] While I have some sympathy for this position, the HPA does not itself provide for a

summary determination of the Warranty claims. Moreover, as noted above, it is the definition of “defect” within the Warranties themselves that engages the interests of the various other parties thus making a

summary trial on only the Warranty issues impractical. [ 40 ] I also note that a similar argument was made before Mr. Justice Cohen in Pan Pacific but that was not sufficient to persuade him that a

summary trial was appropriate. Evidence in Chief by Way of Affidavits [ 41 ] The plaintiff proposes that evidence in chief at the trial be given by way of affidavits. It submits that such an order would result in a significant savings of time and expense. [ 42 ] As noted by Madam Justice Griffin in GVRD at para. 62 , such “hybrid” trials are contemplated by Rule 9-7(12)(

b) and were also envisioned in the leading case of Inspiration Management . [ 43 ] In my view, this is the type of case in which some form of hybrid process may well be appropriate. For example, I would anticipate that much of the key evidence will be in the form of written expert reports that will be exchanged in advance of trial in accordance with the Rules. It may be that other evidence can also be done in writing and exchanged in advance with a view to shortening what is currently scheduled as a 60 day trial.

[ 44 ] However, it is premature at this stage to make a blanket order requiring all evidence in chief to be given by way of affidavits. Instead, the plaintiff should provide the other parties with a more concrete proposal as to which evidence it believes can properly be presented in affidavit form. It should also advise the other parties of those facts on which it seeks agreement as a detailed statement of agreed facts would also likely serve to shorten the proceeding. If the parties cannot agree, they can return for further directions. [ 45 ] As stated by Tim Dickson, in his

article “A Few Thoughts on Hybrid Trials” (2014) 72 The Advocate 361 at 363: The key to making a hybrid trial successful is carefully considering the form in which evidence on particular issues is presented.

An advantage of a hybrid trial is that it allows for more difficult evidentiary issues-such as contests of credibility-to be addressed orally, while allowing other issues to be presented in writing, thereby reducing hearing time and often producing a more complete and comprehensible written record.” [ 46 ] I would therefore decline to make the order sought at this time but I would encourage the parties to work together to better streamline the process. In this regard, I would also endorse Mr.

Dickson’s further comment at 367 as follows: With forethought and co-operation by counsel and the approval of the case planning judge, many of the default procedures under the Supreme Court Civil rules can be modified to achieve more “proportionate, timely and affordable” litigation. Conclusion [ 47 ] As set out above, it is my view that the plaintiff’s proposed

summary trial application, as framed in its current application for directions, is unlikely to succeed. I would stress however, that this is merely a preliminary opinion based solely on the issues identified and without the benefit of a full

summary trial record. It is not intended to preclude the plaintiff from bringing a

summary trial application nor is it intended to bind the court on the hearing of any such application. “Skolrood J.”