Leemhuis v. Kardash Plumbing Ltd., 2018 BCSC 1137

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Leemhuis v. Kardash Plumbing Ltd., 2018 BCSC 1137 Date: 20180622 Docket: S127524 Registry: Vancouver Between: Adrian Leemhuis and Lorraine Morris Plaintiffs And Ballast Nedam Canada Limited, La Torre S.P.A., Kardash Plumbing Ltd. and Cascade Faucets Inc. Defendants Before: The Honourable Mr. Justice Mayer Oral Ruling Re Breach of the Sale of Goods Act or Common Law Warranties of Fitness In Chambers Counsel for the Plaintiffs: C. Elrick A. Burns (A/S) Counsel for the Defendant Kardash Plumbing Ltd.: B. Morrow Place and Date of Hearing: Vancouver, B.C.

June 15, 2018 Place and Date of Ruling: Vancouver, B.C. June 22, 2018 Introduction [ 1 ] The plaintiffs, Adrian Leemhuis and Lorraine Morris, own a home in Golden, British Columbia, which was constructed by Ballast Nedam Canada Limited as general contractor commencing in or about 2003. Ballast Nedam had subcontracted plumbing work with other work to Kardash Plumbing Ltd. (“Kardash”).

Kardash provided both labour and materials in respect of the work it performed on the plaintiffs’ home. [ 2 ] In or about April 24, 2012, a cold-water pipe fitting attached to a braided supply line and in turn connected to a faucet which was installed in the bathroom of the plaintiffs’ home failed, which resulted in water ingress and damage. The pipe fitting and connected faucet, which I am going to refer to as "the faucet," had been supplied by Kardash.

Although the pipe fitting was retained after the incident, I understand that the faucet was not. [ 3 ] The plaintiffs bring this application for judgment against Kardash seeking a declaration that Kardash breached the Sale of Goods Act , R.S.B.C. 1996, c. 410 or alternatively, breached the common law warranties of fitness and merchantability and seek an order in that respect with damages to be assessed at a later date.

Arguments of the Parties [ 4 ] In its notice of application, the plaintiffs contend that in or about 2003, they entered into a contract with Kardash for the supply and installation of plumbing in their Golden home and that it was an implied term of that contract that the work done and the parts installed would be fit for their intended purpose. [ 5 ] In argument, the plaintiffs appeared to suggest that there were individual contracts of sale in respect of various plumbing materials supplied by Kardash, including the faucet.

Further, the plaintiffs contend that the alleged contract included an implied warranty, either pursuant to s. 18 of the Sale of Goods Act or under the common law that the faucet would be fit for use in their home. Finally, the plaintiffs contend that the opinion evidence obtained by Kardash from Wayne Brox, E. ENG., on which they rely, proves that the pipe fitting was defective and therefore not fit for the purpose for which it was used.

[ 6 ] Kardash disputes that there was a contract between it and the plaintiffs. Kardash says that it supplied plumbing work and materials pursuant to a subcontract between itself and Ballast Nedam Canada Limited, who were acting as the plaintiffs’ general contractor. Kardash admits that it performed a variety of services at the plaintiffs’ home, including installation of the faucet.

Kardash says that the evidence establishes that the faucet which it supplied was ordered by either Ballast Nedam or the plaintiffs’ designer. [ 7 ] With respect to the application of the Sale of Goods Act , Kardash says that the supply of the faucet was incidental to services it provided to Ballast Nedam and therefore does not draw application of the Act .

In addition, Kardash says that even if the supply of the faucet does qualify as a supply of goods under the Act , that the plaintiffs have not shown that it relied upon Kardash's skill or judgment with respect to the fitness of the faucet and its components so as to give rise to an implied warranty of fitness.

Accordingly Kardash contends that the implied warranty provisions in the Sale of Goods Act do not apply. [ 8 ] Kardash also contends that if the implied warranty provisions of the Sale of Goods Act are found to apply that the evidence establishes that the faucet was of merchantable quality and durable, having lasted for eight years after installation, and that the evidence of its expert, Wayne Brox, proves that it failed due to outside factors, including stress and an incompatible constituent in the environment or inadequate maintenance and therefore that they are not responsible for the loss. [ 9 ] With respect to the application of a common law warranty, Kardash contends that there have been no submissions with respect to the basis for finding an implied warranty of fitness and therefore that this portion of the plaintiffs’ claim should be dismissed.

Alternatively, Kardash contends that if such a common law warranty is inferred, that the evidence has not established the warranty was breached. Issues [ 10 ] First of all, I note that in this case, in the notice of application, the plaintiffs did not set out the rule they were proceeding under in bringing this application, and I have assumed that the plaintiffs are relying on Rule 9-7, and bring a

summary trial application in respect of the narrow issue of liability, being whether Kardash is liable to them for breach of statutory or common law warranties as a result of supplying the faucet which the plaintiffs say was defective. [ 11 ] Although I was not taken to them during submissions, I did have an opportunity to review the pleadings. I do have some concerns that the pleadings themselves do not set out necessary material facts with respect to formation of the alleged contract.

For example, the pleadings simply assert that there was a contract for the supply and installation of the plumbing fixtures, which included a number of expressed or implied terms. But that is essentially a bald allegation without elucidation. Nonetheless, I have considered this application based on the materials contained within the notice of application. [ 12 ] In my view, the issues to be decided in this application are as follows: 1) Was there a contract between the plaintiffs and Kardash Plumbing, and what were its terms? 2) Do the warranty and condition provisions under s. 18 (a), (

b) and (

c) of the Sale of Goods Act apply to this contract? 3) If not, is there a common law warranty of fitness which applies to the alleged contract? 4) And finally, was there a breach of either the statutory or common law warranty or both? Analysis [ 13 ] I note, and this is just for the purposes of clarity in my reasons, that the plaintiffs’ pleadings contend that Kardash supplied the pipe fitting which was defective. Further, the plaintiffs’ notice of application focuses on the pipe fitting as the good supplied by Kardash.

The evidence of Wayne Brox is that the somewhat long neck at the broken end of the pipe fitting was unique and strongly suggests that the pipe fitting was provided by the faucet manufacturer as a component of the faucet. This is also the evidence of Peter Kardash. Accordingly, in my analysis below I will treat the pipe fitting and faucet as one unit of indeterminate origin. [ 14 ] I start by saying that there must be a contract found between the plaintiffs and Kardash on which either a statutory or common law condition or warranty of fitness can be inferred or applied.

In its application response, Kardash stated that “they were hired by the general contractor for the services and subsequently sold the plaintiffs a faucet when it was convenient for all”.

When pressed during argument to clarify this pleading, counsel for Kardash submitted that the relevant contract was between itself and Ballast Nedam and that the supply of the faucet was merely incidental to this contract, which was in the main services contract. [ 15 ] As I have already indicated, the plaintiffs’ argument with respect to the nature of the contract between themselves and Kardash appears to be somewhat inconsistent.

They appear to admit that Kardash supplied services pursuant to a labour and materials arrangement but also suggest in argument that the materials and in particular the faucet was supplied pursuant to a separate supply agreement.

As I have already mentioned, the plaintiffs’ pleadings do not include material facts with respect to the formation of the alleged contract between themselves and Kardash. [ 16 ] The plaintiffs point to various invoices issued by Kardash directly to them, which include an itemized breakdown of parts supplied, which they contend suggests that there was a contract for the supply of goods between Kardash and the plaintiffs.

It appears that this argument is advanced in order to demonstrate the applicability of the Sale of Goods Act . [ 17 ] The discovery evidence of Peter Kardash is that none of the invoices on which the plaintiffs rely relate to the relevant installation work at the plaintiffs’ home. No invoices have been produced with respect to the supply of the faucet or for that matter any labour or materials provided in respect of the initial installation work. In addition, I note that in the invoices provided, they list charges

for both parts and labour or a blended labour and materials charge. I do not consider that the invoices provided by the plaintiffs at thehearing of this application allow me to infer that the parties had a practice of entering into separate contracts for the supply of goods. [18] Further, the evidence establishes that there was no communication between Kardash and the plaintiffs with respect to the supplyand installation of the faucet or any materials.

The evidence establishes that the plaintiffs dealt with either their general contractor or theirdesigner only, who either made orders to or authorized the purchase of plumbing fixtures, including the faucet, by Kardash. [19] I also note that the discovery evidence of the plaintiff Adrian Leemhuis was that he assumed that Ballast Nedam hired Kardashto perform the plumbing, heating and ventilation work for his home. His evidence was that he did not hire Kardash. He was not aware ofany written contract between Ballast Nedam and Kardash.

He did not have any conversations regarding plumbing with anyone fromKardash and referred any questions in this regard to Ballast Nedam. He was not aware who made the decision as to which faucets were tobe installed in the plaintiffs’ Golden home but assumed that Ballast Nedam would have been involved.

None of this suggests a contractbetween the plaintiffs and Kardash. [20] As a result, I find that Kardash provided the plumbing services and materials pursuant to a work and materials subcontractbetween itself and Ballast Nedam with Ballast Nedam acting in its capacity as a general contractor and that the supply of plumbingfixtures was merely incidental to this agreement between those parties. Accordingly, if there was an implied warranty with respect tofitness, it was a warranty provided pursuant to a contract between Ballast Nedam and Kardash.

Although this finding is sufficient todispense with the plaintiffs’ claim, it will also provide reasons assuming that either a work and materials contract or a sale contractexisted between the plaintiffs and Kardash. The Application of the Sale of Goods Act [21] The implied warranty and condition provisions at s. 18 of the Sale of Goods Act only apply to contracts for the sale of goods orto work and material contracts, in the latter case where the supply of goods is more than merely incidental to what is primarily a contractfor services.

Whether a contract is primarily one for the sale of goods or primarily one for services depends on the essential character ofthe agreement: Ter Neuzen v. Korn, (SCC), [1995] 3 S.C.R. 674 at para. 67. [22] In this case, the evidence establishes that Ballast Nedam subcontracted the services to Kardash to install plumbing, heating andventilation at the plaintiffs’ Golden home.

In my view, the nature of such a contract is in essence a contract for services. [23] In the absence of evidence establishing that Kardash was primarily hired to provide goods, an example of such evidence whichwould include invoices demonstrating that most of its charges related to materials and not to labour, the plaintiffs have not proven thatthe principal purpose of their engagement with Kardash was with Kardash as a supplier of goods. [24] As I have already stated, the invoices provided by the plaintiffs all concern work done by Kardash after the installation workwhich gives rise to this claim.

Those invoices do not establish that the principal purpose of the contract related to the sale of goods.Accordingly, I find that the Sale of Goods Act does not apply. The Application of a Common Law Warranty [25] It is trite law that a person who contracts to do work and supply materials warrants that the materials he or she uses will be ofgood quality and reasonably fit for the purpose for which they are used unless the parties agree otherwise:Ter Neuzen v. Korn, (SCC), [1995] 3 SCR 674, at para. 78.

In my view, there is no question that when a plumbing contractor is hired to completeplumbing services which includes the installation of materials and fixtures that there is an expectation, unless the parties have agreedotherwise, that the materials and fixtures used will be of good quality and reasonably fit for a purpose. [26] In this case, Kardash obtained and installed a new faucet for use in an upstairs bathroom. I find that it was an implied term ofthe contract for services between Kardash and Ballast Nedam that the faucet would be of good quality and reasonable fit for use in thislocation.

The issue then becomes whether the plaintiffs have shown that the faucet was not of good quality and reasonably fit for use inthe bathroom and therefore common law warranty with respect to fitness has been breached. [27] Notwithstanding my findings that the plaintiffs' contract within which an implied warranty of fitness is applied was with BallastNedam, I will comment on whether the evidence establishes that this warranty was breached and that this breach was causative of theplaintiffs’ loss.

In my view, both are required in order to found liability on the part of Kardash. [28] The plaintiffs rely on the evidence of Wayne Brox, who provided an expert report for the defendant Kardash. I find that Mr.Brox is qualified to provide the opinions given. In

summary, Mr. Brox found that some external environmental factor along with stresscaused the pipe fitting in question to fail. He says that brass fittings are susceptible to stress fractures and failures but in this case he findsthat the fitting which failed was nickel coated. [29] He states at page 8 of his report: While the high zinc yellow brass alloys are well known to be susceptible to EAC – [which means “environmentally assisted cracking”] -the component that broke in this instance was nickel plated. [30] Mr.

Brox speculates that the nickel coating was somehow breached or otherwise flawed inside the fitting, but there is noevidence with respect to if, how or when this breach occurred. Even if Mr. Brox's evidence is unclear with respect to the presence ofnickel coating and its purpose, he states in his report: It is unknown if the nickel plating was intended as a decorative finish, in which case, the integrity of the nickel plating inside a

component would not have been any concern, or whether it was intended as a corrosion barrier or both. This is information that only the manufacturer could offer. [ 31 ] I am not satisfied that the plaintiffs have shown the presence of a nickel coating inside the pipe fitting or lack thereof or its condition was something that Kardash was aware of or as a reasonable plumbing contractor could reasonably have known. In fact, I note that in Wayne Brox's report he states that in his opinion most plumbers are not aware of the possibility of failures resulting from EAC.

In my view, the implied warranty of fitness does not extend as far as to make Kardash liable for what may have been a latent defect in the pipe fitting, and I emphasize "may" because in my view that has not been proven on the facts. [ 32 ] Also relating to the issue of causation, Wayne Brox says that not all components made from susceptible brass alloys fail. In his opinion, there must also be an external incompatible environment, which when combined with stress results in failure of the components in question. [ 33 ] Wayne Brox does not identify the incompatible constituent in play in this case.

He states that some possibilities include the presence of ammonia or similar compounds or decaying organic matter inside the pipe fitting itself. He also states that it is unusual to find incompatible constituents in sufficient concentrations in potable water systems and speculates that an incompatible constituent may have been introduced prior to installation, therefore approximately eight years before the failure, or that this portion of the water system became stagnant. Mr.

Brox does not provide an opinion with respect to how stagnant water would become present in the pipe fitting in question or how it would have caused a failure. Wayne Brox has not identified an incompatible constituent, and it is not possible to determine if the presence of such a constituent is something that Kardash should have been aware of and considered when determining whether or not the pipe fitting was fit for installation in the upstairs bathroom of the plaintiffs’ home. [ 34 ] So in

summary I am not satisfied on the evidence that the faucet installed by Kardash was not of good quality. The evidence suggests that a new faucet was purchased at the request of Ballast Nedam or its designer and installed by Kardash. Further, with respect to the component of the faucet which failed, the pipe fitting, it is the evidence of Wayne Brox that the fitting was nickel lined and therefore was not in and of itself defective. He speculates that the nickel lining must have been damaged, but whether or not Kardash knew or could have known about this damage is unknown.

Further, it is not known what the incompatible constituent is, which Wayne Brox opines must have been present in order for the pipe fitting to fail, or when or how it was introduced to the fitting. Accordingly, it has not been shown whether in supplying the faucet Kardash breached the implied warranty to provide a faucet reasonably fit for use in the plaintiffs’ home.

Accordingly, I am unable to find that the faucet itself was defective. [ 35 ] Even if I was to find that the faucet was defective and on that basis that the installation of the faucet constitutes a breach of an implied warranty of fitness, such a warranty would have been provided by Kardash to Ballast Nedam pursuant to the work and materials contract entered into between those parties. Accordingly, there is no basis for a claim of breach of an implied warranty of fitness by the plaintiffs against Kardash. They may be able to assert other claims against Kardash, but not in contract.

Accordingly the plaintiffs’ claim for judgment against Kardash Plumbing is dismissed with costs to Kardash. “Mayer J.”