COURT OF APPEAL FOR ONTARIO

CITATION: O'Dowda v. Halpenny, 2015 ONCA 22

DATE: 20150119

DOCKET: C59091

Weiler, Feldman and Benotto JJ.A.

BETWEEN

Robert O’Dowda and Miriam O’Dowda

Plaintiffs (Appellants)

and

Donald Halpenny, Elizabeth Halpenny, Paul Desalaiz, Derek Dier, Sutton Group Select Realty Inc., The Corporation of the City of London, Gordon Stanley Morton, 592987 Ontario Limited, G.S. Morton & Associates Ltd., The Estate of the Late Gordon Dale Maddock, Basil George Tambakis, Harris-Troy Design Build Limited, London Roof Truss Inc., Thorndale Roof Systems Inc., Universal Forest Products, Inc., Courtney Roofing Ltd. and Farncomb Kirkpatrick & Stirling Surveying Ltd.

Defendants (Respondents)

Sean Dewart, for the appellants

Jennifer Stirton, for the respondents

Heard: December 11, 2014

On appeal from the judgment of Justice Andrew J. Goodman of the Superior Court of Justice dated June 20, 2014.

ENDORSEMENT

[1] The issue on this appeal is whether the motion judge erred in granting summary judgment dismissing the appellants’ claim against the respondents Morton and the numbered company on the basis it was barred by the 2-year limitation period under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.

[2] The appellants purchased a house from the Halpennys in 2003 and discovered structural problems shortly thereafter. They retained experts in the fall of 2003 to examine the problems and prepare a report. The Phase 1 report was delivered in May 2004. It identified some problems and recommended further investigation. One of the problems was with the load-bearing ability of the roof.

[3] Following the Phase 1 report, the appellants commenced an action against the vendors of the house, their realtor, two real estate agents and the city of London. They also asked the experts to do the recommended further investigation. The Phase II report is dated February 28, 2005. The Phase II report identified further problems and raised safety concerns about the roof.

[4] At examinations for discovery held in March 2006, Donald Halpenny, one of the defendants in this litigation, testified that the respondents on this appeal had designed the house and prepared the working drawings. On December 19, 2006, the appellants moved to amend their claim to add the respondents as defendants for negligent design of the house causing it to be a danger to safety.

[5] The respondents moved for summary judgment dismissing the action against them on the basis that it was statute-barred because they were added more than two years after the cause of action arose. The motion judge granted summary judgment, concluding that 1) the appellants knew or should have known that the negligent design of the house created a condition of danger to safety upon reviewing the Phase 1 report, as it identified structural deficiencies that could be dangerous, even though the words “danger” and “safety” were not used; and 2) the appellants knew or should have known that the respondents had designed the home when the appellants received the plans stamped with the name “G.S. Morton and Associates” shortly after taking possession of the house in May 2003.

[6] On this appeal, the appellants submit, first, the motion judge erred in his two findings, and second, based on the record before him, both matters raised genuine issues requiring a trial: see Hyrniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87. The appellants also requested that this court substitute its own determination of discoverability.

[7] The first issue turns on the application of the law as set out by the Supreme Court of Canada in Winnipeg Condominium Corporation No. 36 v. Bird Construction Co., 1995 CanLII 146 (SCC), [1995] 1 S.C.R. 85, at para. 43, as follows:

I conclude that the law in Canada has now progressed to the point where it can be said that contractors (as well as subcontractors, architects and engineers) who take part in the design and construction of a building will owe a duty in tort to subsequent purchasers of the building if it can be shown that it was foreseeable that a failure to take reasonable care in constructing the building would create defects that pose a substantial danger to the health and safety of the occupants. Where negligence is established and such defects manifest themselves before any damage to persons or property occurs, they should, in my view, be liable for the reasonable cost of repairing the defects and putting the building back into a non-dangerous state.

[8] In other words, a subsequent purchaser of a building has an action in tort against the designers and constructors of the building for defects that pose a substantial danger to health and safety. Because of this requirement, before the limitation period begins to run, a plaintiff must have known or ought to have known that the construction problems or defects with the building at issue “pose a substantial danger” to health and safety.

[9] The motion judge determined, based on his own reading of the Phase 1 Report, that the appellants should have known that the defects identified created such a danger. However, in reaching that conclusion, the motion judge failed to avert to the sworn evidence filed on the motion. The appellants’ lawyer (not appeal counsel) swore an affidavit dated April 1, 2014. Her affidavit was not challenged and she was not cross-examined. She swore, at para. 22, that the Phase II report was her first information “that the house may be dangerous by design”:

I was aware of the law with respect to negligence in the design and construction of the buildings, in general, based on the Supreme Court of Canada’s decision in Winnipeg Condominium Corporation No. 36 v. Bird Construction Co., [1995] 1 [S.C.R.] 85, and I knew that a cause of action by a third party owner in negligence with respect to alleged building defects was only complete if the breach of the standard of care left the building in a dangerous condition. There could be no recovery for pure economic loss. The Phase II Investigation Report indicated that the roof was seriously overstressed and that a competent designer should have recognized the need to consider greater snow accumulations in the valleys than what was used in the original building. This was the first information I had that the house may be dangerous by design. [Emphasis in original.]

[10] It was an error of law for the motion judge to ignore the uncontested sworn evidence on the central matter in issue without giving any reasons for so doing. While the judge is entitled to reject such evidence, he would have to give clear reasons for making such a finding. In this case, because the motion judge did not refer to the lawyer’s affidavit, his reasons for implicitly rejecting the lawyer’s evidence are not apparent.

[11] Given this error, the order for summary judgment dismissing the claim as statute-barred must be set aside. On the record before the motion judge, the parties could have asked him to conduct further fact-finding procedures to determine the issue of when the dangerousness of the structure was known or could have been known. As that was not done, the most appropriate order at this point is to leave the limitation issue as a genuine issue for trial.

[12] The appeal is allowed and the summary judgment is set aside.

[13] Costs were agreed as follows: costs of the appeal fixed at $8500 inclusive and costs of the motion fixed at $12,000 inclusive, payable within 60 days to the appellants.

“K.M. Weiler J.A.”

“K. Feldman J.A.”

“M.L. Benotto J.A.”