ONTARIO
SUPERIOR COURT OF JUSTICE
OTTAWA COURT FILE NO.: 08-CV-41754
DATE: November 21, 2013
B E T W E E N:
C.H. CLEMENT CONSTRUCTION
Pasquale Santini, for the Plaintiff
Plaintiff
- and -
SEGUIN RACINE ARCHITECTES ET ASSOCIES INC., CONSTRUCTION BAO INC. and ADEX SYSTEMS INC.
Megan Marrie, for the Defendant Seguin Racine Architectes et Associes Inc.
Dan J. Leduc, for the Defendants Construction Bao Inc. and Adex Systems Inc
Defendants
- and -
ARXX BUILDING PRODUCTS and ARXX BUILDING PRODUCTS INC.
Third Parties
_
No one Appearing
for the Third Parties
HEARD: May 24, 2013
REASONS FOR DECISION
James J.
[1] This action involves a claim by the developer and general contractor of a 30 unit condominium complex near Rockland, Ontario against the project architect Séguin Racine Architectes et Associes Inc. (Séguin Racine), Construction BAO Inc. (BAO), the installer of the exterior acrylic stucco finish and Adex Systems Inc. (Adex Systems) the supplier of the acrylic stucco.
[2] There are two motions before the court seeking summary judgment dismissing the plaintiff’s action. One motion was initiated by Séguin Racine. The other was initiated by BAO and Adex Systems. Both motions are based on an allegation that the plaintiff’s action is statute-barred because the applicable limitation period expired before the action was started.
[3] For the reasons that follow I have determined that both motions ought to be dismissed.
The Parties
[4] The plaintiff is a construction company that performs residential and multi-residential construction as well as project management. It was formed in 2001. Charles Clement is the president of the company.
[5] The plaintiff was the general contractor and owner of the project in question prior to conveying the premises to the condominium corporation.
[6] The plaintiff’s claim relates to a water infiltration problem that it says is due to deficiencies with the exterior acrylic stucco finish.
[7] The defendant Séguin Racine is an architectural firm that provided architectural services for the project. Construction began in 2004 and was substantially completed near the end of 2005.
[8] The defendant BAO was hired by the plaintiff in June 2005 to install an exterior acrylic stucco finish to part of the exterior of the building. The building was also partly covered with a brick veneer.
[9] The defendant Adex Systems was the supplier of the acrylic stucco that was applied by BAO. BAO and Adex Systems are related companies in that they have common ownership.
The Water Infiltration Problem
[10] Residents began occupying their units in late 2005 as construction was nearing completion. Almost immediately there were complaints of water penetration in some corner units in rainy and windy weather.
[11] Mr. Clement arranged a site meeting in response to the complaints. Séguin Racine, the plaintiff, BAO and United Windows had representatives at the meeting.
[12] As a result of this meeting the plaintiff agreed to perform caulking with silicone sealant wherever there were cuts, joints, seams and openings in the acrylic stucco finish and around the windows. No further complaints were received until the following spring.
[13] It is not clear whether the caulking provided a temporary fix or the arrival of winter conditions meant that it was too cold for noticeable leaking to occur. By the following May there were new complaints of water penetration into the units.
[14] Mr. Clement consulted with his architect who recommended that the plaintiff perform water testing in an effort to identify the source of the problem.
[15] The plaintiff’s first test focused on the possibility that there were roof leaks that were allowing water to penetrate into the interior of the building. Mr. Clement says the testing program commenced subsequent to June 6, 2006. This date is significant because the statement of claim was issued two years later on June 6, 2008. The water test of the roof did not show any evidence of leaking.
[16] Next Mr. Clement arranged for the testing of the exterior wall and windows by systematically covering different components with polyethylene sheets and spraying water against the walls and windows. By a process of elimination the plaintiff suspected that water was penetrating through the acrylic stucco finish. The plaintiff’s first response to this discovery was to remove and replace the caulking in the affected areas but water continued to penetrate the wall. Mr. Clement described this testing program as inconclusive although this observation is open to contestation. Some of the tests were repeated with a representative of BAO present. Mr. Clement stated that the water again penetrated through the walls during the subsequent tests.
[17] In July 2006 the plaintiff retained Laviolette Engineering to investigate and prepare a report. A draft report was provided to the plaintiff on July 28, 2006 that included the following observations and findings:
a) the acrylic stucco coating was too thin in many locations;
b) two cracks were noted in the coating;
c) instances of debonded acrylic stucco coating were found;
d) when water testing of the acrylic coating was conducted around the rear living room window of unit 202, water penetration into the wall system readily occurred when water was sprayed in the vicinity of the window... it was clear that the water penetration was due to leakage through the acrylic coating;
e) the base coat of the acrylic coating was not as thick as required in certain locations allowing for water penetration.
[18] The engineering report concluded that the acrylic coating had not been properly applied and allowed water to penetrate to the interior of the building in certain locations.
Position of the Parties
[19] The plaintiff says that it did not have sufficient information prior to its receipt of the Laviolette report to identify the cause of the leakage problem. The plaintiff says the limitation period did not begin to run until July 2006 or later and accordingly, the action is not statute-barred.
[20] The defendants say that the plaintiff was aware by its own admission that there was a water infiltration problem in November 2005 and again in May 2006. The plaintiff had sufficient information to commence an action prior to June 2006. The plaintiff was not entitled to wait until it was certain who was liable before acting. The plaintiff identified the parties who were potentially liable and met with them following the initial leakage complaints in November 2005. The limitation period began to run at that time.
Discussion and Analysis
Availability of Summary Judgment
[21] The defendants are entitled to bring a motion for summary judgment dismissing the plaintiff’s claims if there are no genuine issues requiring a trial. In making this assessment, the judge hearing the motion may weigh evidence, evaluate credibility and draw reasonable inferences within certain limits. The motion judge must be satisfied that he or she is able to fully appreciate both the evidence and the issues. Sometimes the interests of justice require an opportunity for the presiding judge to hear and observe witnesses, to have evidence presented by way of a trial narrative and to experience the fact finding process first-hand.
[22] On a motion for summary judgment, the evidence and the issues are expressed primarily in a written form. The record does not take the form of a trial narrative.
[23] The requirement that there be a full appreciation of the evidence and the issues does not excuse the respondent from the need to put its best foot forward with respect to the material issues nor does it permit the respondent to sit back and rely on the possibility that more favourable facts may develop at trial.
The Limitation Period Issue
[24] Section 5(2) of the Limitations Act, S.O. 2002, c. 24 creates a rebuttable presumption that a person with a claim was aware of it on the day the act or omission on which the claim is based took place. Where, as here, the presumption is rebutted, the accrual of a limitation period is governed by the discoverability principle which postpones the running of the limitation period until the plaintiff knows, or by reasonable diligence could have known, the material facts upon which to bring an action. See Peixeiro v. Haberman 1997 325 (SCC), [1997] 151 D.L.R. (4th) 429 (S.C.C.).
[25] Where a defendant pleads a limitation period, the onus is upon the plaintiff to prove that the cause of action arose within the statutory limitation period, which in this case is 2 years.
[26] The balancing of a plaintiff’s right to have his action heard on its merits with a defendant’s right to at some point have certainty that he will not be called upon to defend himself against old claims engages the following considerations:
a. Limitation periods exist because there ought to be a time when a potential defendant should be secure in his reasonable expectation that he will not be held to account for ancient obligations;
b. Once a limitation period has lapsed, the potential defendant should no longer be concerned about the preservation of evidence relevant to the claim. Limitation periods are desirable to foreclose claims based on stale evidence once the limitation period has lapsed the potential defendant should no longer be concerned about the preservation of the evidence relevant to the claim;
c. Plaintiffs are expected to act diligently; statutes of limitation are an incentive for plaintiffs to bring their actions in a timely fashion. ( M.(K.) v. M.(H.), 1992 31 (SCC), [1992] 3 S.C.R. 6).
[27] The exact extent of the loss of the plaintiff need not be known for the cause of action to accrue. Once the plaintiff knows that some damage has occurred and has identified the tortfeasor, the cause of action has accrued. Neither the extent of damage nor the type of damage need be known. To hold otherwise would inject too much uncertainty into cases where the full scope of the damages may not be ascertained for an extended time beyond the general limitation period. (Peixeiro v. Haberman, supra, at para 18).
[28] Certainty of a defendant’s responsibility for the act or omission that caused or contributed to the loss is not a requirement. It is enough to have prima facie grounds to infer that the acts or omissions were caused by the party or parties identified. (Gaudet v Levy (1984), 1984 2047 (ON SC), 47 O.R. (2d) 577 (H.C.) cited in Kowal v. Shyiak, 2012 ONCA 512 at para. 18).
[29] In Kowal v Skyiak the Court of Appeal dealt with a similar fact situation in the context of a motion for summary dismissal of the plaintiff’s action. The homeowner plaintiffs acted as their own general contractor in the construction of their new house. They hired the defendant contractor to construct the house but then contracted directly with the third party Overall Plastering to install stucco finishing on the exterior of the home.
[30] Work on the home was completed in December 2005. In the spring of 2006 the homeowners observed water leakage around certain windows and doors and damage to their floors. The defendant contractor performed some caulking and installed some flashing as a repair but the leaks continued.
[31] In a telephone discussion between one of the homeowners and the defendant contractor in August 2007 their disagreement led one of the homeowners to say, “See you in court” and the homeowners acknowledged that at that point they knew the contractor would not be taking any steps to rectify the problem. In a letter in November 2007 the homeowners wrote to the contractor with a copy to the third party stating that the ongoing problems were the result of the contractor’s insufficient supervision during the course of construction as well as his refusal to do any further repair work.
[32] Several months later the homeowners obtained an engineering report that concluded the contractor had been negligent in failing to provide a rain tight exterior. In October 2008 Tarion Warranty Corporation obtained a report blaming the problem on the third party. In October 2009 the homeowners obtained a further report from another engineer who blamed the contractor.
[33] The homeowners commenced their action on November 17, 2009.
[34] Pepall J.A. concluded that by August 31, 2007 and certainly by November 1, 2007 the homeowners were familiar with all the material facts and there was ample evidence on which to base a claim against the contractor. An expert’s report was not required. Significantly, the Court of Appeal noted that the homeowners had consistently maintained the position that the contractor had failed to supervise and no report was required to advance that claim. The Court of Appeal allowed the appeal and determined that the action was commenced after the expiration of the limitation period.
[35] Notwithstanding the result in Kowal v. Shyiak in similar but not identical circumstances to the present case, I am persuaded by the plaintiff that the interests of justice require a trial. The fact-finding exercise associated with the application of the discoverability principle is highly contextual. It requires a determination of when the plaintiff had “sufficient material facts” to establish “prima facie grounds” to infer that the acts or omissions complained of were caused by the party or parties identified.
[36] In the Kowal case there was considerable delay after the first expert’s report pointed at the defendants and subsequent, conflicting reports were obtained. The homeowners maintained from an early stage that the contractor had failed in its duty to supervise the work of the third party but did not promptly institute a claim on this basis. In the present case the plaintiff knew it had a leaking problem but it didn’t know whether the problem originated with the plaintiff’s own work or the work of others. It didn’t know how the water was entering the units or where the leaks originated. The plaintiff explored other possibilities for the cause of the leaks that didn’t involve BAO or Adex Systems after the first remedial action failed and there were new reports of leakage in the spring of 2006. The plaintiff may be seen to have been satisfying its due diligence obligations in conducting the tests in June 2006.
[37] At paragraph 41 of his affidavit Charles Clement said he subsequently learned that as early as 2002 the Ontario Association of Architects was advising the profession about problems associated with the type of exterior finish the architect had specified for this project. At paragraph 40 he said that he believed the architect concealed his concerns respecting the impermeability of the acrylic stucco finish from the plaintiff due to his own potential liability exposure.
[38] Since this is a summary judgment motion, fact-finding must respect the summary judgment principles of full appreciation and interests of justice. At this stage the question is: “can the full appreciation of the evidence that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of a trial?” (Combined Air Mechanical Services Inc. v. Flesch, [2011] ONCA 764 at para. 50). The plaintiff was actively investigating the source of the leaks in June 2006 and this led the plaintiff to conduct testing in areas unrelated to the work of the defendants BAO and Adex Systems. The architect does not appear to have taken a position on the cause of the problem. Mr. Clement said in his affidavit at paragraph 28 that in June 2006 he had numerous discussions with his architect who recommended that the plaintiff hire an engineer to conduct tests and determine the cause of the water infiltration. The plaintiff did not receive a technical assessment of the problem until July. While expert’s reports are not always required, the obvious corollary to this statement is that there may be occasions when they are required. (Mark v. Guelph (City), 2010 ONSC 6034 at paras. 42, 43). I acknowledge the significance of the fact that the plaintiff met with the defendants in November 2005 to discuss the water infiltration problem. However, the totality of the evidence is not sufficiently certain to deprive the plaintiff of the ability to have the oral testimony of witnesses tested by cross-examination and assessed by a trial judge. The date on which the claim was discoverable is a genuine issue.
[39] Given my view of the proper disposition of the motions, it would not be appropriate to purport to make definitive pronouncements as to when in the sequence of events the limitation period began to accrue. Suffice it to say that on my assessment of the facts, the interests of justice require a trial.
[40] As previously indicated, there are two motions before the court. The plaintiff’s allegations of negligence against Seguin Racine flow from the allegations of deficiencies in the work of the other defendants. The issue of discoverability in relation to the BAO and Adex Systems informs and governs the issue of discoverability in relation to the architect.
Disposition
[41] The motions for summary judgment are dismissed. The plaintiff may submit its costs submissions and bill of costs within 10 days and the defendants shall have 10 days to respond.
Mr. Justice Martin James
DATE RELEASED: November 21, 2013
OTTAWA COURT FILE NO.: 08-CV-41754
DATE: November 21, 2013
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
C.H. CLEMENT CONSTRUCTION
Plaintiff
-and –
SEGUIN RACHINE ARCHITECTES ASSOCIES ET INC., CONSTRUCTION BAO INC. and ADEX SYSTEMS INC.
Defendants
-and-
ARXX BUILDING PRODUCTS and ARXX BUILDING PRODUCTS INC.
Third Parties
REASONS FOR JUDGMENT
Mr. Justice Martin James
DATE RELEASED: November 21, 2013