1606533 Ontario Inc. v. The Corporation of the City of Barrie, 2015 ONSC 490
COURT FILE NO.: 14-1449-A1
DATE: 20150122
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1606533 ONTARIO INC.
Plaintiff
– and –
ACACIO RAPOSO c.o.b. as EUROTOUCH RENOVATIONS, FUDA CONTRACTING INC., THE CORPORATION OF THE CITY OF BARRIE, STEVENSON INSURANCE BROKERS LIMITED and THE ECONOMICAL INSURANCE GROUP
Defendants
– and –
STINSON THEATRES LIMITED, DAVENPORT ARCHITECTURAL CORP. and ONTARIO BUILDING PERMITS REVIEW INC.
Third Parties
B. Prentice, for the Plaintiff
S. Zacharias, for the Defendant, The Corporation of the City of Barrie, Moving Party
HEARD: January 13, 2014
Cases Cited:
Hyrniak v. Mauldin, 2014 SCC 7, 2014 S.C.C. 7
Kamloops v. Neilsen, 1984 CanLII 21 (SCC), [1984] 2 S.C.R. 2
Ingles v. Tutkaluk Construction Ltd., [2000] S.C.R. 289
Foley v. Shamess, 2008 ONCA 588
Rothfield v. Manolakos, 1989 CanLII 17 (SCC), [1989] 2 S.C.R. 1259
Boucher v. Public Accountants, 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291
VALLEE J.
[1] In July, 2007, an extensive fire destroyed 67 Dunlop Street in Barrie. The defendant, The Corporation of the City of Barrie, brings this motion for an order to dismiss the plaintiff’s claim against it. The City states that that there is no genuine issue requiring a trial. The plaintiff opposes the motion on the basis that the City undertook an inspection of 67 Dunlop after the fire and had an obligation to also inspect 59 Dunlop for damage from the fire.
Test for Summary Judgment
[2] In Hyrniak v. Mauldin, the court provided guidance on the interpretation of rule 20 of the Rules of Civil Procedure and introduced a new test for summary judgment. Rule 20.04(2)(a) states that the court shall grant summary judgment if it is satisfied that there is no genuine issue requiring a trial. The court noted in paragraph 49 that if the process allows a judge to make the necessary findings of fact, apply the law to the facts, is a proportionate, more expeditious and less expensive means to achieve a just result, and if the judge is able to reach a fair and just determination on the merits of the motion, there will be no genuine issue requiring a trial.
Issues
Is there a genuine issue in the plaintiff’s claim against the City that requires a trial?
Is an order for summary judgment appropriate in the circumstances?
The City’s Position
[3] Almost none of the facts are in dispute in this matter. The principal of the plaintiff corporation is Mr. Joseph Lupo. For ease of reference, I will refer to the plaintiff as 1606. 1606 purchased a property, 67 Dunlop Street, Barrie, from Mr. Mitchell who is a principal of Davenport Architectural Corp. This company is a defendant in the third party claim. 67 Dunlop shares a common wall with the adjoining property, being 59 Dunlop Street.
[4] In July, 2007, there was a huge fire at 67 Dunlop. The fire was so extensive that it seriously damaged the entire building. The building had to be demolished; however, the common wall remained.
[5] Mr. Lupo and Mr. Mitchell were friends. Mr. Lupo hired Mr. Mitchell’s company, Davenport Architectural, to design a new building. According to Mr. Lupo, Mr. Mitchell told him that the common wall was “good to go.” Mr. Lupo understood that the common wall could be incorporated into the design for his new building. Davenport’s design for the new building did in fact incorporate the common wall.
[6] Davenport submitted its design for the new building. Rather than reviewing the design in house, the City sent it to a company known as Ontario Building Permits Review Inc. (“OBPR”). OBPR is a designated review agency pursuant to the Ontario Building Code. After reviewing the plans, it issued a certificate which stated that the proposed building complied with the Ontario Building Code.
[7] 1606 applied to the City and obtained a conditional building permit. The conditional permit allowed for the construction of footings. Furthermore, 1606 was to assume all risks associated with construction pursuant to the conditional building permit. The agreement relevant to the permit stated that 1606 was to indemnify the City for any claims with respect to the permit and was to pay the City’s costs to enforce the agreement.
[8] On July 9, 2008, almost a year after the fire destroyed 67 Dunlop, 1606’s excavator, Fuda Contracting Inc., was excavating along the common wall when it collapsed. There are several theories as to why the wall collapsed.
[9] The City summarizes the plaintiff’s allegations as follows:
The City had a duty to inspect 59 Dunlop including the common wall after the fire. It was damaged by the fire which was a contributing factor to its collapse.
There may be some deficiency with respect to the review of the plans in which case the City would be vicariously liable for OBPR’s review.
[10] The City does not have any liability with respect to what OBPR did or did not do. Schedule B to the Building Code Act, 1992, S.O. 1992, c. 23, provides as follows:
15.15 The following are the functions that a registered code agency may be appointed to perform in respect of the construction of a building:
Review designs and other materials to determine whether the proposed construction of a building complies with the building code.
Issue plans review certificates.
15.16(1) A registered code agency may exercise the powers and perform the duties specified in the Act and the Building Code in respect only of the functions and of building specified in a particular appointment.
31(3) The Crown, a municipality … is not liable for any harm or damage resulting from any act or omission by a registered code agency or by a person authorized by a registered code agency under subsection 15.17(1) in the performance or intended performance of any function set out in section 15.15.
31(4) The Crown, a municipality…is not liable for any harm or damage resulting from any act or omission in the execution or intended execution of any power or duty under this Act or the regulations by their respective chief building official or inspectors if the act was done or omitted in reasonable reliance on a certificate issued or other information given under this Act by a registered code agency or by a person authorized by a registered code agency under subsection 15.17(1).
[11] This schedule to the Building Code Act is clear that the municipality is not liable for any harm or damage resulting from any act or omission of a registered code agency. Furthermore, the municipality is not liable if a building inspector relied on a certificate issued by a code agency. The OBPR is not the City’s agent and cannot be as a matter of law. If there was an issue with the plans, OBPR has the liability.
[12] In this matter, OBPR issued a certificate that the proposed building complied with the Ontario Building Code. Accordingly, pursuant to s. 8(2.1) of the Building Code, the City was required to issue a building permit.
[13] If there was an issue with respect to whether the common wall should have incorporated into the new building design, it was Davenport’s obligation to make this determination. The plaintiff’s should have sued OBPR and Davenport with respect to these alleged issues.
[14] 1606 argues that the City owed it a duty to it to inspect 59 Dunlop after the fire. The plaintiff does not have an expert’s report that addresses the cause for the failure of the common wall. There is nothing before the court that raises an issue as to whether the City was supposed to inspect 59 Dunlop after the fire. On examination for discovery, Mr. Lupo said that he had no knowledge of any problem with 59 Dunlop. From the outside, it looked perfect. On examination for discovery Mr. Mitchell said that he had no reason to believe that 59 Dunlop was damaged by the fire.
[15] SWS Engineering Inc. was the first engineering company that was on the scene after the fire. The principal of SWS is Mr. Wong. In his report to Dominion Insurance dated July 13, 2007, he states that the scope of his retainer was “to provide a recommendation to secure the damaged building with a view to allow the re-opening of the sidewalks.” On page 2, item 3 of his report, he states “the higher portion of the west [common] wall should be lowered to the same height as the balance of the wall. Secure this wall with temporary bracing.” (The building at 67 Dunlop had been two storeys whereas the building at 59 Dunlop was only one storey. This accounted for the difference in the height of the common wall.)
[16] The City obtained an expert’s report in this matter dated July 10, 2013. It was prepared by Ms. M. Brown, P.Eng., CBO. She states in her report that,
Based on our experience reviewing damaged buildings and foundation collapses, and our involvement in bench footing and underpinning design and procedures, in our opinion the excavation directly adjacent to the existing masonry wall, where there a surcharge from the slab on grade from the adjacent building, was the trigger for the collapse.
[17] She also goes on to state that, “There was no indication that the building at 59 Dunlop was unsafe. No action was therefore necessary on the part of the City of Barrie.”
[18] The City states that 1606 may disagree with Ms. Brown’s opinion; however, there is no evidence before the court to challenge it. The court is to assume that 1606 has put its best foot forward on this motion.
[19] As previously noted, 1606 and the City entered into an agreement for a conditional permit. That agreement included an indemnity clause. With respect to the indemnity agreement paragraph 3 of that agreement states:
Indemnification and Assumption of Risk
- The owner indemnifies Barrie from and against all suits and claims of any nature arising out of or connected with the issuance of the conditional building permit and assumes all risks involved in commencing the subject construction before every requirement for a building permit has been met.
Owner to Pay all Costs
- The owner shall pay all reasonable costs incurred by Barrie for its Solicitor (on a solicitor and own client basis), its staff, agents, officers or consultants, for the preparation, registration, administration and enforcement of this agreement.
[20] In accordance with this agreement, 1606 is obligated to pay the costs associated with the City’s enforcement of the agreement.
[21] In the agreement, the collapse of the common wall was a risk that 1606 assumed. It agreed to the City’s costs of enforcing the agreement. This includes defending this action, making a third party claim and bringing this motion.
Analysis
Is there a genuine issue requiring a trial with respect to whether the City had a duty to inspect 59 Dunlop after the fire?
[22] It appears that the City is not liable for any acts or omissions of OBPR, given the language of s. 31(3) of the Building Code Act.
[23] With respect to its allegation of negligence against the City, 1606’s counsel referred me to three cases, Kamloops v. Neilsen, Ingles v. Tutkaluk Construction Ltd. and Foley v. Shamess. In Kamloops, the court held that in discharging an operational duty, the city owed a duty of care to persons whose relationship was sufficiently close that they ought to have been reasonably within its contemplation as likely to be injured by a breach of its duty. The court asked whether it was within the reasonable contemplation of the municipality that carelessness on its part could cause damage to persons. In Ingles, the court held that if an inspection had taken place, the municipality had a duty of care to all those who could be injured by a negligent misrepresentation. Foley concerned a town’s enforcement of its by-law when it knew that a building was derelict. These cases can be distinguished from the case at bar because in each one, the municipality already knew about the issues that were the subject of the actions. In the case at bar, the City did not know that 59 Dunlop had been damaged by the fire. The question is whether the City ought to have investigated 59 Dunlop given its responsibility for health and safety and whether its failure to do so amounted to negligence.
[24] As noted above, the City obtained an expert’s report from Ms. Brown. Ms. Brown did not attend at the property. She was retained after the fact in May, 2012. Her opinion is based on only a review of documents. In her report, she states that “the neighbouring property to the east, at 59 Dunlop Street West, was not damaged by the fire except for a broken window.” This is an important point which informs her opinion. The basis for this statement deserves some comment.
[25] Ms. Brown appears to have relied on Mr. Lupo’s comment that he had no knowledge of any problem with 59 Dunlop and from the outside, it looked perfect. The City provided to Ms. Brown transcripts of Mr. Lupo’s examination for discovery. The City also provided excerpts on this motion. The excerpt from the transcript dated December17, 2008, page 150 is as follows:
768 Q. Now, to your knowledge, was the Stinson building [59 Dunlop] damaged by the fire?
A. Probably was some damage because there was a lot of water go on top of the roof.
Q. So - -
A. They never did maintenance, so I’m sure there is some on top of the roof, some damage.
770 Q. So let me understand your answer for a second. You said you’re sure there was some damage because there was a lot of water on the roof. So is that speculation on your part that there was damage or you knew there was damage?
A. No, I don’t know. I assume it is most of the damage because when the wall collapse, they went inside there and then the roof was down too because this thing went down.
771 Q. So maybe what you can do is explain to me because I’m not quite understanding what you’re saying. So you looked up and you saw something that you said, ok, I think the roof is damaged because of what I see?
The questions and answers that followed this excerpt were not provided.
[26] Ms. Brown also comments that SWS Engineering was on the site shortly after the fire occurred. She states that the SWS report “did not indicate that there was any damage to the adjacent roof at 59 Dunlop Street West.”
[27] It should be noted that SWS was not retained to provide advice as to whether 59 Dunlop suffered any damage from the fire. SWS states in its report that it was retained to provide “recommendations to secure the damaged building [67 Dunlop] with a view to allow the re-opening of the sidewalks.” It is curious that Ms. Brown infers that there was no fire damage to 59 Dunlop because the SWS report does not mention any when SWS was clearly not retained to inspect 59 Dunlop.
[28] In addition, in the instructing letter that the City’s counsel sent to Ms. Brown dated May 31, 2012, he states,
In July 2007, there was a fire in the building located at 57 Dunlop. That building was owned by the plaintiff, 1606533 Ontario Inc. (the “numbered company”). The neighbouring property located at 59 Dunlop Street was also damaged in the fire. It was owned by Stinson Theatres Limited.
[29] The City inspected 67 Dunlop after the fire. In the City’s order to comply dated July 9, 2007 the inspector, Mr. Flucker, comments that the damage to 67 Dunlop occurred “due to an extensive fire.” The fire was so extensive that it damaged 67 Dunlop to the point that it had to be completely demolished. It seems to me that a reasonable person, even a lay person, would have reason to believe that the adjacent property, 59 Dunlop, including the common wall with 67 Dunlop, could have also been damaged by the fire.
[30] A municipality has an overarching responsibility for the health and safety of its inhabitants. If there was a possibility that 59 Dunlop might have been damaged by the fire, any occupants in that building could be subject to a safety risk.
[31] Furthermore, the City is the authority with jurisdiction in this matter. It is an objective entity. A building inspector can go into a privately owned building to inspect for safety. Nobody else can enter a privately owned building for this purpose unless he or she is permitted to do so by the owner.
[32] It could be said that the municipality had an obligation to inspect 59 Dunlop. As noted above, there is some indication that 59 Dunlop was damaged by the fire. Just because Mr. Lupo and Davenport thought that it looked fine does not absolve the municipality from its duty with respect to safety. Damage compromising safety might not be seen on the surface of the building. The record before me does not show whether anyone inspected 59 Dunlop’s roof after the fire. It is plain that the City did not inspect it.
[33] A traditional application of negligence principles requires the court to determine
whether the City owed a duty of care to inspect 59 Dunlop for potential fire damage and safety issues,
if it did, whether the City breached that duty and,
if it did, were people whose relationship was sufficiently close that they ought to have been within the City’s contemplation as likely to be injured by a breach of its duty actually injured.
[34] In Rothfield v. Manolakos, the court commented on page 12,
Moreover, in my view, the distinction sought to be made between owner builders and third parties overlooks the fact that both are ratepayers for whose safety the bylaw was passed. The inspection of plans and the supervision of construction increases the costs of construction for everyone. But I think that most ratepayers, were they to give the matter any thought, would justify the increased expense as an investment in peace of mind: faulty construction, after all, is a danger to life and limb and may result in future expense and liability. This applies equally to owner builders and third parties. Both are justified in saying: “I pay for the provision of an inspection service, and so long as I act in good faith, I should be entitled to rely on the city to exercise reasonable care to ensure that all construction is built according to the standards set out in the bylaws….It must be borne in mind that a municipality, once it has made the policy decision to inspect construction, is not bound to discover every latent defect in a given project, nor every derogation from applicable standards. That would be to hold the municipality to an impossible standard. Rather a municipality is only called upon to show reasonable care in the exercise of its powers of inspection. Accordingly, a municipality, whether the duty of care is owed to an owner builder or a third party, will only incur liability for such defects as it could reasonably be expected to have detected and to have ordered remedied.
[35] In the case at bar, the City was not inspecting construction; however, it undertook an inspection of 69 Dunlop on July 9, 2007 and issued an order to comply. The order stated,
Above noted address damaged on 1st and 2nd floor and flooded in basement due to extensive fire and structural failure. Is unsafe and shall be made safe or demolished.
[36] The City did not inspect 59 Dunlop Street. It may have some liability in this matter because a reasonable person, even a lay person, could have believed that there might be damage to 59 Dunlop given the fact that the two properties shared a common wall and the fire was extensive. On this motion, I am not making a positive finding in that regard.
[37] The conclusions in the City’s expert’s report raise some questions as noted above. I am not satisfied that there is no genuine issue relating to the City’s potential liability that requires a trial. A trial judge, who will have a complete record and an opportunity to assess witnesses, will be in the best position to determine whether the City has any liability in this matter.
[38] Accordingly, the City’s motion for summary judgment is dismissed.
Costs
[39] The plaintiff has been successful in defending this motion for summary judgment. Plaintiff’s counsel submitted a Costs Outline setting out the work that was done and the related time. I am satisfied that the partial indemnity rate is appropriate and the time spent was reasonable.
[40] The court’s discretion to fix costs is found in rule 131 of the Courts of Justice Act, R.S.O. 1990, c.C.43. Rule 57.01 of the Rules of Civil Procedure sets out factors that the court should consider in assessing and fixing costs. Ultimately, in fixing an amount for costs, the overriding principles are fairness and reasonableness. See Boucher v. Public Accountants.
[41] In my view a fair, reasonable and proportionate costs award for this motion is $5,000 all inclusive, which the City shall pay to the plaintiff within 30 days.
VALLEE J.
Released: January 22, 2015