Court File and Parties
COURT FILE NO.: CV-08-366384 DATE: 2022-09-16 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Orillia Soldier’s Memorial Hospital, Plaintiff AND: PCL Constructors Canada Inc., Defendant
BEFORE: Pollak J.
COUNSEL: Ian C. Matthews & David Major, for the Plaintiff Jamie Spotswood & Camille Beaudoin, for the Defendant
HEARD: March 7-16, 2022
ENDORSEMENT
Introduction
[1] The Plaintiff, Orillia Soldiers Memorial Hospital (the “Hospital” or “OSMH”), is located in Orillia, Ontario.
[2] The Defendant, PCL Constructors Canada Inc. (“PCL”), carries on work in Manitoba, Ontario, and the Maritimes.
[3] On September 18, 2003, the Hospital and PCL entered into a CCDC-2 1994, stipulated price contract, in which PCL agreed to construct a substantial addition to the Hospital and to perform renovation work (the “Contract”).
[4] Pursuant to the Contract, the “Consultant” is Parkin Architects Limited (“Parkin”). Parkin’s authorized representative with respect to mechanical and electrical matters is Rybka, Smith and Ginsler Ltd. (“RS&G”). In 2004, RS&G joined with Marshall Macklin Monaghan Limited and subsequently became MMM Group Limited (“MMM”). MMM replaced RS&G under the Contract as Parkin’s authorized representative with respect to mechanical and electrical matters.
[5] MMM prepared the Contract Specifications for the AHU-104 controls.
[6] PCL retained Sayers and Associates (“Sayers”) as its mechanical subcontractor to perform the mechanical work under the Contract. Sayers installed, air handling unit 104 (“AHU-104”). Sayers retained Optimira Controls (“Optimira”) as the sub-sub-contractor to perform Building Automated System (“BAS”) controls work under the Contract. Optimira further sub-contracted some of its work to Absolute Building Controls (“ABC”).
[7] Optimira and ABC implemented the Contract Specifications for the BAS controls by creating the sequences that communicate to the BAS how to automatically control the operation of the AHUs, including AHU-104.
[8] Under the Contract, the “Consultant” is Parkin. Parkin retained RD&G to act as the mechanical and electrical consultant, which, as mentioned above later joined with Marshall Macklin Monaghan to subsequently become MMM Group Limited (“MMM”).
[9] PCL also retained Sutherland-Schultz Inc. (“SSI”) as its electrical subcontractor to perform electrical work under the Contract. SSI installed the electrical components to the AHUs under the Contract, but not the controls to the AHUs.
Damages Claimed
[10] On February 12, 2008, there was a significant over-humidification event in the operating rooms of the Hospital.
[11] I refer to the following summary of the events leading up to the damage claimed from Mr. Okrutny’s report, which I find is a helpful description:
“An over-humidification event occurred within the operating rooms at OSMH located at 170 Colborne Street West in Orillia, Ontario.
In early February 2008, an AHU (referred to as “AHU-104N”) could not heat the incoming outdoor air, so its internal thermostat (referred to as “freezestat”) began tripping (i.e., shutting down) AHU-104N to prevent the unheated air from being drawn into the building. Hospital staff notified PCL Construction (“PCL”) to the tripping of the freezestat. Manual intervention was required to restart the air handling unit after every trip. PCL did not respond, requiring OSMH staff to manually address the tripping air handling unit to maintain required indoor air quality.
Each time the air handling unit was manually restarted, an unpleasant chemical order was reported as emanating from the air duct system. Investigation of this odor indicated that the humidifier steam valve, controlled by the return air humidity sensor, was opening too wide and releasing too much steam into the duct system during restart. Using the BAS remote control, hospital operators turned off the humidifier steam valve by setting the valve position to 0%.
Closing off the humidity valve led to a drop in humidity. To maintain adequate humidity levels while being cognizant of the chemical odor issue, the valve position was set to only 10% open. Reported information suggests that setting the humidifier steam valve to only 10% open did not provide enough steam to meet humidity demand. Logs further suggest that the valve position was increased to 30% open, but this amount of steam also proved inadequate at meeting humidity demand. Eventually, the valve was set to 60% open. The air handling system operated in this state for approximately 10 hours.
In the early hours of February 12, 2008, the freezestat again tripped AHU-104N. While the supply fan turned off, the steam humidifier remained on. The humidifier valve never closed. This created a situation where no fresh air was drawn into the building while the building air continued to be humidified. Steam began to accumulate within the ductwork connected to AHU-104N, and humidity levels increased to levels that caused damage to hospital equipment and supplies.”
[12] The evidence is that air saturated with 99% relative humidity, which temperature sensors measured at approximately 60˚C, flowed unabated into the Operating Rooms (“ORs”) for more than three hours from AHU-104.
[13] The Hospital claims it suffered damages from this event of $908,345.13 and that interest on these damages has been accruing at the contractually agreed to rate of the Bank Rate plus 3% compounded monthly. The issue before this Court is whether the Hospital has proven, on a balance of probabilities, that the Defendant, PCL, is contractually responsible for these damages.
[14] The parties have agreed to the facts set out in Schedule “A”.
[15] The parties reached an agreement with respect to expert evidence as follows:
“Paul Okrutny, a senior forensic engineer engaged as a litigation expert on behalf of the Plaintiff, shall be tendered as an expert in the forensic investigation, diagnosis and identification of the sources(s) of failure(s) for mechanical systems in commercial settings, including air handling units in healthcare settings.
Clive Lacey, a consulting engineer engaged as a litigation expert on behalf of the Defendant, shall be tendered as an expert in mechanical engineering with experience in the design, operation and functioning of HVAC systems including air handling units in commercial buildings, including hospitals.
The qualification of Messrs. Okrutny and Lacey as experts with the above-noted expertise is subject to the approval of the court and is without prejudice to the ability of either party questioning the other party’s expert about the level of relevant expertise and arguing what weight, if any, should be given to the substance of the expert’s opinion.
Subject to the approval of the trial judge, this Joint Brief of Expert Reports shall be marked as a lettered exhibit at the trial. As each experts’ reports in this brief is identified and authenticated by the respective expert, these expert reports are to be made numbered exhibits.”
[16] Mr. Okrutny’s summary of the installation process of a typical AHU is that it generally follows the same sequence of events. “First, a building owner will provide the air quality requirements to a consultant. The consultant will design an AHU capable of meeting those requirements. The design will then be provided to the installing contractor who will produce shop drawings. Shop drawings are simplified versions of the design. The shop drawings may be provided to the manufacturer and/or to the physical installer who is installing the specific AHU. Once the unit was fully installed, and before it was handed over to the operator, it is commissioned by a third party to ensure operation is in line with the specification.”
Theory of the Plaintiff’s case
[17] The theory of the Plaintiff’s case is that there were installation deficiencies of AHU-104 that caused the damage claimed in this Action. It is submitted that each installation deficiency provides a basis to support a finding that PCL is responsible for the Hospital’s damages. It is its position that a remedy of each installation deficiency could have prevented the over-humidification event on February 12, 2008:
“The humidification valve on AHU 104 should have closed when a “freezestat” trip shut down AHU 104 and its supply fan. A “high limit” sensor should have prevented humidity levels in AHU 104 from exceeding 80% by overriding and shutting the humidification valve. Once humidity levels in AHU 104 exceeded 90%, an alarm should have triggered. The discharge isolation dampers, through which humidified air passed before flowing into the ORs. It is submitted that these are all installation deficiencies for which PCL is liable.”
[18] The Plaintiff also claims that even if none of these installation deficiencies have been proven, PCL was contractually bound to provide training to Hospital operators on the operation of the BAS, including system configuration, software commands, and control intervention. In the alternative, if AHU-104 was correctly installed, PCL is contractually liable for failing to properly train or warn Hospital operators. There was no evidence of any training of Hospital operators on the consequences that could allegedly result in the operation in “manual mode”.
[19] PCL’s defence is that the BAS controls were properly installed with built-in functionality to allow an operator to manually adjust humidification, thereby bypassing all safety devices designed to protect against excessive humidity and that the damage was caused by the Hospital’s error.
[20] Based on its expert evidence, the Plaintiff’s reply to PCL’s defence is that it breached the contract by not properly installing AHU-104N. The safety measures that should have been installed are not only restricted to operate on “automatic” mode, but also when using the manual mode. It is submitted that the contractual documents and/or specifications outlining how AHU 104 controls were to be installed do not draw the artificial distinction between functionality in “automatic” versus “manual” mode.
[21] The Plaintiff also argues that there was no operator error by the Hospital. It properly used BAS functionality to set humidification levels. It had no reason to think there was anything improper in it doing so. Hospital operators had manually adjusted humidification valve positions before February 12, 2008 with no adverse consequences. Prior to leaving the hospital on February 11, Hospital personnel deliberately re-engaged the freezestat that they had “jumpered” earlier in the day to keep the air handling unit running.
[22] It is the Plaintiff’s position that interlocks, overrides, fail-safes, and alarms are all components of air handling systems and controls that exist to guard against unforeseen consequences. The issue in this trial is whether installation deficiencies are the proximate cause of the Hospital’s damages and not the Hospital’s operation of the system.
[23] PCL’s response is that the AHU-104 installation complied with the contract on all applicable standards. If it did not comply, PCL argues that it is a result of a design error for which PCL is not responsible. There was, however, no evidence of why such failure would be a “design” error as opposed to an installation error or how to determine whether something is an installation or design error.
[24] The Contract provided that the Consultant, Mr. Gabe Amar of MMM Group is the interpreter of the contract in the first instance. Mr. Amar had the authority to make “findings as to the performance pursuant to the Contract” by the Hospital and PCL without partiality to either party. Mr. Amar, who was qualified as an expert witness, delivered a report with his findings on February 29, 2008, in which he identified deficiencies. At the time the report was made, PCL made no objections to these findings. It is submitted that pursuant to the contract, PCL was deemed to have accepted Mr. Amar’s findings in March of 2008. It, therefore, cannot challenge its liability under the contract.
[25] PCL was responsible for the proper performance of the Work and was obligated to correct promptly, at its expense, defects or deficiencies in the Work which appear prior to and during the warranty periods specified in the Contract Documents.
[26] Pursuant to GC 2.2.6 of the Contract, the Consultant, as the interpreter of the requirements of the Contract, makes findings with respect to the performance by both parties to the Contract. A party is deemed to have accepted the finding of the Consultant and to have expressly waived and released the other party from any claims in respect of the particular matter dealt with in that finding unless, within fifteen Working Days after receipt of that finding, the party sends a notice in writing of dispute to the other party and to the Consultant.
[27] It is an agreed fact (in Schedule “A”) that the MMM Report contains the findings the consultant made findings regarding AHUs 104, 105 and 106 shutting down on freezestat on February 11-12, 2008. As PCL did not respond to these findings, PCL is deemed to have accepted those findings of the deficiencies.
[28] PCL’s argument is that the MMM Report does not constitute notice of the Consultant’s interpretation of the Contract. I do not accept this argument. PCL could, in my view, have responded to the MMM Report which, in my view, was not vague as alleged, as it did specifically identify “deficiencies”. If such deficiencies were not installation deficiencies, for which PCL was responsible, PCL should have objected or asked for clarification. Further, the expert evidence of the Hospital confirms the MMM Report’s finding of a “deficiency” as an installation deficiency.
[29] If I am wrong in my finding that the contract precludes PCL from objecting to the findings of the MMM report, I have concluded below that I prefer the evidence of the expert testifying for the hospital with respect to a finding that there was an installation deficiency by PCL.
[30] I do find that PCL is deemed to admit the findings contained in the MMM report which are that there were deficiencies in the installation of the HVAC system for which PCL was responsible.
The Expert Evidence
[31] The principal point of disagreement between the expert witnesses is whether the freezestat should have shut down the manually set humidification valve when AHU-104 tripped into freezestat.
[32] PCL emphasizes that Mr. Okrutny has never designed controls for a Hospital HVAC system and submits that his opinion “imports a retrospective bias slanted to his expertise in loss prevention, which does not accurately describe the standard in question”. Also, that Mr. Okrutny is a generalist forensic engineer with a background on materials sciences, not HVAC design and operation. He did not design HVAC specifications. The Specifications were prepared in 2003 and he became a licensed professional engineer in Ontario in 2014, more than 10 years after the Specifications were prepared in 2003. His business expertise is advising insurance professionals about loss prevention. His opinions are coloured by his loss prevention practice.
[33] I do not accept these submissions and accept his opinion on the failure of the HVAC systems. Design experience is not necessary, in my view, to assist the court. I prefer Mr. Okrutny’s expert evidence over that of Mr. Lacey, who did not provide the court with his opinion on whether there was an installation deficiency.
[34] I find the evidence of the Hospital’s expert Mr. Okrutny to be of assistance to the Court. This expert evidence is that the failure of the humidifier to be interlocked with the AHU supply fan is an installation deficiency contrary to the standards set out in the Contract and in The applicable Building Code. I accept his opinion that the act of the Hospital of setting the humidification valve manually was not the cause of the loss. Rather, had the system been installed properly with the required interlock as required by the Contract, the loss would not have occurred.
[35] His evidence is that:
“CSA-Z317.2 is a standard, maintained by the Canadian Standard Association, which describes the best practices for designing, installing and operating an AHU within healthcare facilities. In accordance with CSA-Z317.2, designers, installers and operators must ensure the AHU operates within a narrow humidity range and that high humidity limits are installed to prevent over-humidification. An example of a CSA-Z317.2 requirement is an interlock between the supply fan and the humidifier. Interlock simply means that one component cannot function without the other one.
CSA-Z317. 2-01, Section 6.9.5.1 (Figure 1) states that the humidifier systems shall be interlocked with the AHU supply fan. It further states that the steam control valve (humidifier valve) “normally shall be closed”. “Normally closed” describes the state of the component at shut down. The humidifier valve shall close by default when the interlock circuit is broken.”
6.9.5 HUMIDIFCATION CONTROLS
6.9.5.1
Humidifier systems shall be fully modulating and interlocked with the air handling unit supply fan(s). Steam control valves used on humidifiers normally shall be closed.
Note: Interlocking through airflow switches only is not regarded as sufficient.
6.9.5.2
Relative humidity discharge air high limit controls shall be provided, set at a maximum of 90% RH, and arranged to override the operating control.
Note: The purpose of this Clause is to provide for a mechanism to sense and control the high limit of the discharge of the air handling unit, and to limit or shut down the humidification if the airflow fails for any reason.
“In other words, Section 6.9.5.1. states that the humidifier shall be hardwired with the supply fan via a limit circuit, and if this limit circuit is broken via a sensor that detects a supply fan shut down, the humidifier valve will revert to its normally closed position. In short, the humidifier valve closes when the supply fan shuts down.
CSA-Z317. 2-01 does not describe what happens when the humidifier valve position is modulating automatically, nor what happens when the humidifier valve position is manually set using the BAS. This is because interlocks are not capable of distinguishing whether the humidifier valve is automatically modulating, or if its has been manually set using the BAS. As mentioned, interlock sensors are generally basic on/off switches that react to a specific event (low temperature, fan failure, etc). These sensors cannot detect the logic/programming or state of the BAS. CSA-Z317.2-01 does not describe what happens to the interlock system if the humidifier valve position is manually set via the BAS because the interlock system cannot detect the humidifier valve state.
Since interlocks do not have the ability to distinguish between the manually set or automatically set position of the humidifier valve, a correctly installed interlock system will always shut down the humidifier in the event of a supply fan shut down, including a shut-down triggered by a freezestat.
[36] I agree with the MMM Group report, which indicated that the humidifier remaining on after the supply fan was turned off was an installation deficiency.
[37] If installed correctly, per specifications and per general practice outlined within CSA-Z317.2, the humidifier should have shut down as soon as the supply fan shut down and/or the high humidity controls should have taken over control of the humidity valve as soon as air supply humidity levels surpassed the 80% humidity high limit. However, neither of these two specified high limit controls appeared to have been correctly set up in the overall installation of AHU-104N.
[38] PCL’s expert Mr. Lacey did not provide an opinion on whether PCL had improperly installed the HVAC system. He testified that:
a. “Placing a valve in a manual or fixed position requires that it be monitored and supervised by operating personnel and not left unattended;
b. Had the Hospital left the humidification valve in automatic mode, it would have shut when the freezestat tripped based on previous freezestat events (a reasonable conclusion based on the available evidence);
c. The humidification valve remained open after the freezestat tripped on February 12, 2008, because Hospital staff had left the valve in a manual position that was not affected by the automatic shutdown of the supply fan or humidity sensor;
d. He does not agree that the over-humidification occurred because the humidifier remained on because it was not interlocked with the supply fan per design specifications and industry standards namely CSA-Z317.2;
e. He is of the opinion that, when under automatic control, the system was complaint with CSA Z317.2-01 and that item 6.9.5.2 is specific that humidity contol should override the operating control but silent in regards to what happens when the humidification system is under manual control;
f. Based on his review of relevant documents, there is and was in 2008 no industry standard, publication practice, or code requirement that defines that manual setting of valves be automatically controlled by other logic of the BAS;
g. Based on the codes and standards reviewed, it is not a requirement, nor was it in 2008 to include an overarching “Deadman” safety/switch on a buidling automation system;
h. The AHU system at the date of the Over-Humidification Event was compliant with CSA Z317.2-01;
i. In addressing item 1 on page 2 of the MMM Report, Mr. Lacey writes, “It is not clear to us why this is considered a deficiency.” and when questioned, he confirmed that he did not agree with Mr. Amar that the humidification valve staying open in a manual setting was a deficiency.”
[39] Mr. Lacey testified that AHU-104 was controlled by electronic, automatic signals, which included an interlock between the supply fan and the humidifier, consistent with the Specifications, standards, and industry practice at the relevant time.
[40] With respect to Section 6.9.5.1 of CSA-Z317.2-01 , Section 6.9.5.1 states:
[41] Mr. Lacey testified that this standard speaks to a “modulating” humidifier. This plain language contemplates a humidifier operating automatically.
[42] He testified that the controls sequence Specifications contemplate automatic controls and describe the sequence of events when AHU-104 is functioning automatically. Mr. Gloge also testified confirming this.
[43] Mr. Lacey testified that the Specifications do not state that the humidification valve must close if left in manual mode when AHU-104 shuts down on freezestat. If this was intended, the designers should have stated this in the Specifications.
[44] I note that this, however, is not the relevant question. The relevant concern is the failure to install the interlock of the supply fan and humidification valve as required in the specification.
[45] The Optimira Shop Drawings describe the freezestat as a “low limit controller located after the reheat coil stops the supply fan if the measured air temperature drops below 4C. The low limit controller must be reset.”
[46] The Shop Drawings also describe the supply air humidity sensor as follows:
[47] Mr. Lacey testified that this description of the sensor contemplates that the AHU-104 controls are left in their intended automated state and that this is consistent with the Specifications.
[48] Further, it is the evidence of Mr. McCarthy in his cross-examination that “corrections were made to the AHU to address the installation deficiencies identified by the MMM Group.” Following the deficiency correction, the hospital no longer experienced issues with AHU-104N.
[49] There was no evidence that PCL or its subcontractors found the Specifications vague.
MMM REPORT
[50] Mr. Amar’s findings in the MMM Report, are in part:
[51] PCL emphasizes that the MMM Report does not state that there are “installation deficiencies”. Mr. Amar testified that these were installation deficiencies.
[52] I accept Mr. Amar's evidence in this regard. There was no evidence to support a finding that the deficiencies which were identified in the report were or could have been considered to be "design deficiencies". If PCL considered these to be design deficiencies, they could have, and should have objected with a response that they had no obligation to correct these deficiencies as they were design deficiencies for which they were not contractually responsible. As I have referred to above, the evidence is that PCL did correct this deficiency after the damage was incurred.
[53] I do not accept PCL’s criticism of the circumstances surrounding the creation of the MMM Report as being confusing and inconsistent as to their confusion over who was in attendance at the meeting. Further, PCL notes that Mr. Amar confirmed that he provided a draft of the MMM Report to Mr. McCarthy on March 1, 2008. He testified that he did not provide a draft to PCL and Mr. Gloge testified that he had no recollection of receiving a draft of the MMM Report before it was finalized.
[54] Mr. Amar’s provision of a draft of the MMM Report to Mr. McCarthy for comment but not to PCL. He had the obligation of dealing with the parties equally and impartially.
[55] PCL submits that Mr. Amar, who is not an engineer, is a long-term employee of MMM, the Hospital’s consultant. PCL argues that Mr. Amar is not a disinterested neutral party or a Rule 53 expert who must acknowledge duties of impartiality. His interests align with a finding that PCL was negligent. If PCL is not negligent and this Court finds that PCL installed AHU-104 in accordance with the Specifications, then potentially MMM could be deemed at fault. Mr. Gloge of PCL and Mr. Lacey were asked about this section of the MMM Report and both testified that they did not agree that “the continued operation of the humidifier in manual mode should be considered a deficiency”.
[56] I do not find the evidence supports the allegation of bias. I have found that by operation of the Contract, PCL has accepted the conclusions in the MMM Report. Further, I have also accepted the expert evidence of Mr. Okrutny, which I have referred to above, which confirms the findings of Mr. Amar.
[57] Mr. Okrutny’s opinion is consistent with the findings set out in the MMM Report.
[58] Further, the Hospital submits that PCL failed to fulfill its obligations pursuant to the Contract to install AHU-104. PCL failed to exercise the standard of care, skill and diligence that would normally be provided by an experienced and prudent contractor.
[59] PCL submits that the supply system control diagram is unclear with respect to whether it applies to circumstances where the system is in automatic or manual mode. Pursuant to GC 3.4.2, PCL had the obligation to clarify “any doubt” with contractual interpretation:
“If the Contractor finds discrepancies in, or omissions from, the Contract Documents or has any doubt as to the meaning or intent of any part thereof, it must immediately notify the Consultant, who will provide written instructions or explanations. Neither the Owner, nor the Consultant will be responsible for oral instructions.”
[60] On the basis of the expert evidence, I agree with the Hospital’s submission that the supply system control diagram applies in both automatic and manual mode.
[61] PCL was required to provide training programs for the Hospital's personnel to allow the Hospital's operators to understand the operation and programs of the BAS.
[62] I have found that PCL is deemed to accept Mr. Amar’s findings as set out in the MMM Report. If I am wrong however, I also find that PCL is liable for its breach of contract for failure to install AHU-104 in accordance with the contractual requirements.
[63] PCL submits that the Hospital caused the Over-Humidification Event by interfering with AHU-104’s controls and that AHU-104 was installed as per the Specifications, standards and codes, and industry practice.
[64] Pursuant to the Contract, PCL had care and control of AHU-104 on February 12, 2008. It is submitted that the Hospital breached the contract by interfering with the system when PCL was present on the construction site.
[65] The Contract provides at GC 9.1.1, that PCL shall be responsible for damage to the Hospital’s property as a result of PCL’s operations under the Contract but not if the damage occurs as a result of the acts or omissions of the Hospital. PCL relies on this provision to relieve it of liability for the Over-Humidification Event which the Hospital caused.
Actions of the Hospital
[66] The Hospital’s evidence is that every time AHU-104 was restarted following a freezestat, AHU-104 emitted an unpleasant odour. The Hospital was aware of the unpleasant odour before the Over-Humidification Event. The reason the Hospital overrode the Humidification Valve was to avoid the unpleasant odour.
[67] Before February 11, 2008, the Hospital had never “jumpered” nor bypassed the freezestat system. The Hospital did not advise PCL, MMM, Parkin or Optimira of its intention to do so.
[68] “Jumpering” the freezestat means mechanically bypassing the system to disable it so the reezestat would not engage and the air would continue passing through the system.
[69] By “jumpering” the freezestat on February 11, 2008, the Hospital recognized that the cold air which continued to pass through the AHU system – because the Freezestat was disabled – could damage the AHU system.
[70] Hospital staff monitored the BAS throughout the day on February 11, 2008, when the freezestat was disabled.
[71] OnFebruary 11, 2008, at 2:34 p.m., in order to alleviate the unpleasant odour in the operating rooms from the steam treatment chemicals every time AHUs 104 and 105 were restarted, a Hospital facilities employee logged into the BAS and set a manual value for the positioning of the humidifier valve for AHU-104.
[72] The rationale the Hospital provided for the override was to maintain a steady flow of humidity to avoid the chemical smell that emanated from AHU-104 each time it was restarted. With the Freezestat disabled, AHU-104 would not shut down and there would be no restarts with a chemical smell in the humidity. PCL submits that therefore, there was no sensible reason to override the humidifier’s automated or to leave it unattended overnight.
[73] The Hospital did not tell any contractor of PCL, of its intention to override the automatic settings, the Hospital did the following:
a. At 2:53 p.m. on February 11, 2008, the value for the humidification valve for AHU-104 was set to 10% by a Hospital employee;
b. At 3:14 p.m., the Hospital employee set the value for the humidification valve for AHU-104 at 30%;
c. At 3:34 p.m., the Hospital employee set the value for the humidification valve for AHU-104 at 60%.
[74] In the evening of February 11, 2008, before 11:00 p.m., the Hospital’s facilities employee, Paul Calverley, removed the freezestat jumpers on AHUs 104 and 105 and re-engaged the freezestat for these AHUs.
[75] The Hospital did not re-engage the automatic humidity controls on the BAS for AHU-104. Instead, the humidification valve for AHU-104 remained in the 60% position until approximately 5:13 a.m. to 5:22 a.m. on February 12, 2008. There was no explanation for this.
[76] PCL submits that the Hospital’s decision to override the humidification valve and leave AHU-104 unattended was “foolish and ill-advised” and is the cause of the Hospital’s damage for which PCL cannot be held liable.
[77] Mr. Amar admitted on cross-examination that, if he knew what he knew on February 11, 2008, he would not have recommended that the Hospital manually fix the humidifier setting and leave it unattended. Mr. Amar testified that he would want to verify with Optimira before taking such a step.
[78] Further, PCL submits that as the evidence is that Paul Calverly of the Hospital, the individual who overrode the humidifier’s automated setting, was an expert in building automation systems. He should have known better.
[79] PCL emphasizes that the evidence is that the Hospital manually fixed the humidification valve without consulting PCL or its own consultants. It argues that if the Hospital did not know how the humidification valve would operate on reezestat if left in a manual position because nobody trained them on this point, it should not have left the valve in a manual position overnight unattended.
[80] PCL’s evidence is that it took the prior freezestat events seriously and acted without delay to respond to the Hospital’s requests for assistance. PCL engaged its sub-contractors and the Hospital’s consultants in an effort to determine the cause of the Freezestat events.
[81] Mr. Ewert of PCL was on-site at least five days a week. He was on site on February 11, 2008. After Mr. McCarthy notified him of the Hospital’s intention to jumper the freezestat, within three minutes he emailed the mechanical subcontractor (Sayers) and the controls subcontractors (Optimira and Shawn Johnson).
[82] PCL submits that the Hospital should have proceeded in accordance with the Contract and allowed PCL to continue to address the Freezestat problem.
[83] There was no evidence that there was any urgency or circumstances that required the Hospital to take the action that it did. The Hospital has led no direct evidence of operating room disruptions or patient impacts.
[84] Pursuant to the Contract, PCL had care and control of the equipment, including the AHU-104 and was responsible for maintenance and troubleshooting. The Hospital could have sought a contractual remedy.
The Cause of the Damage
[85] The parties agree on the following:
“At approximately 2:15 a.m. on February 12, 2008, AHU-104 freezestat tripped.
When the freezestat shut down AHU-104, the isolation dampers through which air is discharged into the operating rooms did not close and the bypass dampers connecting AHUs 105 and 106 to AHU-104 did not open. Supply air humidity sensor data for AHU-104 registered relative humidity levels in the range of 98.99% to 99.07% between approximately 2:54 a.m. and 4:54 a.m. on February 12, 2008.
At approximately 5:00 a.m. on the morning of February 12, 2008, Hospital security responded to a fire alarm that had gone off in the operating rooms and sterile core area serviced by AHUs 104, 105, and 106, and observed significant moisture in the areas.
At approximately 5:22 a.m. on February 12, 2008, Paul Calverley of the Hospital changed the 60% position of the humidification valve for AHU-104 using the BAS to 0%.”
[86] I have reviewed the expert evidence on the issue of whether PCL has met its contractual requirements. On the basis of the expert evidence, I have found that PCL has not.
[87] Mr. McCarthy testified that the Hospital was permitted to occupy the space in advance of substantial performance. His understanding was that between the time the Hospital occupied the operating rooms in July 2006 though June 2008, PCL owned the equipment and PCL was responsible for the full maintenance and service of that equipment even though it was being used by the Hospital during that time.
[88] The Contract provides:
a. “GC 3.15.1: Such entry and occupancy shall not be interpreted as acceptance of the Work, nor in any way relieve the Contractor from its responsibilities under the Contract;
b. GC 5.9.1: nor partial or entire use or occupancy of the Work by the Owner shall constitute an acceptance of any portion of the Work;
c. Paragraph 1.5.1, Specification section 15850: Partial occupancy or installation of equipment by Owner does not imply acceptance of the Work in whole, or in part, nor shall it imply acknowledgment that terms of Contract are fulfilled; and
d. Paragraph 1.16.1, Specification section 15010 (mechanical) and 16010 (electrical): Any mechanical or electrical piece of equipment that is specified to be provided under the requirements of the Project Documents, shall be provided with a special interim maintenance and service to cover the system/equipment during the time of use during construction period of the project until the project has been certified as substantially performed and such systems/equipment are turned over to Owner. During such period of construction of the Project, such mechanical systems/equipment shall not become property of the Owner or be the Owner's responsibility for maintenance or service. The systems/equipment shall remain the property of the Division 15 Contractor, who shall also be responsible for full maintenance and servicing of the systems/equipment.”
[89] PCL relies on this contract provision. PCL's main argument is that the actual cause of the damage was the hospitals “unforeseen and careless” decision to manipulate the system by putting the humidification valve into a manual position and leaving it unattended overnight. PCL submits that the Hospital must show on a balance of probabilities that “but for” PCL’s negligent act or omission, the loss would not have occurred. The “but for” test requires that the defendant’s negligence was necessary to bring about the injury. The injury would not have occurred without the defendant’s negligence.
[90] PCL argues that there is no common sense connection between the Hospital’s alleged damages and PCL’s conduct. The evidence is that during Freezestat events before the Over-Humidification Event, there were no over-humidification issues.
[91] PCL relies on the expert evidence of Mr. Lacey which concluded that the cause of the damage was the act of the hospital of putting the humidification valve into a manual position and leaving it unattended overnight. However, I have not accepted such evidence.
[92] PCL argues, alternatively, that if its actions did contribute or cause the over humidification event, the hospital damages were unforeseen and remote, and they are therefore not liable. I do not agree.
[93] Pursuant to the Contract, the Hospital had the right to note PCL in default for failure to meet the Contractor’s obligations under the Contract. GC 7.1.2, GC 7.1.3, and GC 7.1.4 sets out the Hospital’s rights in this regard
[94] I have, however, found above that I accept the Hospital’s expert evidence that the failure of PCL to ensure that the supply fan was interlocked with the humidifier was an installation deficiency which was the cause of the over-humidification event. Although it can be argued that the damage would not have been caused if the humidification valve had not been left on manual, the damage would not have occurred if the proper interlock had been installed, in accordance with the provisions of the Contract.
[95] In summary, I have found that through the operation of the contractual agreement between the parties, PCL has waived its right to object to a finding that there is an installation deficiency. Further, I accept the evidence of the Plaintiff’s consultants, Mr. Amar and Mr. Okrutny’s expert evidence that there was an installation deficiency by PCL and that the HVAC system did not comply with the provisions of the contract and the applicable Ontario Building Code. The installation deficiency was the absence of the required interlock.
[96] I find that the safety features built into the HVAC system, did not operate in the manual mode and that if the system was in the manual mode, it should not have been left unattended. However, I have found that the actions of the Hospital of using the manual mode did not cause the damage.
[97] I have also found that PCL did not satisfy its obligation to provide training pursuant to the Contract. There is no evidence that the Plaintiff’s employees were told that the safety features of the system would not operate in the manual mode.
[98] I have also found that the Contract between the parties provided that the HVAC system belonged to PCL, whose obligation it was to maintain the system on the date when the damage occurred. Also, the Contract provided that PCL was not liable for damage for acts of the Plaintiff. The Plaintiff did violate the provision of the Contract which provided that the system was owned by PCL and that it had the obligation to maintain it. However, I have found that notwithstanding this breach, PCL is liable for the damages, as a result of its failure to install the HVAC system in accordance with the provisions of the Contract. Had PCL complied with its contractual obligations, the damage would not have occurred.
[99] In the event that I am wrong, and it was the act of the Hospital that caused the damage, PCL did not fulfill its obligation to train the hospital employees as it did not train employees on the limitations of the safety features of the HVAC system, when it was in manual mode. It is also liable for the damage as a result of its failure to train.
[100] I must therefore conclude that the Plaintiff has met its burden of proving that the damages suffered were caused by PCL’s installation deficiency. As a result, the Plaintiff’s action against PCL must succeed.
[101] The Plaintiff must prove on a balance of probabilities the damages alleged were incurred and that the Plaintiff did properly mitigate its damages.
[102] With respect to the evidence on damages, the Hospital’s Director, Materials Management, Ms. Jo-Anne Chandler and Mr. Tom Roberts, the Hospital’s Vice President Corporate Services and Chief Financial Officer testified on the issues of the damages incurred by the Hospital.
[103] The Hospital’s damages claim is $908,345.13 (the “Damages Amount”) plus interest. The Damages Amount is the total amount claimed in the Damages Brief of the Plaintiff ($908,985.39) less $640.26 for the 2007 Stores Items.
[104] The Court found that the 1,059 page Damages Brief has met the threshold requirement for necessity and reliability and was introduced into evidence as a business record, including Ms. Chandler’s email itemizing each cost.
[105] The test for admissibility under s. 35 of the Evidence Act, R.S.O. 1990, c. E.23, is that the records were made in the usual and ordinary course of a particular business. It was in the usual and ordinary course of business to make such a writing or record at the time or within a reasonable time after the act, transaction, occurrence or event to be established by the introduction of the writing or record. The factors which affect the weight attached to s. [35] documents include:
“The promptness with which the transactions are recorded and the evidence the maker had a motive to misrepresent”.
[106] I have considered the nature of the records and the circumstances in which they were created. The evidence of the Hospital was that as many hospital personnel as possible were requested to prepare the documents relied on to determine what equipment and materials needed to be replaced as a result of the humidity damage. This was done as quickly as possible.
[107] Ms. Chandler acknowledged instances where she was not aware who authored certain notes, where purchase orders did not exist for certain documents, and that there were certain items from the stores requisition spreadsheet from 2007 that were populated into her spreadsheet inadvertently (the “2007 Stores Items”). The total amount for the 2007 Stores Items is $640.26.
[108] Ms. Chandler remembered losses such as a “Christmas Tree adapter” when it was suggested to her that those items were included in error. She explained how a number of the handwritten notes relate directly to entries that are reflected in the spreadsheet. Ms. Chandler also explained that the human resource costs were in respect of the fulltime staff who were diverted from their original duties.
[109] Ms. Chandler testified that the Zimmer and Synthes special order purchase orders related to products that were no longer being offered and that prior to the loss, the Hospital was already looking at replacing the product and accelerated this process. The Synthes product line was no longer available and so OSMH upgraded to the newer product line.
[110] With respect to mitigation of damages, Ms. Chandler testified that inquiries were made of vendors to see if the products could be returned for credits and the answer was no. Ms. Chandler testified that compromised products were disposed of, in accordance with CSA standards. She testified that the Hospital reached out to charitable organizations to see if compromised supplies could be used outside of the operating room context. Ms. Chandler explained that for certain items that are ordered by the box, it would have been impractical to manually count the numbers because the Hospital would not have been able to get through the volume of work that needed to be done and that it only would have served to inflate the human resource costs.
[111] Each page of the Damages Brief was prepared by Hospital personnel contemporaneously during their duties as employees. There is no evidence of any incentive to fabricate its damages. I accept the evidence that the equipment and the materials needed to be replaced.
[112] I agree with the Plaintiff that it would have been unreasonable to attempt to prove damages by calling all employees who were involved in assessing the equipment that was damaged and the need for it to be replaced to testify. I am satisfied that the evidence was reliable and that there was no incentive on the part of the Plaintiff to unreasonably assess the damage. I accept that the Plaintiff has proven its damages on a balance of probabilities.
[113] For all of these reasons, I award damages to the Hospital as it has claimed. I accept the Hospital’s argument on the applicable interest rate of the Bank Rate plus 3% compounded monthly
Costs
[114] As the Plaintiff has been the successful party in this trial, it is entitled to costs on a partial indemnity basis, inclusive of HST and disbursements. If the parties are unable to agree on costs, the Plaintiff may make submissions of no more than two pages, double spaced sent to the Defendant, uploaded to Caselines with a copy sent to my assistant Roxanne Johnson at Roxanne.johnson@ontario.ca by 12 p.m. on September 30, 2022. The Defendant may make submissions of no more than two pages, double spaced sent to the Plaintiff, uploaded to caselines with a copy sent to my assistant by 12 p.m. on October 14, 2022. No reply submissions will be accepted.
Pollak J.
Date: September 16, 2022