In Sun Life Assurance Company of Canada v. 482147
B.C. Ltd. Justice Butler considered an application to
dismiss third party claims in a construction context on the basis
that the claims were properly raised only as defences against the
plaintiff. The successful application, argued by Alexander
Holburn's Construction Group Leader Chris Hirst, provides
a basis for third parties to resist being forced to participate in
The plaintiff, Sun Life Assurance Company of Canada ("Sun
Life") is the current owner of the buildings comprising the
Westgate Shopping Centre in Maple Ridge, British Columbia. In the
main action, Sun Life alleges that the defendants negligently
designed and constructed the Shopping Centre. The numerous
defendants include the developers, contractors, suppliers and
consultants who were involved with the construction.
The Applicants, Morrison Hershfield Limited ("MH") and
Pierre Gallant, a Senior Principal of MH, were added as third
parties by the defendants Norson Construction Ltd.
("Norson"), Timberline Construction Group
("Timberline") and 482147 B.C. Ltd., formerly Westbank
Projects Corp. ("Westbank") (collectively the "Three
Defendants"). Norson was the general contractor for the
Save-On-Foods building, one of the larger units in the Shopping
Centre. Timberline was the general contractor for the other
buildings and Westbank was part of the developer group. Neither of
the Applicants was a defendant in the action and neither was
involved with the original construction of the Shopping Centre.
The Shopping Centre was constructed between 1997 and 1998. Sun
Life purchased the Shopping Centre from the owner, Westgate
Shopping Centre Ltd., in late November, 2000.
MH was hired by Sun Life to perform limited inspection of the
roofs of the Shopping Centre just prior to the November 2000
purchase. Subsequently, significant problems with the
Shopping Center's wall cladding system were discovered,
requiring millions of dollars in repair.
Sun Life commenced the proceedings against the Defendants for
negligent construction and design, and failure to warn. The Three
Defendants denied negligence, and alleged that Sun Life failed to
protect itself by obtaining adequate pre-purchase inspections and
failing to detect the defects. The Defendants then brought third
party proceedings against MH, alleging that it failed to provide
proper advice to Sun Life.
MH relied on the principle in Adams v. Thompson, Berwick,
Pratt & Partners (1987), 15 B.C.L.R. (2d) 51 (C.A.) that
where the only negligence alleged against the third party is
attributable to the plaintiff, there is no need for third party
proceedings since the defendant has his full remedy against the
plaintiff. The Courts in B.C. have applied this principle in two
situations, first where the negligence alleged involves acts of the
third party where the third party is acting as an agent of the
plaintiff, and second where the third party claim is based on an
allegation that the proposed third party should have advised or
assisted the plaintiff to mitigate a loss.
The Court held that the allegations against MH fell into this
second category. The fault alleged against MH in the third party
claims was that MH should have warned Sun Life about the risks
associated with the design and construction of the Shopping Centre.
The Court found that this was essentially an allegation that Sun
Life failed to protect itself, and noted that the same claims were
made as defences against Sun Life directly. Justice Butler
To quote the language in those cases, this is an obligation
"belonging to" Sun Life. Accordingly, it can be raised in
defence by the Three Defendants. Indeed, it already has been raised
in defence, and there is no need for a third party proceeding.
The Court concluded that the allegations against MH were
properly raised as a mitigation defence, despite the fact that the
alleged negligent advice was provided prior to the Plaintiff's
purchase of the Shopping Centre. The Court found that the
obligation to protect itself is an obligation for which the
Plaintiff must be responsible, and "the fact that the advice
was rendered before the loss occurred does not change the nature of
the plaintiff's obligation".
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Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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