Case Commentary: Defeating An Application To Be Added As A Defendant - The Owners, Strata Plan KAS 2971 V. American Bankers Insurance Company Of Florida, Et Al., 2016 BCSC 581

Most actions commenced by a strata corporation¹ alleging negligence in the design and construction of their condominium development name multiple parties as defendants, including the original owner/developer, municipality, general contractor, trades, material suppliers and all consultants, including the architect, engineers and building envelope consultant.  Often, upon commencing the action, the strata corporation will not have a complete list of parties involved in the original development, design and construction of the condominium. As a result, counsel for the strata corporation must apply to court for subsequent pleadings amendments to add defendants, as the identity of those parties becomes known.

Although leave of the court to add parties as defendants is not automatic, the courts generally grant these applications as refusing to do so is viewed as unfairly prejudicial to the strata corporation. The merits of the proposed claim are not carefully assessed at this stage. This often results in serial applications and pleadings amendments, and the addition of defendants to claims with uncertain or dubious merits vis-à-vis that party.

In The Owners, Strata Plan KAS 2971 v. American Bankers Insurance Company of Florida, et al., 2016 BCSC 581, a recent case decided by the British Columbia Supreme Court, the Court took a slightly different approach to an application to add a party as a defendant, and refused the strata corporation's application. 

In this case, the plaintiff owned a residential condominium located in Penticton, B.C., which was completed in 2006. The proposed defendant, Bains Engineering Corp. ("Bains"), was the engineering firm responsible for the design, inspection and approval of the condominium's mechanical systems.

Deficiencies in the condominium's construction were noted almost immediately upon completion and reported to the warranty provider. These deficiencies did not include deficiencies in the mechanical systems for which Bains was responsible. 

The plaintiff delivered another deficiency list to the warranty provider in 2008, many of which involved leaks in the building. Repairs were completed pursuant to the warranty terms.

In 2010, the plaintiff retained an engineer to inspect the building envelope for purposes of the five-year envelope warranty. The inspection found several components of the building envelope to be inadequate and another warranty claim was made. 

In 2011, the plaintiff retained a mechanical engineer to inspect and report upon the condominium's pool and spa and later to inspect and report on the condominium's heating and cooling system. In 2012, that same engineer was retained to inspect the condominium's hydronic pumping station. Bains was responsible for the design and installation of the heating, cooling, ventilation, hot tub and hydronics. 

The Notice of Civil Claim was filed 17th October, 2013. Bains was originally named as a defendant but removed by amendment when it became clear there was no pleading alleging fault on its part.  The Court noted that prior to this application, there were several amendments made to the Notice of Civil Claim; parties had been added and the pleadings amended accordingly. On the application before the Court, the plaintiff sought to add 11 defendants. Ultimately, only Bains opposed the application to be added to the action. 

In opposing the application, counsel for Bains acknowledged that there was no prejudice to Bains in being added as a defendant to the action. However, he argued that taking all factors into consideration, the application ought to be refused. In the end, the Court agreed on the basis that it was not "just and convenient" to add Bains as a defendant. The Court noted that the bulk of the claim at present was "almost entirely concerned with envelope issues" and that Bains "has nothing to do with those claims whatsoever." The trial for building envelope issues was set for five weeks. It was estimated that a trial of the mechanical issues would take two weeks. The Court agreed that to join the two issues and require Bains' participation in the five week trial "works an unreasonable hardship on Bains." The Court further stated that there was an insufficient "degree of interrelationship" between the envelope and mechanical claims to justify adding Bains as a defendant. 

Ultimately, however, Bains' victory may have been a hollow one.  Out of an abundance of caution, the strata corporation commenced a separate action against all of the proposed new defendants, including Bains. As per the usual practice, this action may be ordered to be case managed and tried with the action Bains was successful in avoiding. The Court noted this potential in its reasoning but stated that such a decision was up to the Case Management Judge. This factor did not sway the Court into granting the plaintiff's application.

Underwriters are often faced with applications to add their insureds as defendants to actions.  This case may be instructive to building professionals seeking to resist being added to a claim as a defendant. 

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