Summary

Keywords

Torts — Negligence — Failure to warn — Duty of care — Proximity — Pure economic loss — Building constructed with serious structural deficiencies — Building sold after construction — Whether proximity for economic loss arises between new owner and structural engineers for alleged failure to warn — Whether proximity for economic loss arises between new owner and structural engineers for alleged negligent design of building — Whether enforceability of a limitation of liability clause in contract between builder and structural engineers is suitable for determination by way of summary trial.

Summary

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The respondents, Centurion Apartment Properties (Danbrook One) Inc. and its parent, Centurion Apartment Properties Limited Partnership (“Centurion LP”) (collectively, “Danbrook”) are the legal and beneficial owners of a building in Langford B.C. that was built with serious structural deficiencies. Danbrook brought a claim for damages for the economic loss suffered as a result of remediating the building. Danbrook claimed against the applicants, the engineers who designed the building, in tort, alleging negligence (liability for dangerous defects) and breach of duty to warn. It also claimed against the other respondents, Loco Investments Inc., (“Loco”) the original owner who had the beneficial interest, DB Services of Victoria Inc., the building’s designer and developer, which has since declared bankruptcy, and Margaret McKay, the controlling mind of these businesses. The engineers applied for summary judgment to dismiss Danbrook’s claim on the basis that no proximity existed between them. The engineers also sought summary judgment to dismiss the third-party claims and judgment by way of summary trial declaring that any liability they may have was limited by the limitation of liability clause in the contract between itself and DB Services of Victoria Inc. The chambers judge granted the engineers’ application for summary dismissal and for determination by summary trial. The judge dismissed Danbrook’s claims in negligence against the engineers on the basis that they were not in a relationship of proximity that would give rise to a duty of care. He also held that the contractual provision limiting the engineers’ liability to the builder was enforceable. The British Columbia Court of Appeal (“BCCA”) allowed Danbrook’s appeal in part and dismissed the engineers’ cross-appeal. The BCCA held that it would be just and fair to impose a duty of care. It found that the requisite close and direct relationship was made out under the category of proximate relationship established in Winnipeg Condominium Corporation No. 36 v. Bird Construction Co., [1995] 1 S.C.R. 85 and that a full proximity analysis would lead to the same conclusion. As to the issue of the interpretation of the limitation of liability clause, the BCCA held it was not suited to determination by way of summary trial.

Lower Court Rulings