Westlaw Delivery Summary Report for SCHUETT,ROBERT

Westlaw Delivery Summary Report for SCHUETT,ROBERT

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2011 CarswellAlta 1913, 2011 ABQB 649

2011 CarswellAlta 1913, 2011 ABQB 649

Vargo v. Canmore (Town)

Robert Vargo and Patricia Phillips, Plaintiffs and The Town of Canmore, Joby Messier (also known as Denny Messier), Glen Chernen and Marie Chernen, Cascade Engineering Group, Highland Construction Ltd., Ike Hanson, Code Works Corp., Brad Davis, Davis Electrical Inspection Services Ltd., Lockie Hughes, XYZ Ltd. #2, John Doe #1, and John Doe #2, Defendants and Valley Building Materials and Valley Engineering Ltd., Third Party

Alberta Court of Queen's Bench

G.C. Hawco J.

Heard: April 27 - May 6, 2011

Judgment: October 26, 2011

Docket: Calgary 0701-10138

Counsel: Frank A. Mason, for Plaintiffs

Dale Wm. Fedorchuk, Q.C., for Defendants, Lockie Hughes and Highland Construction Ltd.

Kevin P. McGuigan, for Defendant, Joby Messier

Tyson Dahlem, for Defendants, Valley Building Materials Ltd., Valley Engineering Ltd.

Subject: Contracts; Property

Construction law --- Contracts — Breach of terms of contract — Breach by contractor — Defective workmanship — Miscellaneous

On March 23, 2006, plaintiff homeowners purchased home from vendors — Home inspection report was prepared and nothing untoward was noted — Homeowners hired JC Ltd. to carry out renovations — Almost immediately upon commencing work, JC Ltd. discovered many irregularities in basic construction of the building, beginning with improper load-bearing points — Actual costs of all of renovations amounted to $950,000 — Costs associated with respect to structural problems amounted to $170,000 — Homeowners brought action against vendors and builder — Action allowed in part — Claim against defendant builders was allowed in amount of $165,250.64 — Claims against remaining defendants were dismissed — House was negligently built by builder — Defects constituted real and substantial danger to homeowners — Court was not satisfied that court of appeal intended to require that defective roof must not only be in danger of collapse but that it be in imminent danger of collapse before plaintiff may take steps to ensure that perceived danger did not result in actual harm to family and others, and be compensated for doing so.

Cases considered by G.C. Hawco J.:

Blacklaws v. 470433 Alberta Ltd. (2000), 187 D.L.R. (4th) 614, 1 C.C.L.T. (3d) 149, [2000] 11 W.W.R. 476, 261 A.R. 28, 225 W.A.C. 28, 7 B.L.R. (3d) 204, 2000 ABCA 175, 2000 CarswellAlta 599, 84 Alta. L.R. (3d) 270 (Alta. C.A.) — distinguished

Mariani v. Lemstra (2004), 2004 CarswellOnt 5126, 246 D.L.R. (4th) 489, 27 C.C.L.T. (3d) 261, 39 C.L.R. (3d) 71 (Ont. C.A.) — considered

Privest Properties Ltd. v. Foundation Co. of Canada Ltd. (1997), 143 W.A.C. 182, 87 B.C.A.C. 182, 31 B.C.L.R. (3d) 114, 143 D.L.R. (4th) 635, 1997 CarswellBC 500, [1997] 5 W.W.R. 265, 33 C.L.R. (2d) 29 (B.C. C.A.) — considered

Roy v. Thiessen (2005), 252 D.L.R. (4th) 475, [2005] 7 W.W.R. 199, 42 C.L.R. (3d) 207, 2005 SKCA 45, 2005 CarswellSask 212, 257 Sask. R. 239, 342 W.A.C. 239 (Sask. C.A.) — considered

Sable Offshore Energy Inc. v. Ameron International Corp. (2006), 2006 NSSC 332, 57 C.L.R. (3d) 163, 2006 CarswellNS 496, 792 A.P.R. 122, 249 N.S.R. (2d) 122 (N.S. S.C.) — considered

Winnipeg Condominium Corp. No. 36 v. Bird Construction Co. (1995), 18 C.L.R. (2d) 1, [1995] 1 S.C.R. 85, 23 C.C.L.T. (2d) 1, 43 R.P.R. (2d) 1, [1995] 3 W.W.R. 85, 1995 CarswellMan 19, 176 N.R. 321, 1995 CarswellMan 249, 74 B.L.R. 1, 50 Con. L.R. 124, 100 Man. R. (2d) 241, 91 W.A.C. 241, 121 D.L.R. (4th) 193 (S.C.C.) — considered

ACTION by homeowners against vendors and builder.

G.C. Hawco J.:

Introduction

1 Building a house with insufficient load-bearing points is like building a statute using feet of sand.

2 On March 23, 2006, the Plaintiffs purchased a home in Canmore, Alberta, from Glen and Marie Chernen. A home inspection report was prepared. The Plaintiffs conducted a fairly extensive walk-through before submitting their offer to purchase. Nothing untoward was noted. It was the Plaintiffs' intention to carry out certain renovations

3 The Plaintiffs hired Jenan Construction Ltd. to carry out the renovations. Jenan's person in charge was Roger Gelfand who arrived at the house, [...] Stone Creek Place, in Canmore, on September 18, 2006. When he arrived, most of the cabinetry, trim and drywall had been removed to accommodate the new design. The original framing was exposed and the site was ready to proceed. Almost immediately upon commencing his work, Mr. Gelfand discovered many irregularities in the basic construction of the building, beginning with improper load-bearing points. The problems with the load-bearing points gave him concerns with the rest of the structure Mr. Vargo suggested a thorough investigation, which Mr. Gelfand proceeded to carry out, with assistance from Jamie Fukishima, an engineer.

4 Throughout his work, Mr. Gelfand was requested to keep a detailed, and conservative, accounting of all the costs incurred relating to what he considered to be structural defects. The actual costs of all of the renovations amounted to $950,000. The costs associated with respect to the structural problems amounted to $170,000.

5 The Defendants have each denied any negligence. It is alleged by all Defendants, other than Mr. Hughes, that it was Mr. Hughes, as the builder, who would have been negligent. Mr. Hughes himself says that he was merely following the building plans and the advice of the engineers engaged at the time. He further argues that if there were any defects, they were not of such magnitude that they posed a "real and substantial danger to the occupants" and that any damages incurred to remedy them are therefore not recoverable.

6 The house was negligently built by Mr. Hughes. The defects constituted a real and substantial danger to the Plaintiffs. They are entitled to recover as damages the costs of remedying the defects.

Facts

7 Mr. Vargo and Ms. Phillips purchased their house from the Chernen's on March 23, 2006. Prior to closing the deal, they visually inspected the house and had a house inspection report prepared. They saw nothing which alarmed or even concerned them. The house inspection report gave the house a clean bill of health.

8 The purchase price for the property was $1.304 million. While they certainly liked the house and the location, they determined they did not like many of the finishings, so they bought the house intending to carry out a number of renovations. They had budgeted some $200,000 to $300,000 for those renovations.

9 The company they hired to do the renovations was Jenan Construction Ltd. It in turn hired Roger Gelfand to carry out the work. Mr. Gelfand had no engineering training other than on-the-job learning. He was a carpenter by trade but did not have his journeyman's ticket. He had, however, managed and carried out quite a few renovations. He had never built a house from the ground up. He did not purport to be an expert.

10 When Mr. Gelfand arrived at the house on September 18, 2006, he ran into Mr. Lockie Hughes who introduced himself as "Lockie Hughes - Master Builder" and then proudly stated that he had built this house that Mr. Gelfand was going to be working on.

11 Mr. Gelfand reviewed the original plans for the house and the plans which had been drawn up for the renovations and formulated a "game plan". As stated, most of the cabinetry, trim and the drywall had been removed to accommodate the new design. The site was ready to proceed. While preparing his plan for the renovations, Mr. Gelfand discovered what he described as many irregularities in the basic construction of the building. He was concerned with what he considered to be improper load-bearing points. He was also concerned that the framing was inadequate. His superior, Mr. Frank Gust of Jenan Construction, told him to proceed with an investigation and to report anything he suspected to be inadequate.

12 What first caught Mr. Gelfand's eye was a post in the kitchen area that was supporting the second floor and picking up some of the load for the roof of what he referred to as the great room. The post in the kitchen was accepting the load but was only resting on the sub-floor. There was nothing else under the post to transfer the load to the footings. He found this rather unusual and continued to investigate further. He found numerous locations in the house that had the same defects. He also noticed that certain load-bearing beams were not in the right places and they were not doing their intended function of carrying and deflecting the loads they were meant to carry. By this time, Mr. Gelfand determined that the problems may have been greater than his expertise so he retained the services of Mr. Jamie Fukishima of Valley Engineering Ltd.

13 Mr. Gelfand approached Mr. Fukishima about the project and his concerns. Mr. Fukishima informed him that he was familiar with the home as he had dealings with the original builder. Mr. Gelfand showed Mr. Fukishima the spots he was concerned about. Mr. Fukishima agreed with his diagnosis of the problem and began recommending corrective measures to be taken. Mr. Fukishima's original report of November 17, 2006 was entered as Tab 26 of Exhibit 1. The primary structural defects which he noticed were set forth in that report. There were eight primary deficiencies, all of which related to load-bearing beams or posts being out of position and therefore not bearing and distributing the weight to the proper points, not being present at all or improperly transferring loads or not transferring them at all to the foundation and the bearing walls.

14 Mr. Vargo requested that Mr. Gelfand keep a running summary of the work he did related specifically to what he had to do to deal with the structural defects. Mr. Vargo told Mr. Gelfand to be conservative with respect to the costs incurred. A summary of the work and the costs associated with the work was entered as Tab 20 of Exhibit 1. The total set out is $170,250.64. That should have been reduced by $5,000 for certain flooring which was wrongly attributed to the deficiencies. The total claim being advanced by the Plaintiffs is $165,250.64.

15 The total costs of all renovations incurred by the Plaintiffs was $954,228.21.

16 Mr. Gelfand's report and all of the photographs he took relating to the deficiencies discovered and remedial work carried out was entered as Tab 29 of Exhibit 1. I do not intend to go through the report in great detail, other than the primary problems discovered.

17 After the initial structural problems were noted, the Plaintiffs determined that all drywall should be removed. Having done that, it was soon apparent that the problems began from the foundation when larger beams were installed than were called for in the original plans. This gave rise to the walls and, eventually, the trusses for the roof, being out of alignment. The result of the main support beams in the foundation not being properly installed was to deflect the walls such that when the trusses were installed for the roof, there was insufficient bearing for those trusses. Mr. Hughes had attempted to remedy this by adding what are referred to as ledger strips, which were simply strips of wood nailed into the trusses. This was deemed by Mr. Gelfand, and more importantly, Mr. Carswell, to be completely inadequate. The result of that insufficient loadbearing was to cause undue weight and deflection on the roof. More will be said on this later.

18 In addition to the trusses not sitting properly, Mr. Hughes omitted to install two loadbearing beams which were called for in the plans and which were simply not installed. It was Mr. Hughes' evidence that Mr. Messier (the original owner) told him that he did not want them to be installed because he did not like the aesthetics. Mr. Hughes maintained that he checked with Mr. Fukishima who told him that they were not necessary for load-bearing and could be omitted. Mr. Fukishima denies having said this. Mr. Messier denies that any such conversation took place between him and Mr. Hughes at all. The lack of these two beams put additional stress upon the trusses, which were already not able to take up the weight for which they were designed.

19 Up to the point in time when Mr. Gelfand perceived there to be a significant flaw in the way the roof trusses were installed, he had been working under the direction of Mr. Fukishima. When he discovered the roof trusses problem, he discerned that Mr. Fukishima may be in a possible conflict of interests, having had a hand in the design of the roof trusses and the supply of the roof trusses through his companies, Valley Engineering Ltd. and Valley Building Materials Ltd. Mr. Gelfand asked Mr. Fukishima if he would mind if he brought in someone who was totally impartial. Mr. Fukishima had no objections. As a result, Mr. Vargo contacted Mr.John Carswell, a structural engineer. Mr. Carswell then became involved with the problems and how to fix them.

20 Mr. Carswll agreed that the roof and the lack of support constituted a very serious problem. He determined that the roof was not structurally safe and that it could collapse under heavy snow.