Negligent Construction – Who to Sue and What to Sue For

One of the challenges in negligent construction disputes is that plaintiffs often start litigation only knowing something is wrong that needs to be fixed, but not necessarily knowing what the extent of the issues are, who is responsible for the issues and how much the issues will cost to fix. Out of an abundance of caution, plaintiffs name everyone and use the time they are in litigation to gather more evidence and the litigation process to obtain further evidence to clarify liability issues. Defendants, for their part, will name any other party they can attempt to put some or all of the liability onto. Winnowing the parties involved, the issues in dispute and the evidence that may need to be considered should always be the goal of all parties involved.

The recent case of Perrick v RJS Electrical Contracting Ltd., 2020 BCSC 211 (CanLII) is illustrative of how, after some evidence gathering, the court can cut through the issues in dispute and arrive at a determination of liability and a quantification of damages.

In the case the Plaintiffs hired RJS Electrical Contracting Ltd. (“RJS”) to construct a luxury home for their use as a rental and vacation property. Flooding occurred at the home shortly before occupancy resulting in extensive damage and loss of rental income. It was determined that the water entered the house through an electrical conduit that was not properly sealed before installation of a charging station occurred. The Plaintiffs sued RJS and Hemstreet Contracting Ltd. (“Hemstreet”), the party that did site preparation, for damages.

RJS brought in other third parties it claimed should share some or all of the blame including Hemstreet and Tall Oaks Contracting Ltd. (“Tall Oaks”), who acted as general contracting for the beginning of the build.

The court weighed evidence about the cause of failure to properly seal the electrical conduit and found it most probable that RJS’ employee failed to seal the electrical conduit. The court found that both the employee and his supervisor ought to have known that failing to seal the electrical conduit risked flooding.

The court rejected the argument that Hemstreet could bear any liability since it simply dug the trench where the electrical conduit was laid and did so under RJS’ supervision. The court rejected that Tall Oaks was responsible for work completed after it finished its part of the build. Lastly, the court rejected the argument that that Plaintiffs bore any liability for failing to properly supervise RJS once they no longer had the general contractor, Tall Oaks, acting. On the last point, the Court stated:

RJS offered no authority for the proposition that a negligent contractor may attribute fault to the owner for failing to supervise the contractor. I think that the proposition is doubtful. In any event, RJS does not point to anything in particular that [the Plaintiff] did or failed to do that would have prevented the loss in this case. [The Plaintiff’s] evidence is that he was unaware of the manner in which the conduit was installed until the flooding occurred, and there is no evidence to suggest that he ought to have paid close attention to the installation.

Having found RJS to be solely responsible for the damages suffered the court went on to the assessment of those damages. The court balanced three estimates for the future costs of repair work against an expert report produced by RJS which suggested that such estimates included contingencies. It found that “The plaintiffs, who have suffered loss and damage resulting from RJS’s negligence, should not bear a significant risk of being undercompensated for the repair costs they will incur.” and only modestly reduced the upper range of the potential costs to the plaintiffs.

The plaintiffs did not produce any expert evidence on lost rental income and their rough numbers did not include negative contingencies. In assessing the lost opportunity of rental income, the court held that the legal framework for such losses was established in several cases[1] and included as follows:

  1. the court must find there was a real possibility that an opportunity was lost; and
  2. the court must assess the positive and negative contingencies that affect the lost opportunity.

The court fixed lost rental income at a substantial amount, but significantly reduced from the amount sought.

The court found that there was insufficient evidence to establish the claim for lost value of the house.

The court accepted that the plaintiffs provided incomplete evidence of their damages, but “put their best foot forward”. It did offer its thoughts that perhaps a conventional trial with better evidence could have supported a more precise damage award.

Perrick v RJS Electrical Contracting Ltd. is illustrative of how, even where significant damages are involved, the court is not afraid of exacting some “rough justice” to arrive at a balanced and considered outcome. The court was left with little doubt that RJS was the right party and it had enough evidence before it to quantify damages. The court removed unnecessary parties from the judgment effectively and made a clear judgment as to who was responsible for the issues. The case stands as a good blueprint for pursuing a negligent construction claim as well as pointing out areas where the plaintiffs’ claims for damages could have been improved.

[1] Greybriar Investments Ltd. v. Davis & Co. (1990), 1990 CanLII 1572 (BC SC), 46 B.C.L.R. (2d) 164 (S.C.) at 193, aff’d (1992), 1992 CanLII 1838 (BC CA), 72 B.C.L.R. (2d) 190 (C.A.); Zoic Studios B.C. Inc. v. Gannon2015 BCCA 334 at para. 78Smithies Holdings Inc. v. RCV Holdings Ltd.2019 BCSC 802 at paras. 82-83

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