Swift v. Eleven Eleven Architecture Inc. et al., (2012) 551 A.R. 76 (QB)

• Judge: Millar, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: December 14, 2012
• Citations: (2012), 551 A.R. 76 (QB);2012 ABQB 764

Swift v. Eleven Eleven Architecture Inc. (2012), 551 A.R. 76 (QB)

MLB headnote and full text

Temp. Cite: [2013] A.R. TBEd. JA.050

Philip Swift and Cindy McInnis Swift (plaintiffs) v. Eleven Eleven Architecture Inc. and McKinley Dang Burkart Design Group Inc. (defendants) and Tomecek Roney Little & Associates Ltd. and Brian Tomecek (third party/defendants)

(0801 08299; 2012 ABQB 764)

Indexed As: Swift v. Eleven Eleven Architecture Inc. et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

Millar, J.

December 14, 2012.

Summary:

The plaintiffs (the Swifts) purchased property in British Columbia for the purpose of building a $12.5 luxury residence. Mr. Swift engaged the architect defendants to design the residence. Mr. Swift entered into an agreement (the architect agreement) that contained a limitation of liability clause ($500,000). The architects engaged an engineering firm and its principal (the TRL defendants) to do the structural engineering work. The British Columbia Building Code provided for seismic design requirements. Seismic issues arose and delayed occupancy. Mr. Swift sued in both contract and tort; Mrs. Swift claimed only in tort. The architects entered into a settlement agreement with the plaintiffs whereby they paid the sum of $1,000,000.

The Alberta Court of Queen's Bench held that the TRL defendants were negligent in the performance of their duty to provide a suitable structural design, and assessed total damages in the amount of $1,905,318.70. However, as the court found that the limitation clause applied to the plaintiffs' claims, the amount payable was $500,000. The architect defendants were entitled to be indemnified. In light of the limitation clause, the court would have found the architects' liability for breach of contract to be limited to $500,000. Thus, the engineer defendants were required to indemnify the architects in the amount of $500,000.

Building Contracts - Topic 705

The contract - Plans and specifications - Designer's duty respecting - [See first Building Contracts - Topic 5502 ].

Building Contracts - Topic 751

The contract - Interpretation - Limitation clauses - The plaintiffs (the Swifts) purchased property for the purpose of building a luxury residence - Mr. Swift engaged the architect defendants, including "Eleven Eleven", to design the residence - The architect agreement identified Eleven Eleven as the "Prime Consultant/Designer", and contained a limitation of liability clause ($500,000) - The limitation clause referred only to the "Designer" - The architects engaged the TRL defendants to do the structural engineering work - Seismic issues arose - The plaintiffs sued - The TRL defendants asserted that the claims were limited to $500,000 - The plaintiffs argued that the limitation clause was inapplicable; alternatively, that the clause applied to each individual claim; and that Eleven Eleven's responsibilities as Designer did not include any structural engineering work - The Alberta Court of Queen's Bench found that the clause operated to limit the claims to $500,000 in total - The plaintiffs' interpretation of the clause would render it largely meaningless - "Parties negotiate these clauses to give themselves certainty with respect to their exposure to liability. Treating the limitation amount as anything other than aggregate would obviate that certainty. There is nothing unconscionable in this interpretation. ... Mr. Swift is a sophisticated, experienced businessman well versed in the concepts of liability and risk who negotiated this limitation amount with the benefit of counsel." - See paragraphs 44 to 56.

Building Contracts - Topic 751

The contract - Interpretation - Limitation clauses - The plaintiffs (the Swifts) jointly owned property for the purpose of building a residence - Mr. Swift engaged the architect defendants to design the residence, and entered into an architect agreement that contained a limitation of liability clause - The architects engaged the TRL defendants to do the structural engineering work - Seismic issues arose - Mr. Swift sued in both contract and tort; Mrs. Swift claimed only in tort - The Alberta Court of Queen's Bench concluded that the limitation clause applied equally to Mrs. Swift - The evidence established that Mr. Swift was acting both on his own behalf and on behalf of Mrs. Swift - The case law indicated that such an agency could be found between spouses in appropriate circumstances - Mrs. Swift was aware of the architect agreement - Had she wished to seek legal advice in respect of it, she could have done so - Instead, she simply relied on her husband as she had often done - See paragraphs 57 to 68.

Building Contracts - Topic 751

The contract - Interpretation - Limitation clauses - The plaintiffs (the Swifts) jointly owned property for the purpose of building a residence - Mr. Swift engaged the architect defendants to design the residence, and entered into an architect agreement that contained a limitation of liability clause - The architects engaged the third party defendants (TRL) to do the structural engineering work - Seismic issues arose - The plaintiffs sued - They argued that, even if the limitation clause operated to limit liability in respect of the claims in contract, it was not intended to extend to claims against TRL in tort - The Alberta Court of Queen's Bench held that the limitation clause limited the liability of TRL in tort as well as in contract - To find otherwise would permit the plaintiffs to escape the application of a negotiated provision of the architect agreement - The plaintiffs' arguments relating to whether TRL was retained as a "consultant" or a "subconsultant", were without foundation - "The material point is whether the TRL Defendants and the type of work they performed were what was in the contemplation of the parties to the Architect Agreement and I have found that they were." - See paragraphs 156 to 161.

Building Contracts - Topic 5502

Architects and engineers - Duties to owner - Respecting design - The plaintiffs claimed for damages in respect of the structural engineering design of their luxury residence in Saanich, British Columbia - Seismic upgrades were needed - The Building Code provided for seismic design requirements - The parties disputed the proper standard of care to be applied - The plaintiffs asserted that the engineer defendants did not exercise reasonable care in preparing the structural design; and that an engineer might be liable in negligence even if the design adhered to the Code - The defendants asserted that the structural design reflected a reasonable exercise of engineering judgment - The experts testified about both gravity load issues and seismic load issues - The Alberta Court of Queen's Bench held that the defendants were negligent in the performance of their duty to provide a suitable structural design - The question of which part of the Code applied (depending on whether the residence was a Part 4 or a Part 9 structure) informed the standard of care, but was not co-extensive with it - Given its architectural design and the risk of a seismic event, the residence should have been built to satisfy Part 4 of the Code - The redesign was insufficient to address the seismic issues - As engineer of record, the defendants had a responsibility to review the shop drawings (roof trusses) and to address the deficiencies in them - See paragraphs 70 to 142.

Building Contracts - Topic 5502

Architects and engineers - Duties to owner - Respecting design - The Alberta Court of Queen's Bench held that the engineer defendants were negligent in the performance of their duty to provide a suitable structural design for the plaintiffs' residence - The court found that the deficiencies in the structural design presented a real and substantial danger to its occupants, and was sufficient to ground the plaintiffs' tort claim in negligence for pure economic loss - The court rejected the assertion of the defendants that the danger must also be imminent - "In my view, a requirement that the danger be imminent as well as real and substantial, is not consistent with the Supreme Court of Canada's judgment in Winnipeg Condo. ... [P]ostponing a claimant's ability to seek redress until the danger becomes imminent creates unnecessary potential for complication." - See paragraphs 143 to 155.

Building Contracts - Topic 5557

Architects and engineers - Liability to owner - General - Damages - The Alberta Court of Queen's Bench concluded that the engineer defendants were liable for their failure to provide a suitable structural design for the plaintiffs' $12.5 million luxury residence - The plaintiffs argued that they were entitled to damages both for remedial work necessary on the residence and for "consequential" losses, including the cost of alternative accommodation during the remedial work - They submitted that they were entitled to a measure of damages sufficient to achieve both structural and aesthetic integrity - The "fixes" proposed by the defendants' expert would result in a very different home than the plaintiffs contracted for - The court agreed with the plaintiffs that their expert's proposal was more in keeping with the original design aesthetic and, thus, put the plaintiffs more in the position they would have been but for the breach of contract and negligence - Accordingly, the court determined the quantum of the plaintiffs' damages in accordance with their expert's proposal - See paragraphs 169 to 175.

Building Contracts - Topic 5557

Architects and engineers - Liability to owner - General - Damages - The Alberta Court of Queen's Bench concluded that the engineer defendants were liable for their failure to provide a suitable structural design for the plaintiffs' luxury residence - In addition to the cost of repairs, the plaintiffs claimed general, non-pecuniary damages for mental distress, inconvenience and loss of enjoyment of the residence - The court declined to award non-pecuniary damages - An award of non-pecuniary damages for mental distress was not justified - While the plaintiffs' experience had been frustrating and stressful for the plaintiffs, such awards were to be made only sparingly and ... "'psychological disturbance ... must be distinguished from psychological upset'" - Also, none of the professionals involved, including the plaintiffs' experts, had recommended vacating the residence for safety reasons - Nor was it appropriate to award non-pecuniary damages for the inconvenience associated with vacating the residence during repairs; the award of pecuniary damages was sufficient in that respect - See paragraphs 193 to 201.

Building Contracts - Topic 5557

Architects and engineers - Liability to owner - General - Damages - The Alberta Court of Queen's Bench concluded that the engineer defendants were liable for their failure to provide a suitable structural design for the plaintiffs' luxury residence in Saanich, B.C. - The plaintiffs claimed that, as a result of not being able to move into the residence in 2007 as planned, they incurred additional living costs - The court denied the claim for the cost of six weeks' pre-occupancy delay - The plaintiffs were not guaranteed occupancy by late 2007 and it could not be said that they would have been able to occupy the residence by that point even in the absence of the defendants' fault - The original construction schedule was unrealistic - Further, the plaintiffs were given a revised schedule in early July 2007 that indicated that the residence would not be ready for occupancy until March 31, 2008 - Although the plaintiffs moved to Victoria in August 2007, they did not sell their house in Calgary until July 2008, the same month in which the occupancy permit for the residence was issued - See paragraphs 202 to 207.

Building Contracts - Topic 5557

Architects and engineers - Liability to owner - General - Damages - The Alberta Court of Queen's Bench concluded that the engineer defendants were liable for their failure to provide a suitable structural design for the plaintiffs' $12.5 million luxury residence - The court allowed the following claims for damages: (a) for the first attempted remedial structural work undertaken; (b) for the remedial work that needed to be done; (c) for engineering fees to implement the remedial work; (d) for the cost of the truss fix; (e) for the costs of reports to determine the necessary remedial work; and (f) for future out-of-pocket expenses associated with vacating the residence during the remedial work - The court denied the plaintiffs' claim in general damages, and for the cost of six weeks' pre-occupancy delay associated with the first attempted structural fix - The total amount of damages was $1,905,318.70 - However, as the court previously found that the limitation clause ($500,000) applied to the plaintiffs' claims, the amount payable to the plaintiffs was $500,000 - See paragraphs 219 to 236.

Building Contracts - Topic 5581

Architects and engineers - Liability to owner - Claims for contribution - General - The architect defendants' position was that, in the event they were found liable to the plaintiffs, whether in contract or in tort, they were entitled to be indemnified by the engineer defendants - The Alberta Court of Queen's Bench found that the architects were entitled to be indemnified - There was no independent fault on the part of the architects - The evidence did not satisfy the court that the architects were negligent either in hiring the engineer defendants or in failing to dismiss them when problems arose - The negligence rested entirely upon the engineer defendants - The case law indicated that the architects were entitled to be indemnified for any amount they were liable to pursuant to this judgment - The court was mindful both of the $1 million settlement agreement between the plaintiffs and the architects and s. 3(2) of the Tort-feasors Act - In light of the limitation clause ($500,000) the court would have found the architects' liability to be limited to $500,000 - Thus, the engineer defendants were required to indemnify the architects in the amount of $500,000 - See paragraphs 208 to 218.

Limitation of Actions - Topic 9409

Bars - Disallowance of defence - Claim added to a proceeding previously commenced - The plaintiffs (the Swifts) purchased property for the purpose of building a residence - Mr. Swift engaged the architect defendants to design the residence - The architects engaged the TRL defendants to do the structural engineering work - Seismic issues arose - Mr. Swift sued in both contract and tort; Mrs. Swift claimed only in tort - The TRL defendants asserted that Mrs. Swift's tort claims were barred by the applicable limitation period - The plaintiffs argued that Mrs. Swift's claim was brought as an addition to an existing claim previously brought by Mr. Swift, and that s. 6 of the Limitations Act applied - The Alberta Court of Queen's Bench found that the requirements of s. 6 were met - Mrs. Swift was an additional claimant, as contemplated by s. 6(3), but her claim pertained to the same events described in Mr. Swift's original pleading - Further, the TRL defendants had not satisfied the court that they did not have sufficient knowledge of Mrs. Swift's claims to prejudice them in maintaining a defence thereto - Finally, with respect to the requirement in s. 6(3)(c), it was desirable that the claims of both Mr. and Mrs. Swift be resolved in the proceeding - See paragraphs 162 to 168.

Torts - Topic 7381

Joint and concurrent tortfeasors - Contribution between tortfeasors - Indemnity between tortfeasors - [See Building Contracts - Topic 5581 ].

Torts - Topic 7420

Joint and concurrent tortfeasors - Contribution between tortfeasors - Settlement by one tortfeasor - [See Building Contracts - Topic 5581 ].

Cases Noticed:

Troika Land Development Corp. et al. v. West Jasper Properties Inc. (2009), 481 A.R. 242; 2009 ABQB 590, refd to. [para. 32].

Syncrude Canada Ltd. et al. v. Hunter Engineering Co. and Allis-Chalmers Canada Ltd. et al., [1989] 1 S.C.R. 426; 92 N.R. 1, refd to. [para. 45].

Tercon Contractors Ltd. v. British Columbia (Minister of Transportation and Highways) (2010), 397 N.R. 331; 281 B.C.A.C. 245; 457 W.A.C. 245; 2010 SCC 4, refd to. [para. 45].

Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd., [1999] 3 S.C.R. 108; 245 N.R. 88; 127 B.C.A.C. 287; 207 W.A.C. 287, consd. [para. 46].

Rockland Industries Inc. v. Amerada Minerals Corp. of Canada Ltd., [1980] 2 S.C.R. 2; 31 N.R. 393; 21 A.R. 79, refd to. [para. 57].

Canadian Laboratory Supplies Ltd. v. Engelhard Industries of Canada Ltd., [1979] 2 S.C.R. 787; 27 N.R. 193, refd to. [para. 57].

Ziner (John) Lumber Ltd. et al. v. Kotov (2000), 137 O.A.C. 177 (C.A.), refd to. [para. 57].

Ryan et al. v. Kaukab et al., [2011] O.T.C. Uned. 6826; 2011 ONSC 6826, refd to. [para. 58].

Century 21 Maritime Realty Ltd. v. LeClerc (1994), 144 N.B.R.(2d) 87; 368 A.P.R. 87 (T.D.), refd to. [para. 58].

Moore, Re (2006), 246 N.S.R.(2d) 392; 780 A.P.R. 392; 2006 NSSC 216 (Bktcy. Registrar), refd to. [para. 58].

Hadley v. Superior Venetian Blind Services Ltd. et al., [2000] B.C.T.C. 670; 2000 BCSC 1321, refd to. [para. 58].

Winnipeg Condominium Corp. No. 36 v. Bird Construction Co. et al., [1995] 1 S.C.R. 85; 176 N.R. 321; 100 Man.R.(2d) 241; 91 W.A.C. 241, refd to. [para. 70].

Trizec Equities Ltd. v. Ellis-Don Management Services Ltd. et al. (1998), 227 A.R. 1; 1998 ABQB 1133, refd to. [para. 73].

Dinevski et al. v. Snowdon, [2010] O.T.C. Uned. 2715; 2010 ONSC 2715, refd to. [para. 73].

Brantford (Town) v. Kemp et al. (1960), 23 D.L.R.(2d) 640 (Ont. C.A.), refd to. [para. 73].

Rogers v. Grypma et al. (2001), 304 A.R. 201; 2001 ABQB 958, refd to. [para. 75].

North Sydney Associates v. United Dominion Industries Ltd. (2006), 243 N.S.R.(2d) 372; 772 A.P.R. 372; 268 D.L.R.(4th) 491; 2006 NSCA 58, refd to. [para. 145].

Mariani v. Lemstra (2004), 246 D.L.R.(4th) 489 (Ont. C.A.), refd to. [para. 145].

Vargo et al. v. Canmore (Town) et al., [2011] A.R. Uned. 743; 2011 ABQB 649, refd to. [para. 145].

Blacklaws et al. v. 470433 Alberta Ltd. (2000), 261 A.R. 28; 225 W.A.C. 28; 2000 ABCA 175, refd to. [para. 146].

Cardwell v. Perthen (2007), 243 B.C.A.C. 135; 401 W.A.C. 135; 2007 BCCA 313, refd to. [para. 146].

Sentinel Self-Storage Corp. v. Dyregrov et al. (2003), 180 Man.R.(2d) 85; 310 W.A.C. 85; 2003 MBCA 136, refd to. [para. 146].

Roy v. Thiessen (2005), 257 Sask.R. 239; 342 W.A.C. 239; 252 D.L.R.(4th) 475; 2005 SKCA 45, refd to. [para. 148].

Owners-Condominium Plan No. 9421710 v. Christenson et al. (2001), 298 A.R. 55; 5 C.C.L.T.(3d) 135; 2001 ABQB 180, refd to. [para. 148].

London Drugs Ltd. v. Brassart and Vanwinkel, [1992] 3 S.C.R. 299; 143 N.R. 1; 18 B.C.A.C. 1; 31 W.A.C. 1, refd to. [para. 156].

London Drugs v. Kuehne & Nagle International Ltd. et al. - see London Drugs Ltd. v. Brassart and Vanwinkel.

Brett-Young Seeds Ltd. et al. v. K.B.A. Consultants Inc. et al. (2008), 225 Man.R.(2d) 291; 419 W.A.C. 291; 68 C.L.R.(3d) 170; 2008 MBCA 36, refd to. [para. 171].

University of Regina v. Pettick et al. (1986), 51 Sask.R. 270; 38 C.C.L.T. 230 (Q.B.), revd. in part (1991), 90 Sask.R. 241; 77 D.L.R.(4th) 615 (C.A.), refd to. [para. 172].

Fidler v. Sun Life Assurance Co. of Canada, [2006] 2 S.C.R. 3; 350 N.R. 40; 227 B.C.A.C. 39; 374 W.A.C. 39; 2006 SCC 30, refd to. [para. 194].

Schmidt v. Guarantee RV Centre Inc., [2009] A.R. Uned. 424; 2009 ABQB 331, refd to. [para. 194].

Mason v. Westside Cemeteries Ltd. (1996), 135 D.L.R.(4th) 361 (Ont. Gen. Div.), refd to. [para. 195].

Stoddard v. Atwil Enterprises Ltd. (1991), 105 N.S.R.(2d) 315; 284 A.P.R. 315 (T.D.), refd to. [para. 196].

Alie et al. v. Bertrand & Frère Construction Co. et al., [2000] O.T.C. Uned. D17; 30 C.C.L.I.(3d) 166 (Sup. Ct.), varied in part [2001] O.A.C. Uned. 137; 11 C.L.R.(3d) 12 (C.A.), refd to. [para. 197].

Bertrand & Frère Construction Co. et al. v. Ontario New Home Warranty Program - see Alie et al. v. Bertrand & Frère Construction Co. et al.

Bustard and Bustard v. Irving Oil Ltd. (1984), 54 N.B.R.(2d) 404; 140 A.P.R. 404 (T.D.), refd to. [para. 197].

Keays v. Honda Canada Inc., [2008] 2 S.C.R. 362; 376 N.R. 196; 239 O.A.C. 299; 2008 SCC 39, refd to. [para. 199].

J.O. et al. v. Strathcona-Tweedsmuir School et al. (2010), 504 A.R. 117; 2010 ABQB 559, refd to. [para. 199].

Mustapha v. Culligan of Canada Ltd., [2008] 2 S.C.R. 114; 375 N.R. 81; 238 O.A.C. 130; 2008 SCC 27, refd to. [para. 199].

Eastern Shipping Co. v. Quah Beng Kee, [1924] A.C. 177 (P.C.), refd to. [para. 208].

McFee v. Joss (1925), 56 O.L.R. 578 (C.A.), refd to. [para. 209].

Peace Hills Trust Co. v. Professional Property Management Ltd. et al. (1991), 126 A.R. 88; 83 Alta. L.R.(2d) 357 (Q.B.), refd to. [para. 209].

Trans-Canada Forest Products Ltd. v. Heaps, Waterous Ltd., [1954] S.C.R. 240, refd to. [para. 209].

Brook's Wharf and Bull Wharf Ltd. v. Goodman Brothers, [1937] 1 K.B. 534 (C.A.), refd to. [para. 210].

Carleton (County) v. Ottawa (City), [1965] S.C.R. 663, refd to. [para. 211].

Aetna Insurance Co. et al. v. Canadian Surety Co. et al. (1994), 149 A.R. 321; 63 W.A.C. 321; 19 Alta. L.R.(3d) 317 (C.A.), refd to. [para. 212].

Statutes Noticed:

Limitations Act, R.S.A. 2000, c. L-12, sect. 6 [para. 166].

Tort-feasors Act, R.S.A. 2000, c. T-5, sect. 3 [para. 217].

Authors and Works Noticed:

Campion, John, and Dimmer, Diana, Professional Liability in Canada (1994) (2012 Looseleaf Update, Release 1), vol. 1, generally [para. 76].

Fridman, Gerald Henry Louis, The Law of Contract in Canada (5th Ed. 2006), generally [para. 32].

Counsel:

Dan Gallagher, Q.C., and Amy Cooper (Bennett Jones LLP), for the plaintiffs;

Timothy C. Hagg, Q.C., and Jaclyn Yeo (Bryan & Company LLP), for the defendants;

William Kenny, Q.C., Scott Hammel, Q.C., and Philip A. Carson (Miller Thomson LLP), for the third party defendants.

This case was heard on March 6 and 12-30, April 2-5 and 16-27, and August 7-9, 2012, before Millar, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following judgment, with reasons, dated December 14, 2012.