Privest Properties Ltd. v. The foundation Co of Canada Ltd.

DATE OF RELEASE: September 26, l995

C884875

Vancouver Registry

IN THE SUPREME COURT OF BRITISH COLUMBIA

BETWEEN:

)

PRIVEST PROPERTIES LTD., )

LORD REALTY HOLDINGS LTD.,

POLARIS REALTY (CANADA) LIMITED,)

)

LORDINA LIMITED, and

)

POLARIS REALTY (WESTERN) LIMITED)

)

PLAINTIFFS

)

AND:

)

THE FOUNDATION COMPANY OF

CANADA LIMITED,

DONALCO SERVICES LTD.,

)

REASONS FOR JUDGMENT

W.R. GRACE & CO. OF CANADA LTD.

)

ENG & WRIGHT PARTNERS, )

ARCHITECTS and

W.R. GRACE & CO. - CONN.

)

DEFENDANTS

)

OF THE

HONOURABLE

AND:

)

LORDINA LIMITED

)

DEFENDANT BY COUNTERCLAIM )

)

AND:

)

MR. JUSTICE DROST

THE FOUNDATION COMPANY OF

)

CANADA LIMITED,

)

DOUBLE A/D DISTRIBUTORS LTD.,

DONALCO SERVICES LTD.,

MACKENZIE, SNOWBALL, SKALBANIA

)

& ASSOCIATES LTD.,

)

WEBB, ZERAFA, MENKES, HOUSDEN,

ENG & WRIGHT PARTNERS, )

ARCHITECTS,

)

NELSON SKALBANIA,

DONALD THOMAS,

CHARLES WRIGHT,

GERHARD K. SCHADOW,

DOUGLAS FAULKNER,

MARTIN BRUCKNER,

)

WORKERS' COMPENSATION BOARD,

)

GILBERT ENG, and

W.R. GRACE & CO. OF CANADA LTD.

)

THIRD PARTIES

Counsel for the Plaintiffs and the D. W. Roberts,

Defendant by Counterclaim:

Q.C.

L. J. Muir

L. P. Williamson

S. A. Griffin

M. M. Munro

M. A. Sandor

Counsel for the Defendant and Third Party R. W. Hunter

Eng & Wright Partners, Architects, and the D. A Garner

Third Parties Charles Wright, Gilbert Eng,

Gerhard K. Schadow, Douglas Faulkner,

Martin Bruckner and Donald Thomas:

Counsel for the Defendant and Third Party

The Foundation Company of Canada:

J. M. Giles, Q.C.

R. J. McDonell

K. Shirley-Paterson

Counsel for the Defendant and Third Party

W. R. Grace & Co. of Canada Ltd. and the

Third Party W. R. Grace & Co. - Conn.:

D. F. Robinson

R. L. Hayley

T. S. Woods

K. A. Bridge

C. G.

J. J.

Proudfoot

D. E. Venour

Ovsenek

Counsel for the Defendant Donalco

Services Ltd. and the Third Party

Double A/D Distributors Ltd.:

J. R. Singleton

J. Ingman-Baker

J. A. Hand

Counsel for the Third Party Webb, Zerafa

Menkes, Houseden:

B. McGarva

T. Hill

T. Whitby

Counsel for the Third Party The Workers' M. J. G. Walsh

Compensation Board: T. Cherniak

B. A.

V.

Meckling

Bjorndahl

Dates and Place of Trial:

182 days between January 20, 1992 and

January 10, 1994, at Vancouver, B.C.

_______________________________________________________

TABLE OF CONTENTS

I. INTRODUCTION............................................................................................. 4

II. BACKGROUND FACTS................................................................................ 15

III. THE PLAINTIFFS' KNOWLEDGE ............................................................ 31

IV. THE FIREPROOFING SPECIFICATIONS .............................................. 57

V. THE LIMITATION PERIOD ....................................................................... 65

VI. ECONOMIC LOSS........................................................................................ 83

VII. OWNERSHIP/STATUS ISSUES ................................................................. 92

VIII. RELEASE and ASSIGNMENT................................................................... 95

IX. PRODUCT LIABILITY ...............................................................................114

X. THE ADMISSIBILITY OF LEARNED TREATISES ..............................124

XI. ASBESTOS AND ASBESTOS-RELATED DISEASES............................134

XII. REGULATORY ACTION...........................................................................194

XIII. THE MONOKOTE PRODUCTS ...............................................................214

XIV. ASBESTOS IN BUILDINGS......................................................................234

XV. THE ALLEGED CONTAMINATION OF THE BUILDING.................250

XVI. THE DECISION TO REMOVE AND REPLACE THE FIREPROOFING

MATERIAL..............................................................................................................288

XVII. CONCLUSIONS REGARDING THE ASBESTOS CLAIMS ...............300

VIII. FOUNDATION'S COUNTERCLAIM.......................................................308

- 4 -

- 5 -

I. INTRODUCTION

1 The plaintiffs, Privest Properties Ltd. and Lord Realty Holdings Ltd., are the owners of a building in which

an asbestos-containing spray fireproofing material was installed, allegedly without their

knowledge or consent. In this action, they and their co-plaintiffs, Polaris Realty (Canada)

Limited, Lordina Limited and Polaris Realty (Western) Limited, seek compensation for the

costs incurred and revenue lost while having that material removed from the building and

replacing it with another, asbestos-free, fireproofing material. They also seek punitive

damages.

2 The building in question was constructed in the 1930s and today forms part of the Harbour Centre complex,

a major retail/commercial complex built during the 1970s in Vancouver, British Columbia.

During the trial, the building was usually referred to by its original name, "the Spencer

Building". I will also use that name, or simply call it "the Building".

3 The plaintiffs allege that the asbestos-containing fireproofing material was installed in the Building in the

course of a major renovation project carried out between 1972 and 1975 as part of the

development and construction of Harbour Centre. They say that the material installed was

inherently dangerous and that, by continuously releasing asbestos fibres into the air, it caused

physical damage to their property and endangered the health of Building workers and

occupants. They say that due to the presence of asbestos in the material, they were unable to

maintain, repair or renovate the Building without causing further releases of asbestos fibres,

- 6 -

and for that reason they were obliged to undertake a programme of removal and replacement

(the "abatement programme").

4 Throughout the relevant time period, the Harbour Centre complex was owned by one or more of the

plaintiffs, Privest Properties Ltd. ("Privest"), Lord Realty Ltd. ("Lord Realty") and Lordina

Limited ("Lordina"). The other plaintiffs, Polaris Realty (Canada) Limited ("Polaris

Canada") and Polaris Realty (Western) Limited ("Polaris Western"), acted, at different times,

as development and/or building managers.

5 The defendants, in the order in which their names appear in the style of cause, are:

The Foundation Company of Canada ("Foundation") ) the General Contractor who

carried out the development and construction of the Harbour Centre complex and the

renovation of the Building in the 1970s;

Donalco Services Ltd. ("Donalco") ) the sub-contractor engaged by Foundation at that

time to install spray fireproofing in the Building;

W. R. Grace & Co. of Canada Ltd. ("Grace Canada"), formerly W. R. Grace

Construction Materials Ltd., ) the manufacturer of the spray fireproofing material

supplied for installation in the Building;

Eng & Wright Partners, Architects ("Eng & Wright") ) the firm of architects engaged

by the plaintiffs to prepare the plans and specifications for the development of the

complex, including the renovation of the Building; and

- 7 -

W. R. Grace & Co. - Conn. ("Grace-Conn.") ) a U.S. corporation which is the sole

shareholder of Grace Canada.

6 I will frequently refer to the two Grace companies, collectively, as "the Grace defendants".

7 Each of the defendants cross-claimed against its co-defendants. In addition, they collectively joined as third

parties:

Double A/D Distributors Ltd., a company affiliated with Donalco Services Ltd.;

MacKenzie, Snowball, Skalbania & Associates Ltd., the mechanical engineers on the

Project;

Nelson Skalbania, one of the original developers;

Donald Thomas, a specification writer engaged by Eng & Wright to prepare the

specifications for the project;

Charles Wright, Gerhard K. Schadow, Douglas Faulkner, Martin Bruckner and

Gilbert Eng, each of whom was at relevant times a partner or associate in Eng &

Wright;

Webb Zerafa, Menkes, Housden ("Webb Zerafa"), a firm of architects engaged by the

plaintiffs to provide design consulting services; and

The Workers' Compensation Board of British Columbia ("the WCB").

- 8 -

8 Foundation counterclaimed against Privest, Lord Realty, Polaris Canada and Lordina for the costs incurred

in defending this action. Foundation alleges that those parties were contractually obliged to

maintain general liability and property damage insurance coverage, which, if effected, would

in whole or in part cover the plaintiffs' claims herein, thus precluding their right to succeed in

this action.

9 In the spring of 1987, parts of the interior of the Building were extensively renovated to meet the

requirements of a new tenant. In the course of those renovations, some of the existing spray

fireproofing material was exposed and disturbed. That led to the discovery of chrysotile

asbestos in the existing fireproofing material, and to the Workers' Compensation Board of

British Columbia issuing an order closing the area to unprotected workers.

10 Within a few days of that happening, the plaintiffs embarked upon an abatement programme which will

eventually see the removal of all of the existing fireproofing material from the Building and

its replacement by an asbestos-free material.

11 The plaintiffs allege that the chrysotile asbestos was contained in the spray-fireproofing material, known as

Monokote MK-3, which was installed during the renovation of the Building between 1973

and 1975. They say that at that time there was widespread public knowledge of asbestos-

related health hazards and, that, in the architectural profession and the construction industry

at least, there was particular concern about the use of asbestos-containing spray fireproofing

materials.

- 9 -

12 The plaintiffs maintain that they did not know that the material contained asbestos. Had they known, they

say, they would have taken steps to prevent its installation.

13 The plaintiffs say that they relied on the knowledge, skill and judgment of the defendants to specify and

install appropriate materials to be used in the Building and that, by specifying and installing

asbestos-containing MK-3, the defendants failed to exercise the degree of skill, care and

diligence required of them.

14 The plaintiffs assert claims against Foundation in contract and in tort. They say that Foundation had a

contractual responsibility to ensure that only the most appropriate products were used in the

Building, a responsibility that it breached by permitting the installation of a hazardous

product. And they say that, before entering into a formal contract with Polaris Western in

1975, Foundation assumed a duty of care to the owners of the Building which it breached by

failing to warn them of the presence of asbestos in the specified spray fireproofing material

and by installing an inherently dangerous material. They also allege that Foundation

breached an implied warranty of fitness.

15 The plaintiffs also assert claims against the architect, Eng & Wright, in both contract and tort. They say that

they relied on Eng & Wright's knowledge, skill and judgment as professional architects, and

that Eng & Wright knew or ought to have known of that reliance. They allege that Eng &

- 10 -

Wright acted negligently and in breach of contract by failing to take sufficient care in

drafting the specifications for the renovation of the Building, failing to exercise the degree of

skill required of a reasonable architect, and by failing to warn of the presence of a hazardous

product. They also allege that Eng & Wright breached an implied warranty of fitness.

16

Their claim against the applicator, Donalco, lies in tort. They say that, despite the absence of a

contractual relationship, Donalco owed them a duty of care. Donalco, they say, was

experienced in the business of supplying and installing spray fireproofing material in

buildings, and knew or ought to have known that they were relying on its knowledge, skill

and judgment. They allege that Donalco knew of the dangers of asbestos and knew that MK-

3 contained asbestos. They say that, notwithstanding that knowledge, Donalco failed to warn

them of the presence of asbestos and the dangers associated with the use of an asbestos-

containing product.

17

The plaintiffs also say that by approving a specification which called for the use of "Monocote (sic)"

simpliciter, Donalco represented to them that Monokote MK-3 was suitable for use in the

Building. They say that Donalco's

representation was negligent, that they relied upon it, and that the representation resulted in

the installation of MK-3 in the Building to the plaintiffs' detriment.

11

18

The impugned product, Monokote MK-3, was manufactured and supplied by Grace Canada, but the

plaintiffs allege that its business operations, including the decision to continue marketing

MK-3 in Canada after April 1973 ( when its application by spraying was banned by the

United States Environmental Protection Agency) were directed and controlled by its U.S.

parent corporation, Grace-Conn.

19

20

The plaintiffs allege that the Grace defendants were negligent in that they knew or ought to have

known that Monokote MK-3 was a dangerous product, capable of causing harm to others

either in the course of its application or by its continued use or existence in the Building.

The plaintiffs also allege that the Grace defendants breached a common law duty to warn them of the

dangers "inherent" in that product, and that they negligently misrepresented the product as

being a superior one, without disclosing that it contained asbestos, and that other, asbestos-

free, products then available could achieve the same purpose. Moreover, they say, by using

the term "cementitious" to describe their product, the Grace defendants actively sought to

convey the impression that there was no concern about the asbestos in their product.

21

Finally, the plaintiffs submit that their claims against the Grace defendants warrant application of the

concept of strict liability.

12

22

23

It is the cost of the abatement programme (which has not yet been completed), and the loss of rental

revenue allegedly resulting therefrom, that form the basis of the plaintiffs' claim for

compensatory damages in the amount of $7,555,841.

The plaintiffs also seek punitive damages. They allege that when the product was installed in the

Building, all of the defendants knew or ought to have known that asbestos is a carcinogen

and that MK-3 contained asbestos. They allege that the defendants knew or ought to have

known that MK-3 was friable (i.e., that, on contact, it crumbled easily), and that it was being

installed in places where there was a risk of it being disturbed and thus releasing respirable

asbestos fibres.

24

The plaintiffs describe their claims against the Grace defendants as "unequalled in their importance

in this case". They say that because the Grace defendants knew that asbestos is a carcinogen,

it is reasonable to assume that the Grace defendants were well aware of the potential harm

that could result from the installation of their asbestos-containing product in the Building. In

his opening statement, plaintiffs' counsel described the activities of the Grace defendants as:

. . . a case of arrogant and reckless conduct of a multi-billion dollar corporation bent

on wringing every last cent out of a product they knew was hazardous and which for

that reason had been banned in the United States where [Grace-Conn.] had its

corporate headquarters.

25

He then compared the Grace defendants with "those who commit acts of environmental terrorism

against third world countries".

13

26

27

It is in the light of those inflammatory words that the plaintiffs claim the additional sum of $3

million by way of punitive damages.

In recent years, courts in the United States have been inundated by asbestos litigation. First came

the wave of personal injury actions. Then came the second, and perhaps even larger wave, of

property damage claims. I understand that the full extent of potential property damage

awards and insurance claims runs into billions of dollars.

28

This is the first asbestos property damage claim to reach trial in a Canadian court. It may also be the

first such action in which a contractor has been joined as a defendant with the manufacturer

of an asbestos-containing product, the applicator who installed the product and the architect

who allegedly specified its use.

29

The many claims, cross-claims and third party claims that were advanced gave rise to a multitude of

complex issues. A total of 160 days were taken up by the presentation of evidence. During

that time many hundreds of documents were entered as exhibits. Counsel then provided me

with more than six thousand pages of written argument, followed by twenty-two days of oral

argument.

30

For reasons which will soon become apparent, I did not find it necessary to address all of those

issues. Many have not been dealt with, perhaps to be resolved another day.

14

31

Furthermore, I have found it impractical, if not impossible, to recount with any degree of

completeness all of the testimonial and documentary evidence that was presented with

respect to the issues that I will discuss. Similarly, I found it impractical to refer to every

argument that was put forward on a given subject. Accordingly, when discussing an issue, I

will mention only what I consider to be the most relevant aspects of the evidence and

argument.

32

Having said that, I want to assure the parties that, with the benefit of counsel's able assistance, I have

endeavoured to give full consideration to all of the evidence and submissions that were

presented.

15

II. BACKGROUND FACTS

33

In this section I intend to provide an overview of the evidence relating to the design and construction

of the Harbour Centre complex, with particular emphasis on the installation of the spray

fireproofing material in the Building and the events which led to the plaintiffs' decision to

remove and replace it. Later, I will undertake a more detailed analysis of the evidence

relating to the issues that fall to be decided.

34

The development of the Harbour Centre complex (the "Complex"), including the renovation of the

Building, was carried out under two separate groups of owners. Except when it is necessary

to distinguish between the two phases, I will refer to the renovation and development project

as "the Project". It began around 1970, when a group of developers (including the third

party, Nelson Skalbania) acquired a major site in downtown Vancouver, B.C., which

included an old bank building and the Spencer Building, then the location of Eaton's main

Vancouver store. They retained Eng & Wright to design a commercial/retail development

for the site.

35

In early 1971, Eng & Wright brought forward a design proposal that would have resulted in both of

the old buildings being retained and a new office tower being erected. However, that scheme

was rejected by the developers who decided, instead, to seek approval for the construction of

a radically different kind of tower. They had in mind an office tower, on the top of which

would be a revolving restaurant, similar to the Space Needle in Seattle, Washington.

16

36

The developers retained another firm of architects, Charles Paine & Associates, to design the new

tower and restaurant ("the Tower"), while Eng & Wright carried on with the design of the

retail and parkade portions of the Project, which included the renovation of the Building.

Concordia Management Ltd. was hired to act as the Project Manager.

37

38

In December 1971, an application for a building permit was filed, but the "space needle" concept

was rejected and the Project had to be re-designed once again.

In October 1972, Eng & Wright retained Donald Thomas, an independent specification writer, to

prepare the necessary specifications for their portion of the Project. He did that and, on

November 8, 1971, Concordia combined the Eng & Wright specifications for the retail and

parkade portions of the Project with those of Paine and Associates relating to the Tower into

what was called the "Vancouver Square Outline Specification".

39

Initially, the Fireproofing Section of that Outline Specification read as follows:

13.2

Fireproofing

A.

B.

Tower - Spray fireproofing - Cafco Asbestos free. Monocote [sic] etc.

. . .

Existing Eight (8) Storey Building - upgrading not necessary.

40

A short time later, however, Mr. Charles Wright, the senior Eng & Wright partner working

on the Project, learned that additional fireproofing had to be added to the existing structure in

17

order to bring it up to current building code requirements. Accordingly, he amended the

fireproofing specification by striking out the word "not" and adding, by hand, the word

"YES", so that it then read:

13.2

Fireproofing

A.

B.

Tower - Spray fireproofing - Cafco Asbestos free. Monocote [sic] etc.

. . .

Existing Eight (8) Storey Building - upgrading not necessary. YES

41

42

In December 1972, a revised Development Permit Application was approved by the

Vancouver Building Department.

Mr. Adrian Geraghty, who was the Structural Engineer Plan Checker for the Vancouver City

Building Department during the years 1972 to 1975, testified that at that time officials in the

Building Department regularly referred to test reports published in handbooks issued by

Underwriters Laboratories Inc. ("ULI"), an American firm, and by Underwriters Laboratories

Canada ("ULC"), for information concerning various building products, including spray

fireproofing materials. Both of those laboratories tested assemblies of fireproofing materials

in order to determine their fire resistance capabilities.

43

Speaking of the Vancouver City Building Department's practice at that time, Mr. Geraghty

testified that:

18

. . . when an architect decides to use a particular assembly in a building to achieve fire

resistance ratings, we will then ask him what is the number of the test that he

proposes to use. We will then compare what he shows on his building permit

application drawings with what is shown under that test number in the handbook, and

if they're not similar, then we will normally reject that application.

44

45

In February 1973, the Vancouver Building Inspector approved the use of Underwriters

Laboratory Inc. design J701 for the fireproofing to be applied to the floors of the Building

intended for use as office space, and a modification of that design for the remaining floors

intended for mercantile use.

By May 1973, General Contract Specifications had been prepared for the purpose of

obtaining construction bids. Part I of those Specifications, which related to the retail and

parkade sections, had been prepared by Eng & Wright. In it the following specification

appears under the heading "Products":

Sprayed fireproofing to be cementitiously applied Monocote (sic), as distributed by

Grace Materials, or approved alternative, to equivalent thicknesses as required to

provide fire ratings as specified.

46

Part II, which related to the Tower and had been prepared by Paine & Associates, specified

that:

Materials shall be Mono-Kote (sic), Type 4, asbestos free, well mixed cementitious

sprayed fireproofing as manufactured by Grace Construction Materials or approved

equal.

19

47

48

During the spring or early summer of 1973, Concordia engaged Foundation to act as the

General Contractor for the Project.

In August 1973, Vancouver Square Holdings Ltd. sold the development site to the plaintiff

Lord Realty, together with all the plans, specifications and permits that had been prepared

and obtained up to that time. Lord Realty appointed Polaris Western to act as its agent and

development manager in place of Concordia Management, and work continued on the Project

on a "fast-track" basis.

49

Charles Paine & Associates were also let go and Polaris Western retained the third party,

Webb Zerafa, to prepare a "conceptual redesign" of the entire project. At about the same

time, Eng & Wright's engagement was enlarged to include the preparation of working

drawings and specifications for the entire Project.

50

The final architectural drawings called for the first four floors of the new Tower to be built

contiguous to the first four floors of the Building so that, on those floors, one could walk

from one side to the other, from the Building into the new structure, without being conscious

of the difference. Above the fourth floor level, the Tower stands separate from the Building,

and it is topped by a revolving restaurant.

51

So that Eaton's Data Centre might remain on the seventh floor of the Building while the

renovation and construction work proceeded, spray fireproofing was applied to the underside

20

of the eighth floor in October 1973. The material used was Monokote MK-3 and it was

applied by Donalco under a work order from Foundation. The application was supervised

and inspected by Eng & Wright.

52

In February 1974, Eng & Wright prepared a "Brief Basic Architectural Specification", on the

basis of which Foundation submitted a guaranteed upset price bid for the Project. Its

fireproofing section simply contained a reference back to the specification prepared by Eng

& Wright in 1973.

53

On March 1, 1974, Polaris Western entered into a written contract with Eng & Wright

wherein the latter agreed, amongst other things, to prepare working drawings and

specifications for the renovation of the Building, an extension to the Building, the new Tower

(including a revolving restaurant and public observation gallery), and additions and

alterations to the existing parking and loading facilities.

54

During the month of March 1974, Donalco submitted a quotation to Foundation for the

application of spray fireproofing to the "Structural Slab of Former Spencer Building (Retail

Area) and Miscellaneous Structural Steel". The quotation was based on the use of Monokote

materials as specified, manufactured by Grace Construction Materials Ltd., Vancouver, B.C.

After some negotiating, Foundation accepted Donalco's final quotation on August 8, 1974,

and in the fall of that year, Donalco spray fireproofed the underside of the seventh floor of

the Building. Once again, the work was performed pursuant to a work order from

Foundation and the material used was Monokote MK-3.

21

55

In August 1974, Foundation and Polaris Western settled upon the terms of a construction

contract. On December 4, 1974, they executed a letter agreement confirming those terms and

adding others. However, in the meantime, registered ownership of the Project and

development site had changed again. On November 22, 1974, Lord Realty had transferred a

50% interest to its wholly owned subsidiary, Lordina, and the remaining 50% interest to

Privest. Accordingly, when Polaris Western entered into the December 4, 1974 contract, it

did so on behalf of Lordina and Privest.

56

57

In January 1975, representatives of Foundation, Lordina and Privest executed a formal

construction contract, dated the 1st day of August, 1974.

The final specifications for the Project were completed by Eng & Wright in the spring of

1975. Between March and October of that year Donalco spray fireproofed the remaining

parts of the Building. Apart from certain painted surfaces which were sprayed with another

material, Monokote MK-3 was used until mid-August, when Grace Canada decided to

remove it from the Canadian market. Donalco then switched to Monokote MK-5 to finish

the job.

58

MK-3 contained approximately 12-13% asbestos fibres, whereas MK-5, which Grace-Conn.

had developed in response to the publicly raised health concerns about the use of asbestos-

containing spray fireproofing materials, was asbestos-free. Cafco Blaze Shield, the material

22

used on painted surfaces in the Building, was also an asbestos-free spray fireproofing

material.

59

The entire Project was completed in 1976, and Harbour Centre then began operating as a

multi-purpose complex, consisting of a shopping centre, a department store, an office tower

and a restaurant. The major tenant in the Building was a Sears Canada department store,

occupying floors one through five. The sixth and seventh floors became office space

accommodating several tenants.

60

Mr. Jonathan Hall became the General Manager of Harbour Centre in February 1985, a

position he holds today as well as that of Vice-President of Polaris Canada. He is in charge

of all operating aspects of Harbour Centre, including building management, leasing and any

renovations that are required.

61

Not long after Mr. Hall became the General Manager, Sears Canada indicated to him that

they would like to leave the complex or, alternatively, substantially reduce the amount of

space they were occupying. According to Mr. Hall, Sears was so anxious to leave that, were

it not for the fact that their lease was a "very strong" one, binding them for a further 20 years

of an initial 30 year term, they would have abandoned their entire space and left the Building.

62

Polaris Canada, which by then had replaced Polaris Western as the manager of the Harbour

Centre complex, learned that the federal Department of Public Works ("the DPW") was

23

looking for office space in downtown Vancouver for use by the Department of Fisheries and

Oceans ("the DFO"). After deciding to pursue the DFO as a tenant for part of the space

occupied by Sears, Polaris Canada entered into an agreement with Sears that, should the DFO

become a tenant, Sears would vacate the third and fourth floors of the Building and

"contribute" a sum of money to secure a partial release of its obligations.

63

Polaris then entered into negotiations with the DPW and, in the spring of 1986, submitted an

Offer to Lease the third and fourth floors of the Building. In accordance with a DPW

requirement that the entire Building be free of formaldehyde, PCBs and friable asbestos, the

Offer contained the following warranty:

The lessor warrants that the building, premises and the lands are free of friable

asbestos, hazardous formaldehyde and polychlorinated biphenyls (PCB) and the

lessor covenants to keep the building, premises and the lands free of such materials

throughout the term of this lease and any renewals thereof.

64

In response to an earlier request initiated by Mr. Hall for confirmation that the Building was

asbestos-free, Eng & Wright had advised by letter that:

. . . this is to confirm that the sprayed fireproofing and thermal insulation specified for

the above project was Monocote (sic) distributed by Grace Construction Materials.

65

That letter satisfied Mr. Hall and it was included in the tender documents submitted to the

DPW.

24

66

67

Polaris's offer was accepted and the DFO leased the entire third and fourth floors of the

Building (including the contiguous floors in the tower), together with a small area of the

ground floor, giving them their own lobby and elevator access from the street level.

The tender proposal called for substantial alterations to the third and fourth floors of the

Building. The ceilings had to be replaced and new lighting, heating and ventilation systems

had to be installed. As well, the proposal called for the installation of three new elevators

running from the new separate entrance. The owners did not intend, while making those

alterations, to replace the existing fireproofing, only to patch and repair it where damage

occurred.

68

Sometime in 1986, a patron of the revolving restaurant at the top of the Tower questioned

whether the readily visible fire-proofing material on the underside of its roof structure

contained asbestos. An enquiry was made and Mr. Hall subsequently received from Eng &

Wright a copy of a letter from Donalco, dated May 16, 1986, advising that:

25

. . . I have concluded that from the weekly reports and a letter from Doug

McKay (formerly with Donalco) to Jeff Holland of Foundation Co. that Monokote

Type 5 as manufactured by W. R. Grace was used on this project.

69

Then, in late 1986, after the third and fourth floor ceilings had been removed and the existing

fireproofing material was disclosed, the general contractor hired to do the renovation work

(not Foundation) expressed concern as to whether the spray fireproofing in the Building was,

in fact, asbestos-free. At Mr. Hall's suggestion, he had a sample taken and tested. It was

found to contain asbestos. Polaris Canada then communicated with Grace Canada who sent a

representative to examine the site. He recommended that further samples be taken and sent

to a different lab for testing. That was done, and Polaris subsequently received a letter from

the lab advising that all six of the samples taken showed less than 1% asbestos content, a

finding which was considered the equivalent of asbestos-free. To double check, Polaris sent

four more samples for testing and the same result was obtained.

70

Following his inspection of the site, the Grace representative wrote to Polaris advising that:

The information I have gathered dating back to the approximate time that fire

protection was sprayed in the area concerned at the Harbour Centre indicates

Monokote MK-5 to be the involved product. Our records show the complex was

referred to as the Sears Centre, Spencer Building and Vancouver Square. The

product shipped at that time was Monokote MK-5.

71

But he also suggested to Mr. Hall that further samples be taken and a particular type of test

be performed, a test that would determine conclusively whether or not asbestos was present.

That advice was not followed. On the evidence that he then had, Mr. Hall concluded that the

26

tests performed for the contractor were faulty, and that the Building was asbestos-free. The

renovation work continued.

72

During a regular inspection of the work being performed on the third and fourth floors of the

Building, a representative of the B.C. Workers' Compensation Board took some bulk samples

of the spray fireproofing material that had been dislodged and was lying about on the floors.

Those samples were tested and found to contain in excess of 1% chrysotile asbestos. As a

result, on March 30, 1987, the Board issued the order which brought the renovation work to a

halt. It stated that:

LAB ANALYSIS OF BULK INSULATION SAMPLE CONFIRMS THE

PRESENCE OF CHRYSOTILE ASBESTOS.

ASBESTOS CONTAINING MATERIAL IS IN A DAMAGED CONDITION,

SOME MATERIAL HAS ACCUMULATED ON THE FLOOR. WORKERS IN

THIS AREA WERE NOT WEARING RESPIRATORY PROTECTION.

THIS ENDANGERS THE HEALTH & SAFETY OF WORKERS AND IS

CONTRARY TO INDUSTRIAL HEALTH & SAFETY REG. 804 & 204.

EFFECTIVE IMMEDIATELY, NO UNPROTECTED WORKERS SHALL BE

ALLOWED IN THIS AREA. PROPERLY TRAINED & EQUIPPED WORKERS

SHALL CLEAN UP FALLEN INSULATION MATERIAL.

A HAZARD ASSESSMENT DETAILING PROPOSED CORRECTIVE ACTION

SHALL BE SUBMITTED TO WCB PRIOR TO THE START OF ASBESTOS

CONTROL.

73

On the same day that the WCB order was issued, Polaris Canada retained Pinchin-Harris &

Associates Ltd. ("Pinchin-Harris") to survey and establish the extent of asbestos-containing

material ("ACM") within the third and fourth floors of the Building (those leased to the

27

DFO) and throughout the balance of the Building. They asked Pinchin-Harris to make

recommendations with regard to "control options" for that material.

74

75

Polaris Canada also informed Sears and the DFO of the situation, and immediately embarked

on a "damage control" programme with respect to the serious problem they had on their

hands. In short, they decided to take all necessary steps to retain their new tenant.

In argument, the plaintiffs put it this way; they said:

Before receiving the Pinchin Harris report, but after taking advice from Pinchin

Harris, the Owners decided that the asbestos-containing material should be

immediately removed from the third and fourth floors. This decision was made as

'damage control': they could not afford to lose the DPW tenancy, it meant millions to

the project in terms of rent and would provide a needed boost to the retail area

because of the 500 new employees.

76

Pinchin-Harris completed their report on May 2, 1987. In it they advised that between March

30 and April 27, 1987, they had conducted a "cursory" survey of the Building and its

associated structures, and that bulk samples of "suspect material" had been taken and

analyzed. They reported that four types of friable asbestos-containing materials ("ACMs")

were found "or assumed to be present" and they provided an assessment, on an area-by-area

basis, of the condition and the potential for disturbance or erosion of the ACMs that had been

found in the Building.

77

However, long before that Report was issued, Mr. Hall and other representatives of the

Building owners had agreed with the DPW that, not only would the existing spray

28

fireproofing material be removed from the third and fourth floors immediately, but that it

would be removed from the rest of the Building as well, over time and coincidental with

planned renovations or scheduled lease terminations.

78

In the spring of 1987, Simon Fraser University expressed an interest in leasing the

mezzanine, first and second floors of the Building, space still occupied by Sears, for its

Downtown Campus. SFU also required the removal of all asbestos from the proposed

premises before they would lease the space. The owners agreed to do that, and a lease

agreement was signed in the fall of 1987. Sears terminated its tenancy of those areas in

December of that year.

79

Of course, under the terms of the agreement with the DPW, the owners would, in any event,

have had to remove the existing asbestos-containing fireproofing material from the space to

be renovated for occupancy by SFU, and then from any other areas subsequently renovated.

However, in the case of SFU and other new tenants, the plaintiffs say that the removal of the

asbestos-containing material delayed the new tenants' occupation of the renovated premises

and resulted in a further loss of rental income.

29

III. THE PLAINTIFFS' KNOWLEDGE

Introduction

80

The extent of the plaintiffs' actual or imputed knowledge concerning the asbestos content of

the spray fireproofing material that was specified for installation in the Building is one of the

most important issues in this case. Indeed, it is so important that the Grace defendants devote

more than 500 pages of their main argument to the subject, and another 33 pages in surreply.

81

82

The issue is relevant to the plaintiffs' allegation that the defendants were under a duty to warn

them of the presence of asbestos in the spray fireproofing material to be installed in the

Building, and to the defendants' assertion that the plaintiffs' claims are time-barred.

The Grace defendants plead that at the time the material was installed in the Building, the

plaintiffs knew that:

(a) asbestos was an ingredient of many con-struction products and building components,

including sprayed fireproofing; and

(b) during the construction of the Harbour Centre complex there were publicly voiced

"concerns about the hazards of asbestos in certain circumstances and that in certain

circum-

stances asbestos could be hazardous to human health or workers' safety".

- 30 -

30

83

84

85

They have also pleaded that Eng & Wright, Webb Zerafa and McKenzie Snowball (the

"design professionals") were retained by the plaintiffs because of their knowledge and

expertise. They say that those parties were the plaintiffs' "agents to know" for all purposes in

connection with the materials to be used in the Building, and that their knowledge, whether

actual or constructive, must be imputed to the plaintiffs.

The Grace defendants have also pleaded that the plaintiffs and their agents were aware at all

relevant times that the presence of asbestos in sprayed fireproofing materials was the subject

of controversy, that both asbestos-containing and asbestos-free formulations of sprayed

fireproofing products (including Monokote) were available, and that the Grace defendants

could have provide an asbestos-free product if that requirement was specified.

And all of the defendants have pleaded that the plaintiffs' claims are time-barred because the

facts within their means of knowledge were such that the provisions of subsections 6(3)(i)

and (j) of the Limitation Act are applicable.

- 31 -

31

Discussion

86

The extent of public and industry awareness in Canada regarding the concerns that were

being expressed at the time the MK-3 was installed in the Building about asbestos-related

health hazards was commented upon judicially by the Quebec Court of Appeal in Canadian

Indemnity Co. v. Johns-Manville Co., Ltd., (1988), 54 D.L.R. (4th) 468. The question arose

in that case because Canadian Indemnity rejected a claim on the ground that the insurance

policy it had issued was invalid because the insured, Johns-Manville Co., had not fully

informed it about the nature of the risks. In answer, the insured placed before the court

numerous medical, scientific, newspaper and magazine articles, as well as conference

proceedings in order to demonstrate that the health hazards of asbestos were of "public

character and notoriety" in the late sixties and early seventies.

87

Writing for the court, Mr. Justice Rothman stated at p. 476-477 that:

Quite apart from the many studies and reports on asbestos related health hazards

published in medical and scientific journals prior to the issuance of the policy, there

were numerous articles published in newspapers across Canada and in the United

States dealing with asbestos-related health hazards, including those mentioned in the

Selikoff reports. Many of these were published prior to the issuance of the policy in

1970 and its renewal in 1973. By the time the present proceedings in nullity were

taken by the insurer in 1979, there were hundreds of articles dealing with asbestos-

related health hazards published in Canada.

Nor, with respect for the opinion of the trial judge, do I believe we can ignore the

articles published in American newspapers and magazines when assessing the public

character and notoriety of the facts in question. There may well be a question of

weight or appreciation of the likely impact of those publications on an insurer in

Canada, but the evidence would certainly be relevant and admissible.

- 32 -

32

In this case, some of the articles in question were published not in obscure

publications. These were prominent articles in the New York Times, the Wall Street

Journal, The New Yorker Magazine, The Washington Post and others.

On October 12, 1968, for example, The New Yorker carried a lengthy article by Paul

Brodeur describing in some detail the work of Dr. Selikoff and his associates and the

very high frequency of asbestosis among asbestos insulation workers. A news story

appeared in the New York Times on the cancer risk as early as October 7, 1964, again

quoting Dr. Selikoff. Canadians, and Canadian insurers in particular, are not isolated

from the mainstream of news and knowledge in North America and, in my respectful

opinion, these American articles were relevant to the issue of public character of

asbestos fibre hazards, at the very least as a complement to the Canadian material that

was put in evidence.

88

Mr. Justice Rothman concluded at p. 480 that:

If the media accounts left him in any doubt as to the precise extent of the risk or as to

the details contained in the Selikoff reports, any inquiry within the industry or even

the most superficial research outside of it would have brought forward this

information.

89

90

The case went to the Supreme Court of Canada: (1990), 72 D.L.R. (4th) 478. There,

Gonthier, J., writing for the court, upheld the reasoning of Rothman, J.A. and specifically

adopted the statements quoted above.

The Supreme Court held that when considering the obligation to be informed, the standard to

be applied is that of the reasonable insurance underwriter. Consequently, while the average

member of the public might not be aware of certain facts, those same facts would be

notorious in the underwriting industry because of its position. As Gonthier, J. put it at p.

508:

- 33 -

33

The insurer will be presumed to know only those facts which are publicly available

and which would be notorious to the reasonably competent underwriter insuring

similar risks in that industry.

. . . . . . .

91

Gonthier, J. continues at p. 509:

Once it can be said that the reasonably competent underwriter would have been

aware that the handling of asbestos and asbestos products involves a serious danger,

then it is up to the Insurer to consult, if it wishes, the publicly available information in

order to find the exact statistics on the actual severity of the risk.

92

93

In my opinion, the same standard should apply to a person whose duty and responsibility it is

to oversee and direct a major real estate development project.

I will now explore, in some detail, the knowledge and means of knowledge of Mr. Geoffrey

Kendrick, who was employed by Polaris Western as the Harbour Centre Project Manager

during a critical stage of the construction of the complex and the renovation of the Building.

I will then note a relevant piece of evidence given by Mr. Karsten von Wersebe, who was an

officer of Lord Realty and Polaris Western during the development phase. Finally, I will

discuss some of the evidence relating to Mr. Vincent Strother who was employed by Polaris

Western in May 1975 as Clerk of the Works on the Project, after having been employed for

several years by Donalco.

- 34 -

34

94

95

96

In light of my conclusions regarding the knowledge and means of knowledge of the plaintiffs

through those three persons, I do not find it necessary to consider the extent to which the

knowledge or constructive knowledge of the design professionals affects the plaintiffs.

Mr. Kendrick joined Polaris Western in 1974 as Project Coordinator for the entire Harbour

Centre development. Later, he became the Project Manager, a position he occupied until the

development project was completed.

Mr. Kendrick was well qualified for the job. He held a certificate in mechanical engineering.

In 1964, he became a member of the Institute of Heating and Ventilating Engineers in the

United Kingdom. During 1966, he spent three months studying industrial ventilation and air

pollution at Michigan State University. In 1972, he became a member of the National

Society of Professional Engineers in the United States.

97

Between 1965 and 1967, Mr. Kendrick was employed by a division of the Foundation

Company of Canada as a section design engineer, working on air conditioning and machine

ventilation. Between 1970 and 1974, when he joined Polaris Western, Mr. Kendrick was

employed by H. A. Simons International in Vancouver as Assistant Manager, Project

Planning. While holding that position, he was involved in the construction of a pulp and

paper mill in New Zealand, and in the construction of a new building for Imperial Oil

Limited at its Ioco refinery.

- 35 -

35

98

As project coordinator for Polaris Western, it was Mr. Kendrick's responsibility to co-

ordinate the activities of the architects, the engineers, the contractor and all of the other

persons involved in the project. In fact, he spent the major part of his time at the construction

site.

99

Mr. Kendrick testified that, after assuming the position of project coordinator, he read the

specifications identified as Part I, Retail Parkade, and Part II, The Tower, but did not notice

the difference between the specifications for spray fireproofing materials to be used in those

two areas. He said that he was not then familiar with the different kinds of spray fireproofing

materials, and that he had no previous experience with Monokote products. In fact, he said,

he had never before been involved in a project where an asbestos-containing spray

fireproofing material had been used.

100

One of the documents produced by the plaintiffs is a Hazard Alert Bulletin, issued in

1975 by what was then the British Columbia Workmen's Compensation Board, entitled

"Asbestos Exposure in the Construction Industry". It speaks of the diseases possibly

associated with the inhalation of asbestos fibres and provides a series of recommended steps

to be taken to "prevent adverse health effects". Mr. Kendrick acknowledged that this type of

bulletin would, in the normal course, have come to his attention.

101

On examination for discovery, Mr. Kendrick testified that he could not be specific as

to when he first became aware that asbestos was or could be a hazardous material, but that it

- 36 -

36

was likely to have been in the mid-1970s. When that statement was put to him in cross-

examination, he acknowledged that it was "probably" wrong, and said that:

The point I was trying to make in answering these questions is that I couldn't -- I

couldn't put an absolute fix on when I became -- had the knowledge that asbestos was

a hazardous material. Certainly, I fully believe -- in fact, I know that when we were

building Harbour Centre that I had knowledge of the problems of asbestos.

. . . . . . .

I'm saying that I cannot put a fix on the date when I became fixed with the knowledge

of an asbestos problem. What I certainly can confirm is that the -- at this time that we

were building the Harbour Centre, that to the extent that there was any asbestos in the

fireproofing or any other material, then I would have been aware -- if I was aware of

it, that I would have brought it to everybody's attention, and I wouldn't have allowed

it to go through, not at all.

102

On May 8, 1975, Foundation forwarded to Mr. Kendrick copies of two brochures they

had received from Donalco. One of them related to a spray fireproofing product known as

Cafco Blaze Shield, and the other to the Monokote products then available. The phrase, "NO

ASBESTOS", appears in bold letters on the cover page of the Cafco brochure. When asked

in direct examination whether seeing that statement alerted him to make further inquiries into

the matter of the spray fireproofing material to be used, Mr. Kendrick said it did not because:

. . . I always believed there was no asbestos in the building anyhow. I wouldn't have

even considered there would be asbestos in the building, so.

Q. And why is that? Explain why that you assumed there was no asbestos in the building?

A. Well, very simply I have knowledge or had knowledge at the time that asbestos was a

hazardous material, and I think I have given previous indications of that of -- in the

various discoveries that I have had, and had I known at the time that we -- that there

was asbestos or any -- any -- any thought of putting asbestos in -- in the building,

- 37 -

37

particularly in this kind of material when -- when it's spread all over the place, I am

sure I would have brought it to somebody's attention. First of all, I don't think I

would have allowed it, but certainly I think we would have a general discussion with

the engineers and the architects and the contractors about it to the point we would

have I am sure found another -- either a different way of -- of doing the work or at

least come to some understanding of what -- what was -- what was happening, and

this issue never came up on the project, never at all. The fact that there is asbestos in

the -- in this building was a surprise to me as I am sure it is to -- to everybody else.

103

104

A Specification Note in the Monokote brochure which Foundation sent to Mr.

Kendrick stated that:

If non-asbestos materials are required, substitute Monokote Type 4 asbestos-free.

Mr. Kendrick testified that he could not recall whether he saw that specification note

at the time, but said that if he had, and had then related it back to the project specifications, it

would "possibly" have raised a question in his mind as to whether or not the specified

material contained asbestos.

105

Under cross-examination by Mr. McDonell, Mr. Kendrick again asserted that, despite

his wide experience in the construction industry and his awareness that, in some cases, spray

fireproofing did contain asbestos, and notwithstanding his review of the Cafco and Monokote

brochures, he "assumed" that the specification of "Monokote" simpliciter called for an

asbestos-free product.

- 38 -

38

106

As the following excerpts show, Mr. McDonell effectively explored that astounding

assertion:

Q. And despite all of your concerns you never put any of your concerns about asbestos into

writing, did you?

A. No, because, as I indicated previously, we all assumed or I assumed there was absolutely

no asbestos in the project, certainly in the fireproofing. Now, since that time I --

you've -- as you've pointed out, there may have been asbestos in the packing and may

have been asbestos in the V.A. tile. But the job per se was asbestos free.

Q. And that's an assumption you had?

A. That's an assumption I had, and that's an assumption I held right up until the

commencement of this litigation.

Q. And that assumption is based on absolutely no communication with any other individual,

isn't it?

A. No, we assumed that it was not -- there was no fireproofing in.

Q. Who is "we"?

A. The architect -- I think you'll find the architect. I think you'll find when you question the

contractors. I think when you find that you question everybody else that everybody

else was under the assumption that there was no asbestos in the fireproofing, and to

the extent there was, well, then somebody hoodwinked us. Somebody deliberately

did something which was against our best interest.

Q. You never asked anyone?

A. No, I don't ask whether the sun is going to come up tomorrow. I expect it will, and I

expect it will go down tonight. But it's very important to me, and I suggest it's very

important to you.

Q. Well, you knew that there were concerns about the spray fireproofing on the job, didn't

you?

A. There were concerns, but there were not concerns raised with respect to asbestos. There

were concerns raised with respect to over-spray. There were concerns raised with

respect to having a conformity of application. There were concerns with respect to it

- 39 -

39

-- it sticking to the -- the surfaces it was supposed to stick. Half the stuff came down.

And there was a lot of concerns raised, and if anybody thought for a moment it had

asbestos in it I can assure you it would have been raised, discussed infinitum until

there was a solution for it or until we'd found some way -other way of dealing with it.

Q. I am going to ask that the witness have a copy -- I've taken -- it's an extract from the

Statement of Claim filed October 4, 1991, paragraph 47 . . .

. . . . . . .

Q. Paragraph 47, the last paragraph, I am going to read this to you, Mr. Kendrick:

"In or about April 1975, the spray fireproofing work was interrupted because

plumbing and sheet metal sub-trades were not prepared to work adjacent to

where the spray fireproofing was being applied as they believed the spray

fireproofing was harmful to their health."

Did you follow me?

A. Yes.

Q.

A.

You recall that incident, don't you?

No, I do not.

Q. Turn, please, to tab 3 of the discovery volume from Mr. Hunter's discovery.

A. Where are we now?

. . . . . . .

Q. Thirty-nine. Yes. Question 150:

"In the Statement of Claim in its newest form -- but it's been something that's

been in the Statement of Claim for some time -- it says at paragraph 47 in part:

'In or about April 1975 the spray fireproofing work was interrupted

because plumbing and sheet metal sub-trades were not prepared to

work adjacent to where the spray fireproofing was being applied as

they believed the spray fireproofing was harmful to their health.'

"Now, first of all, do you recall, sir, any interruption in the work of the spray

fireproofing in April 1975 as alleged here in paragraph 47?

A.

I don't have a specific recollection in regards to the dates, no.

- 40 -

40

Q.

A.

Any general recollection of any interruption to the sprayed fireproofing

work as alleged in paragraph 47 of the Statement of Claim?

Yes, I do."

Q. Were you asked those questions?

A. Yes, I did.

Q. Did you give those answers?

A. Yes, I did.

Q. Are these answers true?

A. Yes, they are.

Q. You recall discussing around this time different kinds of sprayed fireproofing with Eng &

Wright's representative also, don't you, Mr. Kendrick?

A. I'm sorry?

Q. In or around this time, April 1975, you had discussions with Mr. Schadow, Eng and

Wright's representative, in regard to the different kinds of fireproofing being used?

A. I don't believe so, no.

Q. Could you turn, go back to tab 1 of your volume and turn to page 81.

. . . . . . .

MR. McDONELL: Thank you. 453 question:

"Now you recall some conversation with Mr. Schadow with respect to

the different kinds of fireproofing that was being used; is that correct,

in around April of '75?

A. Yes."

Were you asked that question?

A. Yes, I believe I was.

- 41 -

41

Q. Did you give that answer?

A. Yes.

Q. Is that answer true?

A. Yes.

Q. You were present on site when the spray fireproofing was being applied, weren't you?

A. Yes.

Q. And after the time you discussed different kinds of spray fireproofing with Mr. Schadow

and after the time you recall a work stoppage in regard to spray fireproofing that's

when you received the brochures that Mr. Hunter showed you, that is in May of 1975;

is that right?

A. Yes.

107

When it came his turn to cross-examine, Mr. Hayley took up the chase as follows:

Q. . . . Now, I understand from your evidence that you have given the last couple of days

that at the time of the Harbour Centre project both you and your superior, Mr. David

Yolles, had been involved in construction for a number of years?

A.

Yes.

Q. And you yourself had been involved at various times with the design aspects of

construction, you were familiar with plans and specifications?

A. Yes.

Q. You have given that evidence. And, Mr. Kendrick, it was your evidence yesterday under

quite close questioning that you were aware during the course of construction at

Harbour Centre that asbestos in certain circumstances could pose a danger to health?

A.

Yes.

Q. You also told Mr. McDonell under cross- examination that you knew that some

fireproofing and insulation materials contained asbestos?

- 42 -

42

A.

Q. You knew that at the time of Harbour Centre?

A. Yes.

Yes.

Q. You have given evidence that when you started your work at Harbour Centre you read

the original specifications for the project, both the Paine specification for the tower

and the Eng & Wright specification for the retail section which included the Spencer

Building?

A.

Yes.

Q. And you have given evidence that your reading would have included the fireproofing

specifications in those documents?

A.

Yes.

Q. So that when you read the Paine spec for the tower you would have seen that Mr. Paine

had specified Monokote Type 4 asbestos-free fireproofing for the tower?

A. Yes.

Q. And you also knew as a result of your reading that Eng & Wright had not included such

an asbestos-free requirement in their speci-fication for the low-rise section of the

project, that is, they merely required "cementitiously applied Monokote"?

A.

Q. Now, after you started in the project -- approximately what, February 1974?

A. That's correct.

Yes.

Q. Mr. Paine had some involvement for a fairly brief period of time?

A. Very brief, maybe a month, maybe a month and a half. I only met with him once or

twice.

Q.

A.

But then his retainer was terminated?

That's correct.

- 43 -

43

Q.

A.

By Polaris?

Yes.

Q. But Eng & Wright, as you have given evidence, continued as the site architects and

responsible for the production of working drawings, site supervision and the final

specification?

A.

Yes.

Q. And you have given evidence, I believe, Mr. Kendrick that Eng & Wright prepared the

basic brief architectural specification that document in February of 1974 that adopted

by reference the fireproofing spec that Eng & Wright had previously given for the

Spencer Building in the original specs, that is, they referred back to those previous

specifications and they referred back to the retail portion only?

A.

Yes.

Q. Basically the brief architectural specifi-cation was intended though to apply to the entire

project?

A. There was an outline specification jointly prepared by Webb Zerafa and Eng & Wright.

Q. But it was intended to apply to the entire project, high-rise or tower, low-rise section?

A.

That's correct.

Q. So that turned back to the original Eng & Wright specification that said cementitiously

applied Monokote?

A.

Yes.

Q. And you have given evidence that you read the outline specification dated February 26,

1974 prepared by Eng & Wright and Webb Zerafa that again had no asbestos-free

requirement, but simply specified Monokote?

A. That's correct.

Q. And I believe you have given evidence that you read, reviewed the final specifications for

this project prepared by Eng & Wright in which the fireproofing specification called

for cementitiously applied Monokote and once again had no asbestos-free

requirement?

- 44 -

44

A. That is correct.

Q. Now, in the spring of 1975 you were advised that there was another fireproofing product,

Cafco, that was being sprayed on this project, correct?

A. I believe so, yes.

Q. You were provided with a brochure --

A. Yes.

Q. -- at this time, a Cafco brochure as well as a Monokote brochure?

A. Yes.

Q. And you have given some evidence that you would have reviewed these in the normal

course, if not in excruciating detail, that you would have at least been aware of these

and you would have perused them, correct?

A. Yes. I believe my evidence was that I most probably would have normally thumbed

through them, yes.

Q. Thumbing through would have indicated to you that the Cafco product was asbestos-free

because those big words leap off the page?

A. Yes, but, as I think I have already previously said, I probably would not have

distinguished the difference between the two.

Q. But you would have seen Cafco?

A. I would have seen Cafco and I would have seen asbestos-free, yes.

Q. Now, a reading of the Monokote brochure, would it indicate to you that there were both

asbestos-free and asbestos-containing formulations and that if you wanted an

asbestos-free product you had to specify Monokote Type 4 asbestos-free; you have

seen that in that brochure?

A. I have seen it subsequently to my -- obviously the original document that had flown

across my desk, yes.

Q. Now, that's exactly what Mr. Paine specified for the tower, isn't it, precise phrase,

Monokote Type 4 asbestos-free?

- 45 -

45

A. That was in the original specification, yes.

Q. Right. And that's not what was specified by Eng & Wright in any of these other

specifications, correct?

A. That's correct.

Q. And that's also not what was specified by Eng & Wright and Webb Zerafa or either of

them in the outline specification, February 26, 1974, which was incorporated by

reference in the construction contract?

A. That's correct.

Q. The job proceeded on the basis not of Mr. Paine's spec, but on the basis of the outline

spec of February 26, 1974 and subsequently the final specs that were drafted by Eng

& Wright?

A. That's correct. The two different -- two different buildings, Mr. Paine's, Charles Paine's

building was a totally different design compared with that of Webb Zerafa, he not

only did the drawings change but also the specifications changed.

Q. I appreciate that, but there is none of Mr. Paine's wording in the specifications that were

actually used on this job?

A. That's correct.

108

109

During that cross-examination, Mr. Hayley also established that Mr. Kendrick kept a

close eye on the work going on in the Building and was familiar with most, if not all, of the

materials and products being used, including several other asbestos-containing materials.

On the strength of those effective cross-examinations, I reject as patently false Mr.

Kendrick's assertion that "I always believed there was no asbestos in the building" and "I

wouldn't have even considered there would be asbestos in the building".

- 46 -

46

110

I find his assertion that he "assumed" that the spray fireproofing product used would

be asbestos-free to be entirely unreasonable, if not untrue. If, in fact, Mr. Kendrick did not

know that the spray fireproofing product that had been specified for installation was not

asbestos-free, given the extent of his knowledge and experience, he clearly ought to have

known.

111

112

Another significant piece of evidence was given by Mr. Karsten von Wersebe, whose

testimony on discovery was read in by the Grace defendants.

Mr. von Wersebe became a Vice-President of Lord Realty in 1972. In 1973, he

became President of the newly-formed Polaris Western and continued in both positions until

the middle of 1976. As such, he was closely involved in the development of the Harbour

Centre complex and the renovation of the Building.

113

Mr. von Wersebe acknowledged that at the time of his involvement he was aware of

health concerns about asbestos and he said, ". . . in Vancouver there was quite a bit of talk

about it". He testified that:

Well, the -- obviously, I mean we in the building industry, from an ownership point of

view, were made aware that fireproofing with asbestos is becoming, you know,

hazardous for health reasons and that other materials ought to be used.

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47

114

An important (albeit somewhat shadowy) person in connection with this matter is Mr.

Vincent Strother. In May 1975, he was hired by Mr. Kendrick as Polaris's Clerk of the

Works at Harbour Centre. Mr. Strother came to Polaris with an extensive background in the

asbestos and fireproofing industries. He had worked in England with the well-known

asbestos company, Turner & Newall (now T & N), in 1947 "doing experimental work on

construction equipment and asbestos machinery". After emigrating to Canada, he was

employed by a number of companies dealing with fireproofing and other asbestos products.

From 1973 through to May 1975, Mr. Strother was employed by Donalco where he was

involved with numerous large fireproofing projects both in the Toronto and Vancouver areas,

including the Harbour Centre project. He was Donalco's Vancouver office manager and, as

such, had full responsibility for all of the fireproofing work sub-contracted to Donalco at

Harbour Centre.

115

Under construction at the same time as the Harbour Centre project was the Vancouver

Centre development. The fireproofing specification for that project expressly called for an

asbestos-free formulation of Monokote. On the evidence, I find that Mr. Strother was

familiar with both fireproofing specifications and the different products called for by them. I

also find that he was familiar with the various Monokote products then available, including

the asbestos-containing MK-3 and asbestos-free MK-5, as well as which product was

required for each project.

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48

116

In direct examination, Mr. Kendrick acknowledged that when he hired Mr. Strother

he knew that his most recent employment had been with Donalco, and that Mr. Strother had a

"deep knowledge of fireproofing". But he went on to testify as follows:

Q. Did you ever have discussions with Mr. Strother which provided you with information

that spray fireproofing contained asbestos?

A.

Q. Did the subject of asbestos ever come up in your discussions with Mr. Strother?

A. No, it certainly didn't.

No, not at all.

Q. Did you know from discussions with him that there was more than one kind of Mono-

Kote (sic) product?

A. No, we -- we never had a discussion about the -- fireproofing in general or fireproofing

on the job.

117

118

Mr. Strother did not testify. It seems that prior to the trial he was engaged in

assisting, not only the plaintiffs, but Foundation and the Grace defendants as well. No one

wanted to call him as a witness, so it was agreed by all parties that no one would suffer from

an adverse inference being drawn from the fact that he was not called as a witness.

As a general rule, the knowledge of an "agent to know" that is relevant to his

engagement is imputed to his principal, whether or not the information was, in fact, conveyed

to the principal: Rolland v. Hart (1871), L.R. 6 Ch. App. 678, Purdom v. Northern Life

Assurance Co. of Canada [1928] 4 D.L.R. 679 (Ont. C.A.), aff'd by the Supreme Court of

Canada: [1930] S.C.R. 119, and Greveling v. Greveling, [1950] 2 D.L.R. 308 (B.C.C.A.).

- 49 -

49

119

However, the plaintiffs maintain that Mr. Strother was not their "agent to know".

They say that he was hired simply as Clerk of the Works; not for his knowledge or expertise

in spray fireproofing. As Clerk of the Works, they insist, his only responsibilities were to

measure the quantities of all construction and materials supplied for the purposes of

calculating progress payments to be made to the sub-contractors, and not to advise about the

spray fireproofing. Therefore, they say, Mr. Strother's knowledge did not become their

knowledge, either actually or at law, and whatever he knew about the presence of asbestos in

MK-3 does not affect them.

120

While I have grave doubts about Mr. Kendrick's insistence that he never discussed the

subject of fireproofing with Mr. Strother, as I did not hear from Mr. Strother himself, I am

not prepared to rule upon that matter. Nor do I find it necessary to decide whether or not he

was an "agent to know". But Mr. Strother was there, on the site, working closely with Mr.

Kendrick, and he knew that the MK-3 contained chrysotile asbestos.

121

122

On the evidence, I have no hesitation in finding that if, in fact, Mr. Kendrick expected

that an asbestos-free fireproofing material would be installed, he had sufficient personal

knowledge to be put on his inquiry, and a readily available source of information.

Mr. Kendrick was a qualified engineer, with experience and training in the fields of

heating, air-conditioning and ventilation. He knew that plenums ) the spaces between the

dropped ceilings and the underside of the floors above ) were used for air circulation and

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50

ventilation purposes. He knew of the concerns then being voiced about the use of asbestos-

containing building materials, particularly asbestos-containing spray fireproofing materials.

He knew that there were both asbestos-containing and asbestos-free varieties of spray

fireproofing products currently on the market. He reviewed the specifications for both parts

of the development and knew that one called for an asbestos-free fireproofing material and

the other did not. He received and, at the very least, "thumbed through" the Cafco and

Monokote brochures. He knew, or ought to have known that, so far as the Monokote

products were concerned, if an asbestos-free material was required, that had to be stipulated

in the specification. He had discussions with a representative of Eng & Wright following a

work stoppage that was the result of concerns about the safety of the fireproofing material

being sprayed onto the Building. And finally, he knew that he had in his employ the very

man, Vincent Strother, who could provide him with all of the necessary information on the

subject.

123

Yet, the plaintiffs ask this court to accept that, despite all that, Mr. Kendrick had no

idea that MK-3 contained asbestos, and that he remained silent because he felt secure in the

"assumption" that an asbestos-free material would be installed.

124

125

I do not accept that proposition. It flies in the face of reason.

In my view, Mr. Kendrick had more than enough knowledge to arouse his attention.

If his expectation was what he says it was, he should have been on his guard and made some

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51

inquiry. Whatever is sufficient to excite attention and call for inquiry is also notice of

everything which (it is afterwards found) such inquiry might have disclosed, even though it

remained unknown for want of investigation: Graham v. British Canadian Loan and

Investment Company (1898), 12 Man. R. 244, (Man. C.A.).

126

I find that Mr. Kendrick knew, or must be deemed to have known, that the

fireproofing product that had been specified by Eng & Wright, and which he approved for

installation in the Building, contained asbestos.

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52

IV. THE FIREPROOFING SPECIFICATIONS

127

The plaintiffs argue that, notwithstanding the extent of their own knowledge, Eng &

Wright (in particular, Messrs. Wright and Thomas) had a duty to know that Monokote MK-3

contained asbestos and was a hazardous product. They say that the fireproofing specification

prepared by Eng & Wright, which called for the installation of "cementitiously applied

Monocote" (sic) rather than an asbestos-free material, did not measure up to the standard

expected of a reasonably competent architect at that time.

128

129

130

The plaintiffs say that Part II of the fireproofing section of the Outline Specification

assembled in November 1972, in which Paine & Associates specified "Spray fireproofing )

Cafco Asbestos free, Monocote (sic) etc." for installation in the Tower, ought to have alerted

Mr. Wright to the fact that an asbestos-free material was also required for the Building.

Mr. Wright admitted that he did not read the Part II fireproofing specification.

Clearly, he should have done so. However, it does not necessarily follow that, even if had,

he would, or should, have realized that an asbestos-free material must also be specified for

installation in the Building.

That hypothesis requires one to interpret the Paine specification of "Cafco Asbestos

free, Monocote (sic) etc." as requiring the "Monocote (sic). etc." (presumably acceptable

substitutes) to also be asbestos-free. That, in my view, would be a tortured interpretation of

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53

those words. Surely, if that was his intention, the writer would have specified the use of

"Cafco Asbestos free. Asbestos free Monocote (sic) etc.", or words to that effect.

131

132

No one was called from Paine & Associates, and one is therefore left to speculate as

to the intention of the specification writer. That is an inadequate basis on which to reach the

conclusion suggested by the plaintiffs.

In December 1972, Eng & Wright received, and both Mr. Wright and Mr. Thomas

read, a letter from F. Drexel Co. Ltd., the distributor of another type of sprayed fireproofing.

That letter read, in part, as follows:

Attention: Mr. Don Thomas

Subject: Vancouver Square Development

Vancouver, B.C.

Dear Sir:

Reference the spray fireproofing requirements for Eng & Wright's portion of this project, it was

suggested by Mr. Wright that I forward technical literature pertaining to our product line directly to

your attention.

Specifically Don, I am forwarding data relative to Ceramospray IV, a Non-asbestos sprayed on fiber

insulation. I understand that a material of this type

(i.e. containing no asbestos fiber) would be desirable in this instance.

Ceramospray is U.L. rated and I am sure we can provide you the rating required.

(emphasis in original)

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54

133

134

The plaintiffs argue that the Drexel letter ought to have alerted both Mr. Wright and

Mr. Thomas to the fact that asbestos-free products were available, and that an asbestos-free

product was required for the project.

Support for that argument is found in the evidence of Mr. Alfred Roberts, an

experienced architect who was called by the plaintiffs and qualified to give expert evidence

concerning the interpretation of architectural specifications and acceptable standards of

practice in the profession. Mr. Roberts testified that, in his opinion, the Drexel letter:

. . . should have been sufficient to alert a reasonably competent architect with

adequate knowledge of Mono-Kote (sic), to question the use of a material containing

asbestos. In specifying a product for spray fireproofing a reasonably competent

architect should have ascertained if a product was to be used which did contain

asbestos, whether any problems existed which may prevent that product being used

and to record such findings for future reference.

135

Mr. Thomas Cattell, a Vancouver architect and one of Eng & Wright's expert

witnesses, holds a similar opinion. In a passage which was left out of his final report, but

which, under cross-examination, he acknowledged to be an accurate reflection of his opinion,

Mr. Cattell stated:

The letter of December 14, 1972 from the F. Drexel company to Don Thomas

forwarding data relative to a non-asbestos sprayed on fibre insulation, and a comment

on this material's desirability may have alerted Eng & Wright to the issue of asbestos

content in the materials they intended to use on their project. There is no question

therefore that they were made aware of the issue of asbestos fiber in 1972, well before

the commencement of construction during the period 1974 to 1976.

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55

136

Whether or not MK-3 was a "hazardous" product remains to be determined but,

clearly, Mr. Wright and Mr. Thomas ought to have been familiar with its composition before

drafting the specification. They were not. Eng & Wright had never before specified the use

of Monokote or "Monocote" yet, despite Drexel's emphasis of the fact that their product was

a "Non-asbestos" spray and that such a material would be "desirable", neither Mr. Wright nor

Mr. Thomas took any steps to find out whether "cementitiously applied Monocote" (sic)

contained asbestos. Mr. Wright left the matter in Mr. Thomas's hands, and Mr. Thomas did

nothing because he believed that "Monocote" (sic) was asbestos-free.

137

138

139

I find that Mr. Wright, as the responsible architect, and Mr. Thomas, as the

specification writer, should have known, or should have made enquiries in order to ascertain,

the contents of "cementitiously applied Monocote (sic)" before specifying it for installation

in the Building.

However, in my opinion, the Paine specification and the Drexel letter, whether

considered alone or together, were not in themselves sufficient to convey to Messrs. Wright

and Thomas the realization that an asbestos-free material was required by the owners of the

Building. And, as noted above, no such requirement was ever stipulated.

As to the wording of the Eng & Wright specification itself, Thomas Cattell testified

that, in his opinion, Monokote MK-3 was an acceptable specification to make in the 1972-

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56

1975 time period, notwithstanding its asbestos content. Other evidence demonstrates that

during that period MK-3 was still being specified for many projects.

140

For example, in 1972 or 1973, Alfred Roberts' firm, Craig, Zeidler & Strong of

Toronto, specified MK-3 for installation in the new Health Sciences Centre at McMaster

University in Hamilton, Ontario. Mr. Roberts was himself directly involved in the

preparation of the specifications for that job, and when questioned about it, he testified as

follows:

Q. And at the time that you were on this project in '70 to '72, you were aware that what you were

spraying on those trusses was sprayed asbestos?

A. I don't know that I was aware it was sprayed asbestos. I was aware it was sprayed Monokote.

Q. And you didn't know it contained asbestos?

A. At that point in time I'm not sure when I knew it contained -- I just didn't -- I can't remember that

far back.

141

However, in 1974 or 1975, by which time he did know that there were different

formulations of Monokote, and that at least one of them contained asbestos, Mr. Roberts

approved another specification calling for the installation of "Monokote" simpliciter in a

hospital.

142

Other architects testified that the specification of Monokote simpliciter was within the

standard expected of a reasonable and prudent architect during the years 1972 to 1975. For

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57

example, Mr. John Sievenpiper, an architect called by Webb, Zerafa to give expert opinion

evidence, testified as follows:

Q. Now, changing topics, Mr. Sievenpiper, in your opinion, was it appropriate for an architect

practising in Canada in 1974 and 1975 to specify Monokote without any requirement that it

be asbestos-free?

A. Yes. Monokote was a cementitious material. It was encapsulated and it was a reputable

manufacturer and it had a track record and at that period of time there didn't seem to be any

reason why you would not -- compelling reason why you would not specify it.

143

Further evidence confirming the acceptability of the specification of "Monokote"

simpliciter came from Mr. Karl Fraser. He has been involved in the spray fireproofing

business for nearly 25 years. Called by the Grace defendants, he testified that when the

Building was renovated in the 1970s, he submitted a bid for the installation of the spray

fireproofing. When asked about the bid, he testified as follows:

Q. What fireproofing did you bid on?

A. We ended up submitting our tender for the Monokote MK-3 in the retail base and Monokote

MK-4 for the tower fireproofing.

Q. Did the retail base area have any specific name, to your recollection?

A. I believe it was the Spencer Building, that was the name of it. It was an older building.

Q. That was the building that was being re-fitted or renovated?

A. Yes, that was the existing structure they were adding some structural steel to and then adding

whatever it called for to bring the building up to code at the time, I believe.

Q. Why did you bid this job on the basis of two of Grace's fireproofing products rather than simply

one?

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58

A. There was two separate specifications for -- one for the tower and one for the retail base. The

one for the tower specifically called for Monokote MK-4 asbestos free and the one for the

retail base called for Monokote which was MK-3.

. . . . . . .

Q. What was your understanding of the tower specifications, vis-a-vis your understanding of the

specifications for the retail area?

A. The specifications for the tower clearly called for Monokote MK-4 and the specifications for the

retail base was Monokote MK-3, the standard Monokote.

Q. Did you see the word "MK-3" or the phrase "MK-3" in the retail specification?

A. No. It is not referred to, I believe, in the section as Monokote MK-3, just Monokote and at that

time the generic term for Monokote MK-3 was Monokote. Everybody used "Monokote" and

it was Monokote MK-3. It was the most predominant Monokote used at that particular time.

If you were spraying a job with Monokote you used Monokote MK-3, unless somebody

requested otherwise.

144

Accordingly, subject to consideration of the allegations as to the inherently

hazardous nature of Monokote MK-3, I am satisfied that the specification of "cementitiously

applied Monocote (sic)" was an acceptable one at that time.

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59

V. THE LIMITATION PERIOD

Introduction

145

The defendants submit that even if the plaintiffs have a valid cause of action against

any of them (which, of course, they deny), their claims are barred by the provisions of the

Limitation Act, R.S.B.C. 1979, c. 236. They say that:

1) if a cause of action ever existed, it arose during the period 1973 to 1975, when the

fireproofing was installed, and the limitation period began to run by the fall of 1975,

when the work was completed;

2) the plaintiffs' claim is not for injury to person or to property as alleged, it is for pure

economic loss and the applicable limitation period is six years;

3) in the alternative, if it is found that there was injury to property, the applicable limitation

period is two years;

4) in the further alternative, the limitation period began to run, at the very latest, in May

1986, when it was brought to the attention of the plaintiffs that asbestos-containing

MK-3 had been installed in the building in 1975; and

5) the plaintiffs have not pleaded that the running of the limitation period should be

postponed to a date which would bring the commencement of this action within the

applicable limitation period and, in any event, they have failed to meet the onus of

proving why such a postponement should occur.

146

In Lui v. West Granville Manor Ltd. et al. (1985) 61 B.C.L.R. 315 (B.C.C.A.), at

320-21, the British Columbia Court of Appeal (Lambert, J.A.) observed that:

The limitation of actions was introduced by statute. The judge-made common law

did not impose limitation periods. The first compre-hensive limitation statute was

passed in England in 1623 (21 Jac. 1, c. 16). The policy behind that statute and

successor limitation statutes is clear. There should be an end to bickering.

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60

Differences should be brought to an end when it is still possible to reach an informed

conclusion about disputed events. So an arbitrary but firm deadline is drawn as a

matter of legislative policy. After the deadline has passed, the incident is closed. No

discretion is left to the courts to try to temper the arbitrary deadline with

considerations of justice or fairness.

147

And, in a more recent decision, the same court per curiam ascribed the following

purpose to the imposition of time limits on the rights of persons to commence legal

proceedings:

The reasons for the bar itself are well known: society has an interest in putting an end

to the process of litigation which from its nature is rendered susceptible to abuse and

injustice with the passage of time.

(Levitt v. Carr (1992), 66 B.C.L.R. (2d) 58 at 66-67.)

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61

Discussion

A. When Does Time Begin to Run Under the Act?

148

Assuming for the purpose of this discussion that an actionable wrong was committed

by one or more of the defendants, the first question to be decided is: when did the cause of

action in respect of that wrong arise? For it is from that date (subject to the effect of the

postponement provisions, which will be considered later) that time begins to run for the

purposes of the Limitation Act.

149

Section 3 of the Act provides, in part, that:

Limitation Periods

3. (1) After the expiration of 2 years after the date on which the right to do so arose a

person shall not bring an action

(a)

. . . for damages in respect of injury to person or property, including

economic loss arising from the injury, whether based on contract, tort or

statutory duty;

. . . . . . .

(4) Any other action not specifically provided for in this Act or any other Act

shall not be brought after the expiration of 6 years after the date on which the right to

do so arose.

150

In Bera v. Marr (1986), 1 B.C.L.R. (2d) 1, the British Columbia Court of Appeal

(Esson, J.A.) held at p. 14 that:

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62

The Limitations Act, as appears from ss. 3(2) and 8(1), defines the beginning of the

period of limitation as being the date on which the right to bring action arose. That

must mean the date upon which the cause of action was complete; the date upon

which all the elements of the cause of action had come into existence, whether or not

the person entitled to the cause of action was aware of all the facts upon which its

existence depended.

151

152

That conclusion was affirmed by the Court of Appeal in Karsanjii Estate v. Roque

(1990), 43 B.C.L.R. (2d) 234.

Nonetheless, the plaintiffs maintain that a cause of action does not arise until all of

the material facts on which it is based have been discovered, or ought to have been

discovered, by the plaintiff upon the exercise of reasonable diligence. As authority for that

proposition, they rely upon the decision of the Supreme Court of Canada in Central Trust

Co. v. Rafuse, (1986) 31 D.L.R. (4th) 481, and argue (as stated in the plaintiffs' written reply

argument) that:

[t]he key difference between the plaintiffs and the Grace defendants as to when the

cause of action accrued turns on whether or not the [Supreme Court of Canada's]

decision in Central Trust Co. v. Rafuse (cite given) applies in B.C., and thus,

whether or not the common law "discoverability" rule applies to the accrual of a

cause of action. . . .

153

154

With respect, that issue has already been decided.

Central Trust Co. v. Rafuse is a Nova Scotia case. The Limitation Act of that

province did not (at least, when the case was tried) contain postponement provisions

comparable to those found in the British Columbia statute, and, for that reason, its

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63

application was rejected by the Court of Appeal of this province in Wittman v. Emmott,

(1991) 53 B.C.L.R. (2d) 228. Writing for the court, Wallace, J.A. said at p. 236:

If the court accepts that the decision in Central Trust stands for the proposition that

when calculating limitation periods the cause of action arises, as a "general rule",

when the material facts are discovered or are reasonably discoverable, the issue

becomes whether or not such a "general rule" should be applied to the interpretation

of the British Columbia Limitation Act.

To reach a conclusion on this issue I have kept the following considerations in mind:

(1) For purposes of ss. 3 and 8 of the British Columbia Limitation Act, the date which

marks the commencement of the limitation period is the date on which the

right to bring an action arose. There can be no doubt that the "right" to bring

an action in tort arises when the negligence and consequent damage occurs.

This is in accord with the decision of this court in Bera (pp. 25-27) and has

been the traditional interpretation for over 100 years: . . . The "right" to bring

an action clearly does not arise only when the negligence and damage are

discovered, as was suggested by counsel for the appellants.

In light of the language used in the Limitation Act, it would be difficult to

justify the incorporation of discover-ability into either s. 3 or s. 8. To do so

would be to depart from the ordinary meaning of the words used in the

legislation and to give the words the "right to bring an action" a meaning alien

to that by which they have been traditionally understood.

(2) The Limitation Act has expressly made special provisions to avoid, in certain

specific circumstances, the injustice of a statute-barred claim before a plaintiff

is even aware of its existence. Pursuant to s. 6(1) and (3) the running of time

within which to bring an action is postponed until the plaintiff has knowledge

or means of knowledge of the relevant facts. The inclusion of these sections

in the Act indicates the legislature considered the right to bring an action in

tort arises when the negligence and consequent damage occurs regardless of

the plaintiff's lack of knowledge. Had the legislature con- sidered that the

right to bring an action arose only upon the discovery of that negligence and

damage, these postponement provisions would not have been necessary.

. . . . . . .

I adopt the language of Esson J. in Bera wherein he stated (at p. 27):

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64

There are strong policy reasons for not construing the date as of which the right

to bring action arose in a manner different from that which has heretofore been

given to them in the Limitation Act. To do so would be destructive of a

balanced legislative scheme. Sections 6 and 8 are obviously designed to work

together with s. 3(1) to provide relief against the injustice which can be created

by hidden facts and, on the other hand, to provide reasonable protection against

stale claims. All of that is premised upon the "right to do so" meaning the date

of accrual of the cause of action without reference to knowledge. If that

premise is disturbed, s. 6 will be made more difficult of application and s. 8 will

cease to provide any real protection against stale claims.

155

156

Leave to appeal the decision in Wittman was refused by the Supreme Court of Canada:

(1991), 58 B.C.L.R. (2d) xxxiv.

Therefore, it is clear that in this province a cause of action accrues when all of the constituent

elements exist, whether or not the plaintiff is then aware of them.

B. When Did the Plaintiffs' Cause of Action Accrue?

157

I think it is clear that all of the elements necessary to the plaintiffs' cause of action came into

existence during the period 1973 to 1975, when the MK-3 was installed in the Building.

Accordingly, the limitation period began to run in or about the month of September 1975,

when the installation was completed. I need not fix an exact date because, regardless of

whether the applicable limitation period is two years or six years, it had expired when this

action was commenced, unless the plaintiffs can establish that the postponement provisions

of the Limitation Act apply.

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65

C. What is the Applicable Limitation Period?

158

159

This question must be considered next, because how the plaintiffs' action is categorized will

determine the next issue; that is, whether or not the postponement provisions apply.

Once again, for convenience, the relevant sections of the Limitation Act are as follows:

3. (1) After the expiration of 2 years after the date on which the right to do so arose a

person shall not bring an action

(a)

. . . for damages in respect of injury to person or property, including

economic loss arising from the injury, whether based on contract, tort or

statutory duty;

. . . . . . .

(4) Any other action not specifically provided for in this Act or any other

Act shall not be brought after the expiration of 6 years after the date on which the

right to do so arose.

(emphasis added)

160

Because there is no allegation in this case of "injury to person", the issue is whether the

plaintiffs' claims can be categorized as being in respect of "injury to property". If so, the

limitation period is two years. On the other hand, if it is an action "not specifically provided

for", a six year limitation period applies.

161

The defendants submit that the plaintiffs' property was not injured within the meaning of the

Act, and that any loss they might have suffered was pure economic loss rather than economic

loss arising from injury to property.

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66

162

The phrase "injury to property" is not defined in the Act, but its meaning in the context of s.

3(1)(a) was considered by the Court of Appeal of British Columbia in Alberni District Credit

Union et al. v. Cambridge Properties Ltd., (1985) 65 B.C.L.R. 297. The plaintiff in that

case alleged that there were deficiencies both in the materials used to install a vault door and

in the manner of its installation. Esson, J.A. (as he then was) found that the claim was with

respect to an inherent defect; the Court held at p. 300 that it fell under s. 3(4) of the Act rather

than one under s. 3(1)(a) because the word "injury", as it appears in s. 3(1)(a):

. . . imports something in the nature of physical injury or damage. This building

simply has not, in plain language, been injured. So the action is not one in respect of

injury to property. It may be, as the defendants assert, that the defect has resulted in

some physical damage or injury. But, in the old language, that is not something

which is the gist of the cause of action.

163

The meaning of the phrase "injury to property" was again considered by our Court of Appeal

in British Columbia (Worker's Compensation Board) v. Genstar Corp. (1986), 24 B.C.L.R.

(2d) 157. There, the action had been brought to recover the cost of remedying an existing

inherent structural defect in a faulty concrete beam. Writing for the court, McLachlin, J.A.

(as she then was) said at pp. 161-162:

I am persuaded by the authorities that "injury to property" refers to the situation

where property is damaged by an extrinsic act, and not to the situation where a claim

is made for damage occasioned by defects in the property itself . . . .

Policy considerations support the conclusion that "injury to property" refers to

damage caused by an identifiable external event. A short limitation period of two

years is appropriate where the claim is based on an event which causes direct injury

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67

to property. Such a short limitation period may not be appropriate for a claim based

on defects in property which may not manifest themselves clearly for some time, even

though with the benefit of hindsight one may be able to say that their onset was

revealed at an earlier date.

(emphasis added)

164

165

A recent decision of our Court of Appeal has affirmed that approach: Zurbrugg v. Bowie

(1992), 68 B.C.L.R. (2d) 322 (B.C.C.A.).

The issue was also considered by Holmes, J., of this court, in Ridley Terminals Inc. v.

Mitsubishi Canada Ltd., unreported, (March 2, 1993) Vancouver No. C903214. There, due

to an inherent structural defect, structural parts of the plaintiffs' stacker-reclaimer failed and

fell to the ground. The plaintiffs argued that they were unaware of any defect in the stacker-

reclaimer until it collapsed.

166

With respect to the limitation issue that was raised, Mr. Justice Holmes found at p. 4 that:

If what occurred . . . to cause the collapse of the stacker-reclaimer can be properly

characterized as "injury to property" the two year period is applicable; if not, the

limitation period is six years (s. 3(4) of the Limitation Act).

. . . . . . .

At p. 6:

The evidence in this case, as I understand it to be, is wholly consistent with the

collapse of this stacker/reclaimer being caused by an under design of a structural

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68

component which led to fatigue cracking over a lengthy period of time, which by

eventual crack propagation from stress of constant use finally culminated in a

component failure which led to major structural collapse. There was no single

identifiable extrinsic event which occurred causing this damage and to characterize it

as such because it occurred during normal service under load would be a

misapprehension of the meaning of "an identifiable external event" as that has been

referred to in the authorities.

167

After referring to what he described as the "distinct line of British Columbia Court of Appeal

authority interpreting s. 3(1)(a) of the Act", Holmes, J. stated at p. 5 that:

The effect of these decisions is that "injury to property" requires direct damage from

an extrinsic act or an identifiable external event.

(emphasis added)

168

169

In my view, the cause of the damage alleged in the present case was not "an identifiable

external event". Therefore, the plaintiffs' claim is not one for "injury to property".

The plaintiffs agree with that conclusion; they acknowledge that the damage that they allege

occurred ) the "contamination" of the Building and various of its components ) does not fit

within the meaning of "injury to property". They also agree that the applicable limitation

period is six years, but they dispute the assertion that their claims are for pure economic loss.

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69

170

I will discuss the recoverability of economic losses in more detail later, but for the time

being, it will suffice if I note that the real "gist" of the plaintiffs' claim is for the recovery of

the costs and loss of revenue associated with the removal and replacement of a product

alleged to be inherently defective. That sort of claim cannot be categorized as one for "injury

to property". It is a claim for pure economic loss and, as such, falls within the ambit of s.

3(4) of the Act.

D. Do The Postponement Provisions Apply?

171

172

This is the crux of the matter.

Sections 6(3)-(5) of the Act stipulate the following:

6. (3). The running of time with respect to the limitation periods fixed by this Act for

an action

(a)

(b)

(c)

for personal injury;

for damage to property;

for professional negligence;

. . .

is postponed and time does not commence to run against a plaintiff until the identity

of the defendant is known to him and those facts within his means of knowledge are

such that a reasonable man, knowing those facts and having taken the appropriate

advice a reasonable man would seek on those facts, would regard those facts as

showing that

(i) an action on the cause of action would, apart from the effect of the

expiration of a limitation period, have a reasonable prospect of success;

and

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70

(j) the person whose means of knowledge is in question ought, in his own

interests and taking his circumstances into account, to be able to bring an

action.

(4) For the purpose of subsection (3),

(a)"appropriate advice", in relation to facts, means the advice of

competent persons, qualified in their respective fields, to advise on the

medical, legal and other aspects of the facts, as the case may require;

(b)

"facts" include

(i)the existence of a duty owed to the plaintiff by the defendant; and

(ii) that a breach of a duty caused injury, damage or loss to the plaintiff;

(c)where a person claims through a predecessor in right, title or interest,

the knowledge or means of knowledge of the predecessor before the right,

title or interest passed is that of the first mentioned person;

. . . . . . .

(5) The burden of proving that the running of time has been postponed under

subsection (3) is on the person claiming the benefit of the postponement.

173

The plaintiffs submit that regardless of how one characterizes their claims, whether for injury

to property or for economic loss, their claims arise from damage to property. They allege

that the "episodic" release of fibres has caused damage to the Building and argue that the

phrase "damage to property", as it is used in s. 6(3)(b), includes all kinds of damage, not only

what they refer to as "obvious damage", amounting to "injury to property" within the

meaning of s. 3(1)(a). They say that it also includes damage that is not "obvious".

Accordingly, they say, s. 6(3)(b) applies in the circumstances of this case.

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71

174

175

In the alternative, the plaintiffs say that the claims made against each of the defendants are

based upon acts performed and omissions made by them in a professional capacity, and for

that reason s. 6(3)(c) of the Act applies.

The plaintiffs submit that for all, or any, of those reasons, the running of the six year

limitation period was postponed until the discovery of the asbestos in the building in March

1987, and that the "new" parties were added within six years of that date, Grace-Conn.

having been added on October 9, 1990, and the plaintiffs, Lordina and Polaris Western, on

January 8, 1992.

176

In Foundation's summary judgment application (see Privest Properties Ltd. v. Foundation

Company of Canada Limited et al. (1992), 6 C.C.L.I. (2d) 23), I considered the meaning of

the phrase "property damage" in the context of several insuring agreements and the insurers'

duty to defend. After reviewing many Canadian, British and American authorities, I held

that:

. . . none of the claims that have been advanced against Foundation (including those

found in Grace Canada's Third Party Notice), even when given the broadest possible

interpretation, can be construed as allegations of a state of facts which, if proven,

would constitute physical injury or damage to or loss of use of tangible property. (see

p. 65).

Conclusions

- 72 -

72

177

Notwithstanding the subsequent further amendment of the Statement of Claim, having now

heard the evidence and further submissions of counsel, my earlier conclusion as to the nature

of the plaintiffs' claims, and whether they constitute damage or injury to property, remains

unaltered.

178

The condition of the Building is more fully discussed in a subsequent section, but it will

suffice at this point to state that, in my view, the evidence does not support a finding that

there has been any "damage" whatsoever. Whatever the different meanings intended by the

use of the phrase "damage to property" (in s. 6), as opposed to that of "injury to property" (in

s. 3), I am satisfied that this claim is one for the recovery of pure economic loss, and

accordingly, does not fall within the ambit of either of the two phrases.

179

The plaintiffs also argue that some of the fixtures in the building were damaged by asbestos

fibres and, for that reason, they say, their claim is for damage to property rather than for pure

economic loss. However, the evidence shows that fixtures removed from the third and fourth

floors were discarded, not because they were damaged, but because they were not going to be

utilized by the Department of Fisheries & Oceans. And, many of the fixtures that were

removed from other parts of the Building were replaced as part of an already planned

upgrading process. In other instances, fixtures were discarded because debris fell on them

during the renovation operations, while some were cleaned up and reused.

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73

180

On the evidence, I have concluded that the removal of the light fixtures was, in the main, part

of the general removal process. Any real "physical damage" to light fixtures was minor.

Most were removed and discarded solely because the cost of cleaning them up would be

greater than the cost of installing new fixtures.

181

With respect to the plaintiffs' argument that their claims may be characterized as claims for

"professional negligence", it must first be noted that the claims were not expressly pleaded

in that fashion, and that the argument was raised for the first time in the plaintiffs' written

Reply Argument. Earlier in these reasons, I outlined the nature of the plaintiffs' claims

against each of the defendants and it may be arguable that the claims of negligence on the

part of Eng & Wright Partners do, by virtue of their professional status, fall within the

category of professional negligence. So, too, may the claims made in negligence against

Foundation. But I am unable to read into any of the allegations made in the Seventh

Amended Statement of Claim any suggestion of "professional negligence" on the part of

Donalco and the Grace Defendants.

182

If I am wrong in concluding that, first, the plaintiffs' claims are for pure economic loss rather

than "damage to property" within the scope of s. 6(3)(b) and, second, that none of their

claims are for "professional negligence" within s. 6(3)(c), I am nevertheless satisfied that the

postponement provisions have no application to these facts.

- 74 -

74

183

The plaintiffs' argument under this section is premised on the assertion that they simply did

not know that the fireproofing contained asbestos, and therefore, the running of time should

be postponed until their "discovery". For the reasons given in the "Knowledge" section, I

have rejected that assertion. The plaintiffs were aware of the controversies surrounding

asbestos and, in my opinion, they either knew or ought to have known that MK-3 contained

asbestos. All of the factors necessary to an action regarding the MK-3 existed as of the date

of completion of its installation. Accordingly, the limitation period began to run as of that

date, without postponement.

184

It follows, therefore, that the plaintiffs' claims are barred by the provisions of the Limitation

Act.

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75

VI. ECONOMIC LOSS

185

I turn now to an argument advanced by Donalco and the Grace defendants concerning the

nature of the plaintiffs' claim. They say that it is for pure economic loss, i.e., a loss where

there has been no injury to person or damage to property and that, as a matter of law, it is not

recoverable.

186

In support of their position, Donalco and Grace rely in part on the decision of the Supreme

Court of Canada in Rivtow Marine Ltd. v. Washington Iron Works, [1974] S.C.R. 1189. In

that case, the plaintiff, after repairing a dangerously defective crane, had sought to recover in

tort the costs of the repairs, as well as the loss of profits from having to take the crane out of

service to complete the repairs. The majority of the Court concluded that, while there may be

a duty to warn of such dangers, there should be no recovery in tort in the absence of injury to

person or damage to property. Accordingly, as there was no privity of contract between the

plaintiff and the original manufacturer, the plaintiff was denied recovery for the cost of

repairing the defect.

187

The plaintiffs' primary answer to Rivtow, and to the English authorities that reached a similar

conclusion, is that their claim is one for property damage, not for economic loss. For reasons

which I explained in the section dealing with the Limitation Act, I have rejected this

characterization of the claim. In my view, their claim is one for pure economic loss.

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76

188

189

In the alternative, the plaintiffs submit that their claims should succeed on the basis of a

breach of a duty to warn or negligent misrepresentation.

In the further alternative, they argue that the rule prohibiting claims for economic loss cases

such as this had been placed in doubt by the dicta of the Supreme Court of Canada. Armed

with comments from various members of the Court indicating their dissatisfaction with the

majority opinion in Rivtow, the plaintiffs argued that the Court has implicitly overruled the

ratio of the case: see, e.g., Kamloops (City) v. Nielsen, [1984] 2 S.C.R. 2; Ontario (A.G.) v.

Fatehi, [1984] 2 S.C.R. 536; and most recently in Canadian National Railway Co. v. Norsk

Pacific Steamship Co., [1992] 1 S.C.R. 1021. Accordingly, they say that the question of

whether or not a duty arises should be determined with reference to the two-step test

articulated by the House of Lords in Anns v. Merton London Borough Council, [1977] 2 All

E.R. 492 (H.L.), and refined by the Supreme Court of Canada in Kamloops.

190

Events have overtaken us and it is not necessary for me to address the alternate arguments

advanced by the plaintiffs. As their counsel foretold, the Supreme Court of Canada has, in its

recent decision, Winnipeg Condominium Corp. No. 36 v. Bird Construction Co. [1995], 1

S.C.R. 85; (1995), 23 C.C.L.T. (2d) 1, turned away from the majority decision in Rivtow and

adopted the reasoning expressed by Laskin, J. in his dissenting judgment. The Supreme

Court has concluded that claims in tort for the cost of repairing a dangerous defect in a

77

building should be governed, not by a broad rule excluding recovery, but rather on a case-by-

case basis, utilizing the test set out in Anns.

191

192

Although the claim in this case relates to an allegedly dangerous product installed in a

building, the reasoning of the Court has obvious application.

In Winnipeg, the plaintiff purchased an apartment building in 1978, six years after its

construction. In 1989, an exterior section of stone cladding fell from the building. Following

consultation with structural engineers, it was determined that the entire stone cladding had to

be replaced, at a cost of approximately $1.5 million. The plaintiff brought an action in

negligence against the general contractor, the stonework sub-contractor, and the architects )

all people with whom it had no privity of contract.

193

The defendants moved for summary dismissal of the action, but were unsuccessful at the trial

level. The Manitoba Court of Appeal allowed the appeal, concluding that recovery for this

type of economic loss was precluded by the Canadian and English authorities. On further

appeal to the Supreme Court of Canada, a seven member bench unanimously agreed to allow

the appeal.

194

Writing for the Court, La Forest, J. began by stating the issue in these words:

May a general contractor responsible for the construction of a building be held

tortiously liable for negligence to a subsequent purchaser of the building, who is not

78

in contractual privity with the contractor, for the cost of repairing defects in the

building arising out of negligence in its construction? (at p. 90)

195

Mr. Justice La Forest first noted that there was no allegation of damage to property or injury

to person, and that the claim was "simply for the cost of repairing the allegedly defective

masonry and putting the exterior of the building back into a safe working condition". He

then proceeded to analyze the issue on the basis that the losses claimed were purely

economic.

196

La Forest, J. considered the English position on recoverability, as set out in D & F Estates

Ltd. v. Church Commissioners for England, [1988] 2 All E.R. 992. In that case, the House

of Lords concluded that a subsequent purchaser of a building that contained defects (falling

plaster) could not recover from the original contractor the cost of repairing the defect because

there had been no injury to person or damage to property. The House of Lords' conclusion

was, of course, consistent with the Supreme Court of Canada's decision regarding defective

chattels articulated many years earlier in Rivtow.

197

La Forest, J. concluded that the reasoning in D & F Estates should not be considered

persuasive authority in Canada because of the very different developments in tort law

between the two countries. For example, La Forest, J. noted that the House of Lords

assumed that a duty can only arise in contract, and that an extension of liability in tort was an

inappropriate incursion into the contractual realm. However, as La Forest, J. noted, Canadian

79

courts have opted for a different approach, having recognized that a duty of care in tort may

arise co-extensively with a contractual duty: Central Trust Co. v. Rafuse, [1986] 2 S.C.R.

147.

198

La Forest, J. also pointed out that Canadian and English courts have diverged on their

approach to the recoverability of economic loss in general. In Canada, recoverability for

economic loss continues to be governed by Lord Wilberforce's two-step test outlined in Anns

(see Canadian National Railway Co. v. Norsk Pacific Steamship Co., supra). By contrast,

the House of Lords in Murphy v. Brentwood District Council, [1990] 2 All E.R. 908,

overruled its decision in Anns and reverted to a much narrower exclusionary rule for the

recovery of economic loss.

199

La Forest, J. found that there were compelling policy reasons for recognizing a duty in tort.

It made good sense, he concluded, to hold a person who negligently creates a danger within

the community to account for their negligence; such a duty would, he said, serve an

important preventative function by encouraging "socially responsible behaviour". La Forest,

J. noted that Laskin, J. had recognized these concerns in his strongly worded dissent in

Rivtow, and he accepted and adopted Mr. Justice Laskin's reasoning on this point.

200

La Forest, J. then turned to the modified test in Anns to resolve the appeal. On the first part

of the test ) whether there was a sufficient relationship of proximity or neighbourhood

between the contractor and the subsequent purchaser ) La Forest, J. had little difficulty. He

80

held that it is reasonably foreseeable to contractors that, if they design or construct a building

negligently, and if that building contains latent defects as a result of that negligence,

subsequent purchasers of the building may suffer personal injury or damage to other property

when those defects manifest themselves. In his view:

. . . the reasonable likelihood that a defect in a building will cause injury to its

inhabitants is also sufficient to ground a contractor's duty in tort to subsequent

purchasers of the building for the cost of repairing the defect if that defect is

discovered prior to any injury and if it poses a real and substantial danger to the

inhabitants of the building. (at p. 116)

(emphasis added)

201

In the following passage, Mr. Justice La Forest set out the Court's conclusion with respect to

the first branch of the Anns test:

I conclude that the law in Canada has now progressed to the point where it can be

said that contractors (as well as subcontractors, architects and engineers) who take

part in the design and construction of a building will owe a duty in tort to subsequent

purchasers of the building if it can be shown that it was foreseeable that a failure to

take reasonable care in constructing the building would create defects that pose a

substantial danger to the health and safety of the occupants. Where negligence is

established and such defects manifest themselves before any damage to persons or

property occurs, they should, in my view, be liable for the reasonable cost of

repairing the defects and putting the building back into a non-dangerous state.

(emphasis added)

202

He also stated that the contractor's duty would not be subject to any limitations of liability

contained in the contract between the original purchaser and the contractor.

81

203

204

205

La Forest, J. then considered the second branch of the Anns test; that is, whether there were

any considerations which ought to negate either the scope of the duty, the class of the persons

to whom it is owed, or the damages to which a breach of it may give rise. He noted that

concerns have been expressed that such a duty interferes with contractual duties and with the

doctrine of caveat emptor. He suggested that these could be characterized as "Cardozian"

concerns, in that they relate to averting indeterminate liability for an indeterminate time to an

indeterminate class.

He rejected those concerns. He noted that the duty was limited by the requirement that the

defects be dangerous, and that neither the class (subsequent purchasers), nor the time (the life

of the building), nor the liability (limited to the cost of repairs), were indeterminate. As to

the caveat emptor concern, La Forest, J. observed that the purchaser was clearly not in the

best position to inspect the building and to bear the risk of latent defects. Having addressed

these concerns, La Forest, J. concluded that there were no adequate policy considerations to

negate a duty in tort.

It is now clear that under Canadian law a builder may be held liable in tort when he has

constructed a building in a negligent manner and, subsequently, a substantially dangerous

defect is discovered and then repaired prior to any injury occurring to person or property. In

my view, the same principle must apply to one who negligently manufactures a product,

knowing that it will be incorporated into a building, if that product is later found to be

dangerously defective in that it poses a "real and substantial danger" of causing injury to

persons or property.

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82

- 83 -

83

Conclusion

206

Notwithstanding that their claim is for pure economic loss, the plaintiffs may recover that

loss if they are able to establish, on a balance of probabilities, that the presence of MK-3 in

the Building posed a "real and substantial" danger to workers and occupants, that the danger

was caused by negligence, and that the removal and replacement of the product was

necessary in order to alleviate the danger.

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84

VII. OWNERSHIP/STATUS ISSUES

207

Counsel for the Grace defendants describe as "vitally important" certain issues that

arise from the history of ownership of the Building during the time when the MK-3 was

installed and when, allegedly, the plaintiffs first learned of its presence and launched the

programme of abatement.

208

Certified copies of documents registered in the Vancouver Land Title Office were

filed and these chronicle the relevant history of ownership. They show that prior to August

1973, the Building was owned by Vancouver Square Holdings Limited ("VSH") and PPI

Vancouver Limited, and that on or about August 9, 1973, they transferred the title to VSH as

sole owner. On August 29, 1973, VSH transferred the title to Lord Realty. Lord Realty

remained the sole registered owner of the Building until November 22, 1974, when it

transferred a 50% interest to its wholly-owned subsidiary, Lordina, and the remaining 50%

interest to Privest.

209

I emphasize the word "registered" because, on December 1, 1973, prior to the

incorporation of Privest, Lord Realty entered into an Agreement with one James Tory by

which it agreed to transfer a 50% interest to Mr. Tory to be held by him in trust for Privest.

Quite apart from questions concerning the implementation of that agreement, and whether it

effectively transferred a beneficial interest in the Building to Privest, it is clear that

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85

Mr. Tory never became a registered owner of any interest in the Building, either in his

personal capacity or as a trustee.

210

Privest was incorporated in the Province of Ontario on April 4, 1974, and it was not

until November 15, 1974 that it was registered as an extra-provincial company under the

B.C. Company Act. The Grace defendants argue that it follows from that fact that Privest

could not have held any interest, registered or unregistered, in land in British Columbia until

that date.

211

Neither of the Polaris companies ever held an ownership interest in the Building, no

claims have been made against them by the owners, and they admit that they have suffered

no loss or damage as a result of the alleged installation of MK-3 in the Building. In fact,

Polaris Western ceased to exist in 1983, and it was only restored to the register some time

after this action was commenced, in order to be "represented in this case".

212

213

After Lordina re-conveyed its 50% interest to its parent company, Lord Realty, on

December 30, 1977, it was allowed to expire. It, too, was only restored to the register after

the commencement of this action.

In my view, the issues which arise out of these facts, at least so far as the plaintiffs'

claims in tort are concerned, have

been rendered academic by the Supreme Court of Canada's decision in Winnipeg

86

Condominium, supra. Those who take part in the design and construction of a building owe

a duty in tort to subsequent purchasers of the building to take reasonable care in its

construction.

214

As I stated above, I am of the view that a similar duty of care is owed to subsequent

purchasers of a building by one who manufactures and distributes a product, knowing that it

will be incorporated into a building. Thus, upon proof of negligence, misrepresentation, or

breach of a duty to warn, coupled with proof that the presence of MK-3 in the Building

constitutes a "real and substantial danger" to the inhabitants of the Building, the present

owners of the Building would be entitled to succeed on their claims in tort.

215

216

The plaintiffs admit that Lordina, Polaris Western and Polaris Canada have suffered

no loss. Accordingly, whatever the outcome, they would be not be entitled to recover

damages.

In light of the conclusion that I have reached regarding the fundamental issue of "real

and substantial danger", it is not necessary for me to consider further the "interesting and

complex" issues that arise out of the history of ownership.

87

VIII. RELEASE and ASSIGNMENT

217

218

The next issue I will turn to is what I will call the "Release and Assignment" defence.

Introduction

In 1977, as the Project neared completion, a number of disputes arose between

Foundation and the Building owners, then Lordina and Privest. These disputes related to the

final calculation of the cost of the work, what constituted "work" under the contract, retail

sales tax and rebates thereof, and a delay claim made against Foundation by the owners. The

owners claimed approximately $400,000 from Foundation, and Foundation claimed

approximately $200,000 from the owners.

219

At the same time, several sub-contractors were pressing Foundation for payment of

the amounts owing to them. There was then approximately $4 million owing to sub-

contractors and suppliers, and they were demanding the release of holdback monies prior to

the resolution of the disputes. The owners proposed that the sub-contractors be paid without

prejudice to Foundation's claims. However, because it wanted to ensure that it did not

subsequently become involved in disputes between the owners and the sub-contractors,

Foundation would only agree to do that if the owners would release the sub-contractors from

all claims they might have against them. The owners refused to do so.

88

220

In September 1977, Lordina and Privest commenced an action against Foundation for

damages and an accounting. Thereupon, Foundation took the position that it would not

countersign cheques to the sub-contractors for the balance of their holdback monies unless

the owners agreed to an unconditional release of all damage claims. Lordina and Privest

were not prepared to do that.

221

The disputes were finally resolved, and on November 10, 1977, a Settlement Agreement was

executed by Foundation, as Contractor, and by Lordina and Privest as the "Owner". The

recital clauses in that agreement read as follows:

WHEREAS the owner is the owner of a building known as the Harbour Centre,

erected by the Contractor in the City of Vancouver in the Province of British

Columbia, pursuant to a certain construction contract made August 1st, 1974 together

with the revisions thereto (collectively the "Construction Contract") at and for a

guaranteed maximum cost of work.

AND WHEREAS a dispute has arisen between the parties with respect to a claim for

Federal Sales Tax rebate and with respect to damages as a result of certain allegations

by the owner;

AND WHEREAS the owner has commenced an action in the Supreme Court of

British Columbia by action number C775161, Vancouver Registry, claiming inter

alia, a certain sum of Federal Sales Tax rebate and damages;

AND WHEREAS there is in existence a trust account under the control of the owner

and the contractor in order to secure the funds necessary to pay the outstanding

amount of work.

222

The Settlement Agreement further provides that, in consideration of the mutual covenants,

agreements, warranties and payments therein contained, the parties, for themselves and on

behalf of their respective successors and assigns, agree that:

89

a)

$97,711.00 would be paid by Foundation to the Owners in respect of the

Federal Sales Tax rebate, together with the further sum of $102,000 for

damages;

b)

c)

various payments would be made to Lordina and Privest and to

Foundation from a trust account; and

Lordina and Privest would discontinue the Action against Foundation.

223

Clause 5 of the Settlement Agreement (the "Release") provides:

That in consideration of the payment to the Contractor as herein before set out and in

consideration of the Agreement between the parties with respect to the matters in

issue between them, the parties hereto release and forever discharge each other, their

respective successors and assigns, of and from all, and all manner of action and

actions, cause and causes of action, suits, debts, sums of money, accounts,

reckonings, covenants, contracts, controversaries [sic], agreements, promises,

damages, claims and demands whatsoever, in law or in equity which each may have

against the other from the beginning of the Construction Contract to the date of these

presents, except that the Construction Contract between the parties shall remain in

full force and effect with respect to the provisions relating to:

a)

b)

c)

d)

General Condition 17, Indemnification;

General Condition 22, Mechanics Liens;

General Condition 34, Warranty;

the Contractor's obligation to fix or complete deficiencies

and the within release shall not be applicable to any claims which may arise with

respect to the aforesaid four matters.

224

A Certificate of Total Completion, issued in May 1979, pursuant to General Condition 23 of

the contract, discharged Foundation's obligations with respect to the four excluded items.

90

225

Clause 6 of the Settlement Agreement (the "Assignment") provides that:

That the Owner assign, transfer and set over to the Contractor and does hereby assign,

transfer and set over to the Contractor any and all rights, claims and demands

whatsoever, in law and equity that it may have against the Contractor's sub-

contractors, arising out of the construction-erection contract and addendums thereto.

226

Foundation, Grace and Donalco submit that by reason of the Release and Assignment,

the plaintiffs have no standing to bring this action against them.

The Release

227

All of the provisions of the General Contract, except those relating to the four

excluded items, were discharged by the November 10, 1977 Settlement Agreement. That

Agreement, therefore, evidences a novation involving accord and satisfaction of Foundation's

obligations to the owners under the General Contract. The accord is the agreement by which

the obligations are discharged and the satisfaction is the consideration which makes the

Agreement operative: British Russian Gazette and Trade Outlook Ltd. v. Associated

Newspapers Ltd. [1933] 2 K.B. 616 (C.A.) at 643.

228

The plaintiffs argue that the language of the Release does not contemplate a general

release, but relates only to disputes which had arisen between the parties at that time. In this

respect, they place great emphasis on the phrase "with respect to the issues between them"

found in Clause 5. Further, they say that even if the Release is read broadly, it cannot be said

to apply to their claims in this case because the damages alleged in this action were not

91

reasonably within the contemplation of the parties at the time the Settlement Agreement was

signed. They argue that the Release is valid only with respect to those matters which were,

or ought reasonably to have been, within the contemplation of the parties when the

Settlement Agreement was entered into.

229

In support of that argument, they cite the following comments of Lord Westbury in

London and Southern Western Railway and Clement v. Blackmore (1870), 39 L.J.C.H. 713

(H.L.) at 720:

The general words in a release are limited always to that thing or those things, which

were in the contemplation of the parties at the time when the release was given. But a

dispute that had not emerged, or a question which had not at all arisen, cannot be

considered as bound and concluded by the anticipatory words of a general release.

230

Accordingly, the plaintiffs say, because the plaintiffs had no knowledge that

Foundation had chosen and installed an asbestos-containing fireproofing material in the

Building, they could not possibly have had in their contemplation the release of these

asbestos-related claims.

231

I reject that submission. I do not believe that it must be shown that the plaintiffs were

directing their minds to the specific subject of asbestos-containing fireproofing when the

Release was executed.

92

232

Finally, for the reasons I have stated elsewhere, I have concluded that the plaintiffs

were well aware of the controversy surrounding the use of asbestos-containing building

materials, and that they knew or, on reasonable inquiry would have learned, that MK-3

contained asbestos. Thus, potentially at least, the plaintiffs could have released any further

claims arising from this fact.

233

Whether or not they did so depends upon the proper construction of the Release

clause. What must be determined is whether Clause 5 is drafted in such a manner as to

indicate that the parties intended to release, apart from the excepted sections, all other

potential future claims.

234

In White, Fluman and Eddy v. Central Trust Company and Smith Estate (1984), 54

N.B.R. (2d) 293 (C.A.), where, at pp. 310-311, La Forest, J.A. (as he then was) made the

following observations about release clauses and their construction:

Before entering into an examination for the particular releases involved in this case

and the circumstances under which they were executed, it may be useful to make

some general remarks regarding the manner in which releases are to be construed.

Like other written documents, one must seek the meaning of a release from the words

used by the parties. Though the context in which it was executed may be useful in

interpreting the words, it must be remembered that the words used govern. As in

other cases too, the document must be read as a whole. This is particularly important

to bear in mind in construing releases, the operative parts of which are often written

in the broadest terms. Thus reference is frequently made to recitals to determine the

specific matters upon which the parties have obviously focused to confine the

operation of general words . . .

[Then, after quoting Lord Westbury in Blackmore, he continues at p. 311:]

What the statement quoted means is that in determining what was contemplated by

the parties, the words used in a document need not be looked at in a vacuum. The

93

specific context in which a document was executed may well assist in understanding

the words used. It is perfectly proper, and indeed may be necessary, to look at the

surrounding circumstances in order to ascertain what the parties were really

contracting about.

235

Looking at the circumstances in which the Settlement Agreement was executed, one

knows from the recital clauses (and I have had the benefit of testimony as well) that various

disputes had arisen between the Owners and Foundation, and that the contract was, at a

minimum, designed to resolve these matters. The plaintiffs argue that this is all that the

Settlement Agreement and the included Release were intended to do. They say that the

amounts in dispute were modest (relative to the size of the General Contract), and that the

Owners would not have released all future recourse against Foundation for claims such as the

present ones.

236

Foundation, supported by the other defendants, disagrees. They maintain that, given

the scope of the disputes at the time, it would have done Foundation little good to bring them

to an end by a release of claims under the General Contract only to subsequently be sued in

tort. They argue that a general release of all claims, present and future, formed part of the

consideration for Foundation agreeing to pay the disputed sums to the Owners.

237

In my opinion, the words themselves provide the clearest indication of the intention

of the parties.

94

238

The plaintiffs argue that the words "in respect of this matter" in the opening of the

clause suggests an intent to limit the Release. But, in my view, that phrase functions as a

reference to the consideration between the parties, rather than as a limit on the words which

follow. This interpretation is supported by the placement of the comma, which follows the

word "them", rather than "parties".

239

Foundation submits that the very wording of Clause 5 demonstrates that it was

intended to cover more than the immediate issues in dispute. They submit that:

(a)

the language of the operative part of the clause, which reads as follows:

. . . the parties hereto release and forever discharge each other, their respective

successors and assigns, of and from all, and all manner of action, actions, cause and

causes of action, suits, debts, sums of money, accounts, reckonings, covenants,

contracts, controversies, agreements, promises, damages, claims and demands

whatsoever, in law or in equity which each may have against the other . . .

(emphasis added)

discloses an intention to discharge one another from any unknown actions or claims at the time.

They say that it is not a release limited to specific claims. Rather, it is a general release of all

manner of claims whatsoever in law or equity;

(b)

in order to express their intention that the Release be exhaustive, the parties engaged

in superfluity; i.e., they did not simply discharge contracts, they discharged reckonings,

covenants, contracts, agreements and promises. Further, lest there be any doubt that any right to

95

bring legal proceedings would survive, the Release refers to items in the singular and the plural,

i.e., "all manner of action and actions, cause and causes of action"; and

(c)

the Release is not in respect of any particular dispute or claim but is intended to apply

to any possible claim having arisen over a period of time, i.e., any claim "which each may have

against the other from the beginning of the Construction Contract to the date of these presents".

240

241

I agree with those submissions.

An alternative argument advanced by the plaintiffs is that the matters giving rise to

their action against Foundation preceded, and are therefore independent of the General

Contract. They say that by January 1975, when the General Contract was actually signed,

Foundation had already reviewed the original specifications, noted the difference between the

spray fireproofing specification drawn by Paine & Associates for the Tower portion and that

prepared by Eng & Wright for the Retail Section (including the Building), and had,

nonetheless, allowed asbestos-containing MK-3 to be sprayed on the underside of two floors

of the Building without warning the owners of the dangers inherent therewith. They cite BG

Checo International Ltd. v. British Columbia (Hydro and Power Authority) [1993], 1

S.C.R. 12, at p. 30, as authority for the proposition that:

. . . [A] contractual limitation may not apply where the tort is independent of the

contract in the sense of falling outside the scope of the contract . . .

96

242

They say that because the breach of a duty to take care and the failure to warn pre-

dated the General Contract, and both the General Contract and the Settlement Agreement

were entered into without knowledge of those facts, it cannot be said that Foundation's tort

duties are concurrent with its obligations under the General Contract.

243

244

Again, given my finding concerning the extent of the plaintiffs' actual or deemed

knowledge, I find this argument to be without merit.

For all of these reasons, I have concluded that the Release is broad enough to

preclude recovery in this action.

97

The Assignment

245

Clause 6 of the Agreement was the result of a compromise. Originally, as I noted

above, Foundation wanted the owners to release any claims they might have against the sub-

contractors prior to the payment of the holdback monies. The owners refused to do that, and

instead assigned to Foundation any claims that they might have against the sub-contractors.

Thus, Foundation would be able to raise those claims in defence of any actions brought

against them by the sub-contractors.

246

Foundation, again supported by the other defendants, argues that because the owner

assigned to it any claims that "it may have against the Contractor's sub-contractors", the

plaintiffs have no standing to sue Donalco or Grace Canada, both of whom by definition are

"sub-contractors".

247

The plaintiffs advance three arguments in support of their assertion that the

Assignment does not preclude their action against Grace Canada and Donalco. The first two

arguments are similar to the arguments advanced with respect to the effect of the Release

clause: namely, that the Assignment does not contemplate the type of claim advanced in this

action, and that the liability of those defendants is independent of the General Contract.

248

For the reasons discussed above under the heading, "The Release", I reject those

submissions.

98

249

The plaintiffs' final argument relates only to the Grace defendants. They argue that

although Clause 6 of the Agreement assigns to Foundation all actions against "sub-

contractors", it does not affect the plaintiffs' claims against the Grace defendants because

Grace Canada was not a sub-contractor.

250

The General Contract defines the terms "Sub-contractor" and "Materialman" as

follows:

"Sub-contractor" means a person, firm or corporation having a direct contract with the

Contractor (or a person, firm or corporation having such a direct contract with such a

Sub-contractor) to perform a part or parts of the Work or to supply material work to a

special design according to the Contract Documents, but does not include a

Materialman.

"Materialman" means a person engaged by the Contractor to supply materials to the

project.

251

Grace Canada submits that it was a "sub-contractor" within the definition of that word

and thus is entitled to the protection afforded by the assignment of claims contained in the

Settlement Agreement. Grace Canada's argument proceeds along these lines:

(1) Since it was not "engaged by the Contractor to supply materials to the project", it was not a

Materialman;

(2) However, it did have "direct contract" with Donalco, a sub-contractor that did perform part of the

work on the Project;

(3) Grace Canada did supply material "work to a special design according to the Contract

Documents" in that paragraph 109 of the General Contract defines "Construction

Documents" to mean:

99

This Agreement, the General Conditions, and Supplementary General Conditions

executed by the parties, the Sketch Plans and Specifi-cations, . . . Incomplete Working

Drawings and Specifications, Final Working Drawings and Specifications . . . ; and

(4) Grace Canada's products were specified by trade name in the Original Specifications, the Outline

Specification and in the Final Specification; those Specifications required that the

fireproofing material be applied in accordance with the manufacturers' instructions and

sprayed to certain thicknesses on particular surfaces in the building in order to achieve the

appropriate fire-rating protection approved by the City of Vancouver.

252

Grace Canada also argues that it performed "a part or part of the Work" within the

meaning of the General Contract, which, in paragraph 2.01, states that:

The owner engages the Contractor to commence, carry out and complete improvements

to the Lands and Premises of the following nature:

(a)

(b)

the further renovation of the Existing Building to accommodate a Sears

Department Store and to add two floors to and to modify the Parking Garage

and to construct all of that part of a new building on the Lands and Premises

other than the part thereof set out in subparagraph (b) hereof, and to install all

the services for the foregoing (hereinafter separately referred to as the "First

Phase"); and

to construct that part of the new building to be built on the Lands and

Premises above elevation 241.16 feet shown on the Sketch Plans comprising

an office tower, restaurant and public observation level together with all those

parts of the balance of the new building below such office tower to be used in

connection with the foregoing (hereinafter separately referred to as the

"Second Phase")

to the extent and within the scope set out in the Contract Documents, which is

hereinafter referred to as the "Work" . . .

253

Grace says that, at the request of the architects, it provided information to the City of

Vancouver regarding design J701 and its product MK-3 and also provided specified products

to the Project.

100

254

Grace also asserts that the clear purpose of the Settlement Agreement was to resolve

any disputes or claims that might arise and, from Foundation's point of view, to forestall the

possibility of becoming involved in litigation between the owners and sub-contractors after

the holdback monies had been paid. They say that the present action actually exemplifies the

state of affairs which the parties intended to avoid, as Foundation appears in this action both

as a defendant and as a third party.

255

Grace submits that to read paragraph 6 of the Settlement Agreement narrowly, so as

to exclude them from its effect, would be inconsistent with the obvious purpose and tenor of

the Agreement, which was to assign to Foundation all causes of action arising out of the

Project so that Foundation, and Foundation alone, would be able to commence proceedings

based on such causes of action. In return, they say, the owners received substantial

consideration, including the resolution of a major dispute with Foundation.

256

In law, an assignment of a chose in action is lawful and enforceable where the

assignee has a genuine or legitimate commercial interest in the claim of another: Trendtex

Trading Corporation v. Crédit Suisse [1981] 3 All E.R. 520 (H.L.); Fredrickson v. I.C.B.C.

(1986) 28 D.L.R. (4th) 414 (B.C.C.A.); Aff'd (1988), 49 D.L.R. (4th) 160 (S.C.C.).

257

Foundation clearly had a genuine commercial interest in resolving any present and

future litigation relating to the Project, including any claims brought by Lordina and Privest

101

against other participants in the construction of the Project which could result in the joinder

of claims against Foundation.

258

In somewhat analogous circumstances, an assignment of a claim was found to be

valid: Brownton Ltd. v. Edward Moore Incubon Ltd. [1985] 3 All E.R. 499 (Eng. C.A.).

There, the plaintiff had sued two parties, a computer consultant and a computer

manufacturer, over defects in a computer system. The defendants claimed contribution from

each other. After settling with one defendant, the plaintiff assigned to it all causes of action

it had against the other defendant. The Court of Appeal upheld the validity of the assignment

on the basis that the first defendant had a sufficient "genuine commercial interest" or

"genuine and substantial interest" in the totality of the transaction which was the subject of

the assignment. One factor specifically mentioned as a reason to uphold the assignment was

that it arose out of an effort to settle the dispute or reduce the number of parties involved in

the litigation.

259

For the reasons I have stated elsewhere, I have concluded that the plaintiffs were well

aware of the controversy surrounding the use of asbestos-containing building materials, and

that they knew or, on reasonable inquiry would have learned, that MK-3 contained asbestos.

Therefore, in my view, the alleged use of a defective building material was within the

reasonable contemplation of the parties when they signed the Settlement Agreement.

102

260

However, neither of the Grace defendants entered into a contractual relationship with

the Contractor. Neither of them performed "work" on the construction site nor, in my view,

can it be said that MK-3 was "material work to a special design according to the Contract

Documents". Clearly, neither of them falls within the definition of "Materialman". Grace

Canada's relationship with the Project arose through a sales contract with Donalco.

261

But, as I have said, I am satisfied that Foundation had good commercial reasons for

not wanting to release the holdback monies and settle the disputes with the owners without

first, or at the same time, protecting itself from becoming embroiled in litigation between the

owners and sub-contractors in the future. The assignment of all claims that the owners might

have against the sub-trades was intended to prevent that possibility.

Conclusion

262

I have concluded that, in the circumstances of this case, it makes good sense to treat

Grace Canada as a sub-contractor. Even though it was not a "Materialman" within the

definition contained in the General Contract, it did supply materials to the Project and thus,

as this action well demonstrates, could become involved in litigation with the owners and in

third party proceedings against Foundation.

263

Because I am unable to find that the material supplied by Grace was "work to a

special design", my conclusion that Grace is, for the purposes of the assignment, a "Sub-

contractor" is based on what may perhaps be best characterized as "policy" considerations.

103

In my opinion, it would make no sense from Foundation's point of view to obtain an

assignment of the owners' claims against sub-trades who performed work, but not against

those who supplied materials to those sub-trades. The possibility that claims might be made

by such suppliers was clearly foreseeable.

264

I find that by the terms of the Settlement Agreement, the then owners of the Building,

Lordina and Privest, assigned to Foundation any and all claims that they might have had

against the defendants, Donalco and Grace Canada. Accordingly, the plaintiffs have no

standing to pursue the claims made against those defendants. It follows that, quite apart from

the other arguments that have been raised, the plaintiffs' claims against Grace-Conn. must

also fail.

104

IX. PRODUCT LIABILITY

Introduction

265

Notwithstanding the conclusions I have reached with respect to the Limitation and

Release and Assignment defences, I intend to consider the issues arising from the plaintiffs'

allegation that Monokote MK-3 was an inherently dangerous product that has contaminated

the Building by continually releasing asbestos fibres into its atmosphere, thus causing

physical damage to the plaintiffs' property and endangering the health of workers and

occupants.

266

But, before discussing those issues, I think it may be helpful if I review, albeit in a

general way, the law as it stands in Canada today with respect to the liability of the

manufacturer of a defective product.

General Principles

267

The classic statement of the duty of care owed by the manufacturer of a product to its

ultimate consumer or user was made by Lord Atkin in the course of his speech in M'Alister

(or Donoghue) v. Stevenson, [1932] A.C. 562 (H.L.). There, at p. 599, he said:

. . . a manufacturer of products, which he sells in such a form as to show that he

intends them to reach the ultimate consumer in the form in which they left him with

no reasonable possibility of intermediate examination, and with the knowledge that

the absence of reasonable care in the preparation or putting up of the products will

result in an injury to the consumer's life or property, owes a duty to the consumer to

take that reasonable care.

105

268

Nearly forty years further on, that guiding principle was restated by the Supreme

Court of Canada in Lambert v. Lastoplex Chemicals Co. Ltd. et al. [1972], S.C.R. 569

(S.C.C.), in these words:

Manufacturers owe a duty to consumers of their products to see that there are no

defects in manufacture which are likely to give rise to injury in the ordinary course of

use. Their duty does not, however, end if the product, although suitable for the

purpose for which it is manufactured and marketed, is at the same time dangerous to

use; and if they are aware of its dangerous character they cannot, without more, pass

the risk of injury to the consumer:

(at p. 574)

269

And, fifteen years after that, the Ontario Court of Appeal said the following about

Lord Atkin's classic formulation of the law:

This statement has been the source of subsequent developments in products liability

law based on negligence. The rationale is that one who brings himself into a relation

with others through an activity which foreseeably exposes them to danger if proper

care is not observed must exercise reasonable

care to safeguard them from that danger. It can now be taken as a legal truism that the duty

of reasonable care which lies at the foundation of the law of negligence commonly

comprehends a duty to warn of danger, the breach of which will, when it is the cause of

injury, give rise to liability: see, generally, Fleming, The Law of Torts, 6th ed. (1983), at p.

459 ff., and Linden, Canadian Tort Law, 3rd ed. (1982), at p. 563 ff.

Once a duty to warn is recognized, it is manifest that the warning must be adequate.

It should be communicated clearly and understandably in a manner calculated to

inform the user of the nature of the risk and the extent of the danger; it should be in

terms commensurate with the gravity of the potential hazard, and it should not be

neutralized or negated by collateral efforts on the part of the manufacturer. The

nature and extent of any given warning will depend on what is reasonable having

regard to all the facts and circumstances relevant to the product in question: Buchan

v. Ortho Pharmaceutical (Canada) Ltd. (1986), 54 O.R. (2d) 92 (Ont. C.A.), at 101.

- 106 -

106

270

With respect to a manufacturer's duty to warn potential consumers of dangers

associated with the use of his product, it has been held that:

Standing at the forefront of the discussion, in this case of a duty to warn, is the fact

that the manufacturer put out a product which he knew was dangerous. Given this

knowledge of the risk inhering (sic) in the ordinary use by a reasonably prudent

consumer, when other more reasonable alternatives are available, there is first a duty

not to manufacture in the intended defective way. It is only when a manufacturer is

given the benefit of a doubt on the first question that the duty to warn may come into

play. This has already been said.

A manufacturer does not have the right to manufacture an inherently dangerous

article when a method exists of manufacturing the same article without risk of harm.

No amount of or degree of specificity of warning will exonerate him from liability if

he does: Nicholson et al v. John Deere Ltd. et al (1986), 34 D.L.R. (4th) 542 at 549

(appeal dismissed).

271

What is meant by the words "defect" or "danger" in this context was considered by

Strachan, J. of the Alberta Court of Queen's Bench in Holt et al. v. PPG Industries Canada

Ltd. et al. (1983), 25 C.C.L.T. 253 at 264. There he noted that:

. . . it seems increasingly clear that the trend in Canadian/English Courts is to allow

an inference of negligence to be more readily drawn particularly as against a

manufacturer. This inference, however, comes into prominence only in the event that

the product in question is found to be defective . . .

. . . . . . .

The test to be applied to determine whether any defect exists was dealt with at p. 13

of the Ontario Law Reform Commission Report on Products Liability (op. cit.). After

referring to Lord Atkin's test in M'Alister (Donoghue) v. Stevenson, supra, the report

continued as follows:

For there to be liability under Lord Atkin's statement, it is clear that a product

must fall short in some way of what it ought to be; a product, in other words,

- 107 -

107

must be defective. Some test of the concept of 'defect', therefore is required.

This must be a general and flexible test; and, it would seem that the concept

cannot be defined except in terms of what it was reasonable to expect of the

product in all the circumstances.

Compliance With Statutory Requirements

272

The case of R. in Right of Canada v. Saskatchewan Wheat Pool [1983], 1 S.C.R.

205, stands for the proposition that proof of a statutory breach constitutes some evidence of

negligence. The other side of the coin is that evidence of compliance with a statutory or

regulatory requirement or standard is some evidence of conformity with the common law

standard of care.

273

In the most recent edition of his text, Products Liability, Professor Waddams put it

this way at p. 124:

Whether or not the supplier has complied with statutory requirements is a relevant

factor in considering whether the product is defective, or the supplier's conduct

reasonable, but it should not be conclusive.

274

In Franklin v. Gramophone Co. Ltd. [1948], 1 All E.R. 353, the English Court of

Appeal held that compliance or non-compliance with statutory regulations is relevant to the

issue of negligence. The Court observed (at p. 360) that:

. . . in very many cases, it would be difficult, if not impossible, to maintain that an

employer who had complied with regulations had been negligent at common law.

- 108 -

108

275

276

That conclusion has been accepted by this court: Gies v. Gunwall (1982), 143 D.L.R.

(3d) 126 at 131.

A similar conclusion was reached by the United States Court of Appeals, Fifth

Circuit, in Gideon v. Johns-Manville Sales Corporation, 761 F.2d 1129 (5th Cir. 1985).

That case involved a claim for personal injury brought by an asbestos worker. The Court

found that the defendant had complied with the standards prescribed by the Occupational

Safety and Health Administration ("OSHA") and stated (at p. 1144) that:

Compliance with such government's safety standards constitutes strong and

substantial evidence that a product is not defective.

277

A decision of the Ontario High Court of Justice (Gen. Div.) illustrates a similar

approach. In VISP Construction v. Sceptre Manufacturing Co. (1991), 45 C.L.R. 170, the

Court dealt with an action in tort brought by a contractor against a manufacturer of pipe that

had been bought from a third party. The defendant led evidence which established, to the

Court's satisfaction, that its manufacturing processes complied with specifications set by the

Canadian Standards Association. The Court concluded that the CSA standard was a

reasonable one to adopt, and that the defendant took reasonable precautions to assure that its

product met that standard.

278

In his reasons for judgment, Mr. Justice Anderson observed, at p. 183, that:

- 109 -

109

The contention of the plaintiff is that there is liability on the defendant for any

defective pipe which it manufactures and which comes into the hands of an end user.

As I have already intimated, that could be so only if there were a manufacturer's

warranty of quality, or if the law imposed strict liability. It is no doubt because faulty

or defective merchandise is manufactured from time to time that manufacturer's

warranties are sought and offered of and from certain manufacturers. Such warranties

are issued in carefully considered contractual terms.

279

Nonetheless, it must be noted that a manufacturer has a duty to make reasonable

efforts to reduce any risk to life and limb that may be inherent in the design of his product:

Rentway Canada Ltd. v. Laidlaw Transport Ltd. (1989), 49 C.C.L.T. 150 at 158 (Ont. H.C.).

Strict Liability

280

In product liability cases, Canadian courts have always insisted upon some degree of

fault. Unlike the courts of many of the American states, they have, thus far at least, rejected

the doctrine of strict liability. A clear statement of the Canadian position is found in Phillips

v. Ford Motor Co. of Canada Ltd., [1971] 2 O.R. 637 (C.A.), where, at p. 653, the Ontario

Court of Appeal said:

While the scope of M'Alister (or Donoghue) v. Stevenson, [1932] A.C. 532, has been

greatly extended and is no longer limited to articles of food and drink . . . our Courts

do not, in product liability cases, impose upon manufacturers, distributors or

repairers, as is done in some of the States of the American union, what is virtually

strict liability. The standard of care exacted of them under our law is the duty to use

reasonable care in the circumstances and nothing more.

- 110 -

110

281

282

That statement of law reflects the current position in British Columbia: see Meisel v.

Tolko Industries Ltd., unreported (January 18, 1991) Vancouver Reg. C876168 (B.C.S.C.)

and Stiles v. Beckett, unreported (January 4, 1993) Vancouver Reg. C893010 (B.C.S.C.).

The plaintiffs have "invited" this Court to apply the concept of strict liability with

respect to their claims against the Grace defendants. The Grace defendants have responded

to that suggestion with strong arguments as to why a shift toward strict liability would not be

appropriate.

283

In a paper entitled "Products Liability", given at the Paisley Conference on the Law

of Negligence in September 1990, and found in Donoghue v. Stevenson and the Modern

Law of Negligence, sub nom. The Paisley Papers (published by The Continuing Legal

Education Society of British Columbia), Professor John G. Fleming describes the

"transformation" from fault-based to strict liability that took place in the American law of

products liability during the 1960s. Since then, he says, the concept of strict liability has

"dominated" the field of products liability in the United States. And, after noting that a

similar change was taking place in several European countries, he wonders, "How much

longer can Canada afford to stand aside?"

284

But, I find it significant that in the same paper, Professor Fleming also observes (at p.

126) that:

- 111 -

111

The spectacular increase in products liability litigation of the past twenty years is

almost exclusively attributable to design defect and failure to warn cases. It is thus a

paradox that the switch to strict liability, which was originally hailed as likely to

reduce litigation, has actually produced the exact opposite effect.

285

Later in that paper, Professor Fleming writes of the "retreat" by the American courts

from the concept of strict liability to that of negligence, and said that:

This "quiet revolution" can be seen both in the tenor of appellate judicial opinions and

in the trends in litigation.

286

287

"Also indicative," he writes, "of the retreat from stricter versions of liability has been

the treatment of the time dimension and the so-called 'state of the art' defence."

Professor Fleming also observes that, despite the claims of some that the law "has

strayed too far from traditional notions of tort into no-fault compensation", for a personal

injury to be compensable under the strict liability approach, "it must have been caused not

just by a product, but by a defective product" (emphasis in the original).

288

The Canadian law is well settled and, if consideration is to be given to the adoption of

a strict liability concept in product liability cases, that is something that must be left to the

appellate courts.

- 112 -

112

X. THE ADMISSIBILITY OF LEARNED TREATISES

289

290

Another matter I wish to discuss before approaching the central issues in this case is a

ruling I made during the trial concerning the use of "learned treatises" on the subject of

asbestos and asbestos-related diseases.

The treatises or papers in question were authored by "experts" who did not testify

before this court; they had been referred to by Mr. Roberts during his cross-examinations of

Grace's expert witnesses with a view to challenging the validity of the opinions those

witnesses had expressed. Mr. Roberts later argued that those treatises should be admitted

into evidence, not only for that purpose, but also for the truth of their contents. In other

words, he took the position that the plaintiffs should be entitled to rely on the findings and

opinions given in those treatises to support their claims.

291

I rejected Mr. Roberts' argument and gave reasons at the time. However, I think it

will be helpful if I repeat that ruling in this judgment, not only because of its potential

application in other cases but, more importantly, because of the significant impact it had on

the strength of the plaintiffs' case.

292

What follows is a mildly edited version of the text of my ruling.

113

293

"I will turn then, counsel, to the outstanding matter of the admissibility of the expert

or learned treatises put to certain of the expert witnesses called by the Grace defendants.

This ruling relates to the admissibility into evidence of certain documents, some being papers

commonly described as learned treatises, others not usually thought of in those terms, such as

letters written by persons known or suggested to be experts in various fields. The documents

were assembled by counsel for the plaintiffs for the purposes of cross-examination of various

of the expert witnesses called by the Grace defendants, and they form part of the collections

of documents assembled in loose-leaf binders.

294

"A statement of the generally accepted view as to the use that may be made of such

material is found in J. Sopinka, S.N. Lederman & A.W. Bryant, The Law of Evidence in

Canada, 2d ed. (Toronto: Butterworths, 1992). Under the heading, "Use of Authoritative

Literature", the authors state (at 560):

Peculiar to the examination of experts is the utilization of textbooks. In support of

any theory, an expert is permitted to refer to authoritative treatises and the like, and

any portion of such texts upon which the witness relies is admissible into evidence.

Moreover, it appears that, if a written work forms the basis of the expert's opinion,

then counsel is allowed to read extracts to the expert and obtain his or her judgment

on them. The written view of the author thereby becomes the opinion of the witness.

If the witness does not adopt the writing as being authoritative and in accord with the

witness' own opinion, nothing may be read from the text, for that would be tolerating

the admissibility of pure hearsay. [citations omitted]

295

"The authors refer to the decision of Chief Justice Harvey and Mr. Justice Beck in the

oft-cited R. v. Anderson (1914), 5 W.W.R. 1052 (Alta. C.A.), and then continue (at 561):

114

Learned treatises may be used in a similar way in cross-examination of the expert to

confront him with an authoritative opinion which contradicts the view expressed by

the witness on the stand.

. . . . . . .

By so doing, the treatise is not used for the hearsay purpose of proving the truth of the

opinion contained therein, but as a means of testing the value of the expert witness'

conclusion. It becomes not positive evidence, but as in the case of the cross-

examining tool of prior inconsistent statements, it is utilized to challenge the expert's

credibility; to test whether the witness has intelligently and competently read and

applied what has been authoritatively written on the subject. If the witness adopts a

passage in the text, it is the expert and not the text writer's opinion that is admitted

into evidence. [citations omitted]

296

"However, as the learned authors note, some American courts have chosen not to

limit the evidentiary value of texts to an impeachment purpose on cross-examination, or to a

demonstration of the basis of the expert's conclusion when examined in chief. Under certain

of the American Rules of Evidence, learned treatises are recognized as an exception to the

hearsay rule and received as substantive evidence in their own right. As the authors state (at

562):

Wigmore favoured this exception to the hearsay rule on the basis that the absence of

cross-examination of the author of the treatise created no prejudice since the author

would obviously possess no bias in the particular case and because there would be a

115

strong motivation on his or her part to state the position accurately since the author

would be aware that his or her writings would be subject to the scrutiny and criticism

of other experts in the field.

The conventional rule in Canada, however, is that writings put to an expert witness in

cross-examination are, providing the witness recognizes the author of the writing or

the text in which it appears as authoritative, admissible to test the credibility of the

opinion of that expert. If the expert witness accepts the opinion expressed in writing,

as the authors pointed out, he or she adopts it and it becomes part of his own

testimony. If he or she does not accept it, the textual opinion is not admissible as

substantive evidence in the trial. In that event it is the fact that the author or the text

from which the writing was taken, recognized as authoritative by the witness,

contradicts the opinion of the testifying expert, which is admissible, and not the

substance of the contradictory opinion.

297

"I pause here to note that in cross-examination it is important to consider whether the

testifying expert must recognize the authority of the text or journal from which the writing is

extracted or merely the authority of the writer or the author before the textual opinion may be

put to him. Some argument was addressed to this point.

298

"There are cases that support either conclusion, and it seems to me that it becomes a

question of fact in each instance. Does the witness recognize the authority of -- as distinct

from accepting the validity of -- the particular writing, either due to the status of the text or

journal from which the writing is taken or due to his or her recognition of the status and

authority of the author?

116

299

300

"In any event, it is apparent that the traditional rule does little damage to the hearsay

rule. No textual opinion offered in chief or in cross-examination is admissible in itself unless

an expert witness adopts it as his own.

"I do not propose today to embark upon a detailed analysis of the interesting and

forceful argument advanced by Mr. Roberts. It will suffice if I say that he advocates the

adoption of what I will refer to as the "Wigmore approach", as it was adopted by McEachern

C.J.S.C. (as he then was) in Delgamuukw v. B.C. (1991), 79 D.L.R. (4th) 185 (B.C.S.C.), to

those writings found in the binders that I referred to earlier, and assembled for the cross-

examination of several of the Grace defendants' expert witnesses.

301

"Onto the 'Wigmore' view, Mr. Roberts has grafted the decisions of the Supreme

Court of Canada in R. v. Kahn, [1990] 2 S.C.R. 531 and R. v. Smith, [1992] 2 S.C.R. 915,

both well-known decisions dealing with the admissibility of testimonial hearsay. He

maintains that there is in this case that degree of circum-stantial probability of

trustworthiness and of necessity which warrants the admissibility and use of those writings as

substantive evidence of the findings and opinions expressed therein.

302

"I do not agree. I am not persuaded that the circumstances of this case justify such an

approach. In Delgamuukw, the writings in question related not only to scientific opinion, but

also to the specific factual matrix of the case. In fact, the Chief Justice held that not only

were the treatises in question admissible in evidence, but also that the facts they stated were

to be treated as prima facie true, subject to a later determination as to the weight to be given

117

to them. It would not be going too far, in my opinion, to say that in that case the Chief

Justice was dealing with what, under the conventional rules of evidence would be an almost

unmanageable situation, in that the experts were assessing history rather than science and

they were, to a large extent, inter-reliant upon one another. There was, in Delgamuukw,

what might be called a "pressing necessity", in that the parties could not have been expected

to prove by conventional means the facts that had gone into the formulation of many learned

opinions. The Chief Justice acknowledged in Delgamuukw the need to be 'pragmatic'.

303

"In Kahn and Smith the Supreme Court of Canada held that reliable evidence should

not be excluded simply because it cannot be tested by cross-examination, but I think it is

significant that in those two cases the Court approved the use of testimonial hearsay to

establish facts.

304

"In a subsequent decision dealing with the use of prior inconsistent statements, R. v.

B.(K.G.), [1993] 1 S.C.R. 740, the Supreme Court of Canada, while reiterating the governing

principles of reliability and necessity, noted that since the orthodox rule, which limits the use

of prior inconsistent statements to impeaching the credibility of the witness, is an incarnation

of the hearsay rule, a reformed rule must also deal with what they called the "hearsay

dangers" of admitting prior inconsistent statements for the truth of their contents ) namely,

the absence of an oath or solemn affirmation when the statement was made, the inability of

the trier of fact to assess the demeanour, and therefore the credibility of the declarant when

118

the statement was made, and the lack of contemporaneous cross-examination by the

opponent.

305

"In my opinion, the assessment of reliability and trustworthiness of expert opinion

evidence involves very different considerations from those required in the case of factual

evidence. In the case of expert opinion evidence, the need for cross-examination is, if

anything, greater than in factual situations, because the trier of fact is likely to be in a poor

position to assess the credibility of a scientific opinion without the assistance of cross-

examination by opposing counsel, or to adopt the felicitous phrase employed by the late Mr.

Justice McColl in Abermin Corp. v. Granges Exploration Ltd. (9 August 1990), Vancouver

Reg. C884398 (B.C.S.C.), without exposing the opinion '. . . to the vagaries of opposing

counsel's enquiring minds'.

306

"In one sense, Mr. Roberts would have this Court go beyond the bounds of the

Delgamuukw ruling. As I understand his submission, he would have the entire writing put to

the witness admitted as substantive evidence, not just the portion to which his attention was

directed. That is a step that Chief Justice McEachern was not prepared to take in the

Delgamuukw case. Nor am I.

307

"The conventional rule is well expressed in the reasons given by Mr. Justice Beck in

Anderson, supra, with which all of the other judges, including Chief Justice Harvey, agreed.

119

Quoting from the judgment of Mr. Justice Tuck in Brownell v. Black (1890), 31 N.B.R. 594

(C.A.), Mr. Justice Beck stated (at 1063):

I think an expert witness may be examined as to what is in the books. Medical works

are produced which are recognized by the profession as standard authorities. An

expert witness is being examined, who gives evidence as to specified diseases and

their remedies. It is found by reference that his statements are at variance with what

is laid down by the best authors on the same subject. Surely it must be right of

counsel to confront the witness with books written by scientific men, leaders in their

profession, for the purpose of showing either that the witness is mistaken, or that he

may explain and reconcile, if he can, the real or apparent difference between what he

has said and what is found in the books. If it was otherwise, men of insufficient

learning, or veritable quacks, might palm off their crude opinions on juries as

scientific knowledge. There is a marked difference between reading what is in a book

as evidence to a jury, and testing a witness when examining him by reading to him

from the same book. In the one case, you are reading as evidence what, after all, is

only the opinion of a scholar, however learned he may be, without an opportunity to

cross-examine him. In the latter, you are testing the opinion of one expert by the

writings of another, admitted to be of high authority. It may be that the author's

views are placed before the Jury as effectually in one way as in the other; but, in my

opinion, one way is objectionable, and the other is not.

120

308

"In Brunsdon v. Shaw (1992), 73 B.C.L.R. (2d) 313 (C.A.), our Court of Appeal

recognized the continuing validity of the rule in Anderson and referred specifically to the

reasons given by Mr. Justice Beck, as well as those expressed by Chief Justice Harvey.

Brunsdon, in my opinion, confirms that in all but the most exceptional of cases, like

Delgamuukw, the conventional rules will apply.

309

"My conclusion, therefore, is as follows: Our rules of evidence contain express

provisions governing the admissibility of substantive opinion evidence and those rules should

not, except in unique circumstances, be abrogated. Long and complex as this trial might be,

learned and authoritative as the authors of the textual materials may be, the circumstances of

necessity that were present in the Delgamuukw case do not exist here, and, in my view, the

conventional rules must apply. Accordingly, it is my conclusion that no textual finding or

opinion offered in chief or in cross-examination will be taken as substantive evidence unless

an expert witness has accepted it and, in so doing, adopted it as his own."

310

The result of my ruling was that, so far as the alleged hazardous nature of MK-3 is

concerned, the plaintiffs' case rested primarily on the testimony of one expert medical

witness, whose opinion, for reasons which I will canvass in considerable detail in the

following sections of this judgment, I did not find persuasive.

121

XI. ASBESTOS AND ASBESTOS-RELATED DISEASES

Introduction

311

The plaintiffs maintain that, as one authority on the subject has put it, "exposure to

asbestos kills": (Matti Huuskonen, M.D., M.Sc. and Antii Tossavainen, D.Tech., "Fifty

Year Experience in Diagnosing Asbestos-Related Cancers in Finland: Progress and

Detours" (1992) 22 American Journal of International Medicine 259-261 at 259). To

support that position they rely heavily on the fact that in its National Emission Standards for

Hazardous Air Pollutants, Asbestos, Beryllium and Mercury, published April 6, 1973, the

United States Environmental Protection Agency (the "EPA") stated that:

It is not practicable, at this time, to establish allowable numerical concentrations or

mass emissions limits for asbestos.

. . . low level and/or intermittent exposure to asbestos over a long time may be

equally as important in the etiology of asbestotic disease as high level and/or

continuous exposure over a shorter period . . .

(emphasis added)

312

The plaintiffs allege that the Monokote MK-3 installed in the Building continually

released asbestos fibres into its atmosphere, thereby posing a danger to the health of the

workers and occupants of the Building and causing damage to property. They say that each

of the defendants knew or ought to have known of the dangerous nature of MK-3 and its

"potential to cause harm to others either in its application or continued use or existence in a

building".

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122

313

I will begin my discussion of these allegations by reviewing, in some detail, the

evidence concerning the mineral asbestos and the diseases known to be associated with it. I

will look at the matter of asbestos-related disease from two perspectives: first, in light of

what was known at the time MK-3 was installed in the Building and, second, with the benefit

of the further scientific knowledge that had been acquired by 1987, when the decision was

made to remove all of the spray fireproofing material from the Building. It is my

understanding that, so far as the matters in issue in this case are concerned, the state of

knowledge today is much the same as it was in 1987.

314

But first, I think this is an appropriate time to deal with a point made in the plaintiffs'

opening statement about this fundamental issue. There, under the heading, "IS ASBESTOS

HARMFUL?", the plaintiffs began an outline of their case concerning the health hazards of

asbestos by saying:

We now turn to the question of the health hazard of asbestos. We start by making it

clear that it is not necessary given the pleadings in this case, to prove that the

Monokote 3 in this building has caused or will cause an asbestos related disease.

Rather, we must show, and will show, that reasonably informed people, in the

relevant period, would know that there was serious scientific and public concern, and

that a significant number of credible authorities and individuals believed and are still

of the view that asbestos containing materials, including Monokote 3, constitute a

genuine and major threat to health.

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123

315

Mr. Roberts suggested that Grace Canada has conceded the truth of those assertions

by pleading, in Paragraph 5B of its Further Amended Statement of Defence, that many

persons and parties:

. . . were aware at all material times of concerns about the hazards of asbestos in

certain circumstances, and that in certain circumstances asbestos could be hazardous

to human health or workers' safety.

316

In his opening statement for the Grace Defendants, Mr. Robinson responded to that

submission by saying:

The Plaintiffs' Opening . . . mischaracterises (sic) this action by dwelling at length

upon the subject of asbestos hazards simpliciter. As is plain from the pleadings, the

question of whether exposure to high levels of airborne asbestos fibres, over

prolonged periods of time, constitutes a potential hazard to human health is not in

issue. The central question that must be answered by this Court is a quite different

one. Assuming without conceding that the Plaintiffs could prove that what they

removed from their building was, in fact, Monokote MK-3 and that in-place

Monokote MK-3 did release some asbestos fibres into the atmosphere, then the

essential question is: have the Grace Defendants negligently breached some duty of

care owed to the Plaintiffs? Before answering that question it will be necessary to

determine whether exposure to airborne asbestos fibres in low concentrations was

known in the medical literature to constitute an appreciable health hazard between

1973-1975 or, indeed, whether low-level exposure is considered by medical experts

today to be a hazard to health.

317

And in Surreply, the Grace defendants restated their position in these words:

The point has been made many times over the course of this trial, and in our

Argument, that conditions in industrial settings (like plants where asbestos-containing

products, including MK-3, were made) bear no similarity whatsoever to conditions in

buildings where MK-3 sprayed fireproofing has been installed. The fact that

prolonged exposure to airborne asbestos fibres at high levels in industrial settings

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124

may lead to illness is not, and has never been, disputed by the Grace Defendants in

these proceedings. That much is clear from the pleadings -- see, for example,

paragraph 5B of Grace Canada's Statement of Defence in which it is stated that the

Plaintiffs ". . . were aware at all material times of concerns about the hazards of

asbestos in certain circumstances, and that in certain circumstances asbestos could be

hazardous to human health or workers' safety".

318

319

Obviously, the Grace defendants have not conceded that their product, MK-3,

constitutes a "genuine and major threat to health". However, I do accept the plaintiffs'

assertion that it is not necessary for them to prove that the MK-3 installed in the Building has

actually caused an asbestos-related disease.

With that in mind, I turn to the evidence concerning the mineral asbestos and the

asbestos-related diseases.

Asbestos

320

The word "asbestos" comes to us from the Greek word meaning "inextinguishable".

It is a generic term used to describe a variety of hydrated silicate minerals that have several

significant common properties: high tensile strength, high heat resistance and virtual

indestructibility. Asbestos minerals can be separated into microscopically small fibres which

are very flexible and absorb and filter well. They are the only mineral fibres that can be

woven into textiles.

321

There are three principal types of asbestos in commercial use. The most common is

chrysotile, generally known as "white" asbestos. Under a high powered electron microscope,

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125

one can see that it is made up of plates that have curled up, rather like a scroll. One of the

expert witnesses called by the Grace defendants compared the appearance of chrysotile fibres

to the old legal documents that were rolled up and tied with a ribbon. Something in the order

of 90% to 95% of all the asbestos used in North America is of the chrysotile type, the

majority of which has come from Canadian mines, primarily those in the province of Quebec.

322

The other principal types of asbestos, crocidolite and amosite, belong to a different

mineralogical group. Their fibres appear as elongated crystals, are stiffer than chrysotile

fibres, and can split up into needle-like shapes. Crocidolite is blue in colour and amosite is

of a brownish hue.

323

In modern times, the principal use of asbestos has been in the construction industry.

However, Dr. Gordon Bragg, one of the expert witness called by the Grace Defendants,

pointed out that:

There were [in the early to mid 1970s] and remain literally thousands of uses of

asbestos. Later ones include vinyl asbestos floor tile, ceiling tile, building products

such as pipes. Many domestic water systems in North America remain to this day

supplied in part through asbestos-cement pipe. It's a sheeting material, it's a shingling

material. It's used and remains in use today in a wide variety of friction products,

brakes, clutches, things of this nature. It remains in part a building material in such

forms as sheet.

In the '70s there was a large amount of sprayed-on fireproofing and acoustical use,

and there was at that time and there remains in place at the present time, a lot of pipe

and boiler insulation. It's used in heat exchangers and similar equipment as well.

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126

324

It seems likely that asbestos will remain an important component of many such

products for years to come.

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127

The Asbestos-Related Diseases

325

Concerns about the effect of exposure to asbestos dust and fibres were first expressed

a long time ago ) seemingly as long ago as the days of the Roman Empire. But significant

research into asbestos-related diseases did not begin until the early years of this century and,

notwithstanding the vast amount of research that has been conducted since then, to this day

the full relationship between asbestos and human health is not fully known or understood.

It is, however, generally agreed that the diseases associated with exposure to asbestos

are:

326

1.

2.

asbestosis: the scarring or fibrosis of the substance of the lungs;

cancer: including lung, gastro-intestinal and other forms of cancer; and

mesothelioma: a rare and fatal tumour of the lining of the lung and

3.

abdomen.

The Expert Witnesses

327

The evidence of the several expert medical witnesses who testified during this trial

was largely devoted to the consideration of asbestos generally and these three diseases. I

think, therefore, that before I review their evidence, it will be useful to canvass their

qualifications.

328

The plaintiffs called Dr. David Bates, who provided a "historical" view of the state of

knowledge regarding asbestos- related health risks as it existed within the medical, environ-

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128

mental and occupational communities in North America during the years 1973 to 1975, when

MK-3 was installed in the Building. Dr. Bates was Associate Dean of the Faculty of

Medicine at McGill University during the years 1964 to 1967 and Dean of the Faculty of

Medicine at the University of British Columbia from 1972 to 1977. Following his term as

Dean, Dr. Bates continued for several years as a Professor of Medicine and Physiology at

U.B.C., and between 1978 and 1981 acted as head of the faculty's chest disease division.

329

Between 1973 and 1979, Dr. Bates was a member of the National Research Council

of Canada's Committee on Air Quality. He served for several years on the Cardiovascular

and Epidemiology study sections of the U.S. National Institute of Health, and for four years

he was a member of the Scientific Review Panel for Health Research for the U.S.

Environmental Protection Agency.

330

Dr. Bates is a contributing editor of the American Journal of Industrial Medicine. He

is one of the co-authors of a major medical text dealing with the respiratory function, the

lung disorders caused by various substances, and with many of the associated occupational

issues. As well, he has authored or co-authored in excess of 200 medical/scientific articles, a

number of which have to do with the field of respiratory function. Throughout his long and

distinguished career, Dr. Bates has maintained a deep and continuing interest in the fields of

lung disease, environmental medicine and air pollution, as well as those of science policy and

medical education.

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129

331

On the specific subject of asbestos-related diseases, the plaintiffs called Dr. Arthur

Frank, who is a specialist in preventative medicine. Currently the Chairman of the

Department of Preventative Medicine and Environmental Health at the University of

Kentucky College of Medicine, Dr. Frank has a particular interest in environmental health.

Prior to accepting his present position in 1983, he served for two years as the Administrator

of the Environmental Sciences Laboratory at the Mount Sinai School of Medicine. Dr. Frank

holds a number of fellowships and memberships, has taught extensively, and has published

many articles, books and reviews regarding the health effects of asbestos.

332

333

Dr. Frank gave expert testimony regarding the public health hazards of asbestos,

especially in relation to exposure to asbestos in buildings.

Four "medical" experts were called by the Grace defendants. The first was Dr. Peter

Elmes, one of the early leaders in the field of asbestos-related lung disease research. He is

recognized as one of the world's leading clinical epidemiologists in that area. Between 1959

and 1976, Dr. Elmes conducted research in that area, focusing especially on a group of

insulation workers working in the shipbuilding industry in Belfast, Ireland, who were

exposed to high levels of asbestos. Trained as a pathologist, Dr. Elmes personally examined

the lungs of many of those in his cohort of insulators.

334

Dr. Elmes has been involved in most, if not all, aspects of asbestos research. His

knowledge and expertise was acknowledged when, in 1976, he was appointed Director of the

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130

Medical Research Council for Great Britain. The MRC was then responsible for all research

conducted in Great Britain into dust diseases, particularly, asbestos-related diseases. In

addition to his own research, as Director of the MRC, Dr. Elmes also coordinated the work of

other well-known researchers.

335

336

I found Dr. Elmes qualified to give expert evidence in the areas of general medicine,

pathology and epidemiology, and to give evidence as a "state of the art" witness with regard

to asbestos-related scientific literature and knowledge during the period 1955 to 1990.

Dr. Elmes defined "pathology" as the study of the abnormal changes that occur in the

tissues of the body as a result of disease, and "epidemiology" as the study of the frequency

and pattern of illness in a groups of people, or cohorts, within a community, as opposed to

illness in an individual.

337

The next expert called by the Grace defendants was Dr. Andrew Churg, Professor of

Pathology and Head of the Department of Laboratory Medicine at the University of British

Columbia. Dr. Churg is one of the leading research scientists in the areas of pathology and

lung burden in relation to asbestos. He has served on many important medical committees

reviewing the work of other scientists, such as the Medical Research Council of Canada

(Grant's Committee for Respiratory Disease); the Canadian Mesothelioma Reference Panel;

the Canadian Lung Tumour Reference Panel; the U.S. Mesothelioma Reference Panel; the

U.S./Canada Mesothelioma Reference Panel; and the Pneumoconiosis Committee of the

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131

College of American Pathologists and the National Institutes of Occupational Health and

Safety.

338

That Dr. Churg is recognized as one of the top experts in the world with respect to

pathology and lung burden studies was attested to by Drs. Bates and Frank, as well as by

plaintiffs' counsel who observed that he is ". . . a leading pathologist in the field of

respiratory diseases, in particular those related to asbestos".

339

340

Dr. Churg was qualified as an expert in anatomic pathology, specializing in

diagnostic and research expertise in occupational lung disease, with particular reference to

disease caused by exposure to asbestos.

Next, the Grace defendants called Dr. Ronald Crystal. He is head of the pulmonary

branch of the National Heart, Lung and Blood Institute at the National Institute of Health in

Bethesda, Maryland, U.S.A., a large biomedical, clinical and research facility that operates

under the auspices of the United States Public Health Service. One of Dr. Crystal's

responsibilities is to oversee the work of a research group, comprised of some thirty

physician/scientists, that is focused on understanding the cause, pathogenesis and treatment

of a variety of lung disorders, including those relating to asbestos. As well, he carries out his

own laboratory studies and sees patients who have been brought to the Institute from all over

the United States and other parts of the world for evaluation and treatment.

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132

341

342

343

344

Dr. Crystal has served on a number of editorial boards, including those of the

American Journal of Medicine, the American Review of Respiratory Disease, the Annual

Review of Medicine and the Lancet. He has authored or co-authored nearly 400 scientific

papers which have been published in peer-reviewed journals.

Dr. Crystal is a specialist with respect to the functions and diseases of the lung. He is

knowledgable about epidemiology in the sense that, since 1968, he has been applying the

tools and theories of epidemiology to his work, and he considers himself as expert in

assessing the risks of contracting asbestos-related diseases.

Dr. Crystal was subjected to a long and searching cross-examination on his

qualifications, following which Mr. Roberts submitted that he ought to be allowed to give

opinion evidence only in the area of his own personal experience and expertise, and ought

not to be allowed to state opinions on the health effects of asbestos.

I rejected that submission and held that, on the basis of his own experience, clinical

research and studies, as well as his general knowledge and familiarity with the works and

studies of others, Dr. Crystal was well qualified to give expert opinion evidence regarding

what I will describe as the pulmonary function of the lung and diseases of the lung, including

asbestos-related diseases.

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133

345

Later, while Dr. Crystal was giving evidence and in argument, Mr. Roberts suggested

that little weight should be given to Dr. Crystal's evidence. He submitted that because he is

not a lung pathologist, did not carry out asbestos fibre lung burden analysis, and is not an

asbestos-disease epidemiologist, and his opinions are therefore dependent on the work of

others, such as Drs. Churg and McDonald, they carry little, if any, weight.

346

347

I disagree. Dr. Crystal gave valuable evidence regarding the anatomy and function of

the lungs, as well as the problem of plural plaques, which, according to the plaintiffs' case,

are caused by "low level" exposure to asbestos and are a precursor of mesothelioma.

The fourth and last expert medical witness called by the Grace defendants was Dr.

John Corbett McDonald. A medical doctor with extensive training in the areas of

occupational health and medicine, Dr. McDonald has spent the major part of his long and

distinguished career as an epidemiologist in the study of occupational health issues.

348

Dr. McDonald has been closely involved in asbestos-related research since 1964. He

has conducted extensive research into asbestos and its relationship with various lung diseases

and, during the course of his career, he has acted as consultant to several governmental and

regulatory bodies, including the World Health Organization, the U.S. National Institute for

Occupational Safety and Health (NIOSH) and the Environmental Protection Agency (EPA),

and to the governments of Quebec, Ontario, the United Kingdom and Sweden.

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134

349

Dr. McDonald is a member of the Royal College of Physicians of London, a Fellow

of the Royal College of Physicians of Canada, and a Fellow of the Faculty of Community

Medicine of the Royal College of London, Ireland and Scotland. He was the first professor

and chairman of McGill University's Department of Epidemiology and Health, following

which he became professor and director of the London School of Hygiene and Tropical

Medicine at London University. Later, he returned to McGill University as professor and

director of the School of Occupational Health. He is now professor emeritus of

epidemiology at McGill as well as being Chairman of the Department of Clinical

Epidemiology in the University of London.

350

Dr. McDonald gave expert testimony concerning the epidemiological and

occupational medical health aspects of pulmonary lung disease, with particular reference to

asbestos-related lung disease. He is one of the acknowledged world leaders in his field.

The Evidence

Dr. Bates

351

In a written report Dr. Bates described in some detail the "slow evolution of

understanding of the risk from asbestos fibres". For my purposes, it will suffice to focus, as

did Dr. Bates, on the proceedings of a conference convened by the International Agency for

Research on Cancer ("IARC") and held in Lyon, France, in October 1972.

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135

352

IARC is an organization composed of representatives from many different countries,

including all of the major industrialized nations. Its function is to provide a forum in which

current scientific knowledge relating to materials, chemicals and other substances thought to

be carcinogenic may be examined and shared, and to "categorize" those materials in relation

to their proven carcinogenity. Periodic conferences are held and reports of the proceedings

are published.

353

The 1972 IARC Conference was held for the specific purpose of discussing the

biological effects of asbestos. The published report of its proceedings contains many

scientific papers, as well as summary sections covering the state of knowledge in the main

areas of epidemiology, pathology, physics and chemistry. Dr. Bates described the IARC

Report as a "unique resource" for the purpose of summarizing the state of knowledge and

understanding in this area at that time. That view was endorsed by Dr. Elmes, who was one

of the presenters at the 1972 Conference. When he testified, he confirmed that the answers

and opinions set out in the Report were given by leading asbestos health experts from around

the world, and reflect the state of knowledge at that time about asbestos and its effects on

human health.

354

By way of background: in 1963 a planning group was set up to consider the

organization of an international investigation of the cancers associated with exposure to

asbestos dust. That was followed, in October 1964, by an international conference on the

biological effects of asbestos, held in New York City under the sponsorship of the New York

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136

Academy of Sciences. Dr. Bates, then a fellow of the Academy, attended that conference

and, according to his recollection, it focused the attention of the scientific and medical

communities on the new data that had been gathered on the hazards of asbestos.

355

356

Following the 1964 conference, a group was set up to do further work on the subject

of asbestos, and that led to the full-scale "working" conference of IARC held in Lyon, France

in October 1972.

Public attention was drawn to the evolving debate when, in 1968, the New Yorker

magazine published a series of articles written by Paul Brodeur that, amongst other things,

described the first lawsuit arising in relation to mesothelioma. According to Dr. Bates,

Brodeur carefully documented his facts, and he described the articles as "researched medical

journalism" that commanded considerable attention. Then, in 1969, a comprehensive biblio-

graphy of world literature on asbestos was published in South Africa. Dr. Bates described

these publications as "sign posts" leading up to the 1972 IARC Conference.

357

In the Introduction to the Report of the 1972 IARC Conference, it is stated that:

The modern asbestos industry dates from the discovery in the 1870s of large deposits

of chrysotile fibre in Canada and Russia, followed by the commercial exploitation of

three other types of fibre - crocidolite, amosite and anthophyllite. Previously

regarded as curiosities, these fibrous silicate minerals rapidly found applications,

including large-scale use in fire-proofing and reinforcement for cement in building

materials. There are now numerous products which depend on asbestos, some of

which require specific types of fibres. This demand has led to a vast increase in

production to the present level of more than four million tons per annum. As no

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137

satisfactory substitutes have been found for many of these uses, asbestos is likely to

remain an essential material for years to come.

By the 1950s it was accepted that the inhalation of asbestos dust could lead to

pulmonary fibrosis and carcinoma of the lung, and more recently that an association

exists between exposure to asbestos dust and the development of diffuse

mesotheliums of the pleura and peritoneum. The mesotheliomas appeared to occur

after a long lapse period, forty years, following in some cases only slight exposure to

asbestos dust. Anxiety that sufficient exposure to produce mesotheliomas might

occur in non-industrial situations indicated a need for urgent assessment of the

situation. It became essential to establish which type, or types, of asbestos were

responsible for the development of the conditions, and to clarify the evidence through

epidemiological and experimental studies. It might then be possible to suggest

methods for the prevention of the diseases.

. . . . . . .

With the establishment of the International Agency for Research on Cancer, it was

considered that the asbestos problem, which was now being investigated by

epidemiologists, morbid anatomists, experimental pathologists, physicists and

chemists, was exactly the type of study to be integrated into the Agency's programme

of environmental carcinogenesis. Accordingly, a research agreement was concluded

with the Agency in 1968, and in 1970 the project was expanded with the Agency's

support. The following year it was decided that a further meeting of the working

group was appropriate to review the progress that had been made in implementing the

1964 recommendations and to collate the information now available on these cancers.

As it was considered that the situation should be reviewed on a wide basis, the

working party was requested to "assess the biological effects of asbestos".

Authorities on various aspects of the problem were invited to submit papers which

were circulated beforehand and presented for discussion; these were summaries by

rapporteurs.

. . . This study has completed what we consider to have been a successful eight-year

phase. The proceedings of the conference and the recommendations of the advisory

committee to the IARC have now been prepared as a publication, which we trust will

provide an authoritative international review of the asbestos cancer problem and show

where research is most needed.

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138

358

At the 1972 Conference, Dr. Irving Selikoff, one of the pre-eminent researchers in the

field of asbestos-related diseases, discussed his study of a cohort of asbestos insulation

workers and stated his conclusion that:

A serious cancer risk has been demonstrated among asbestos insulation workers in the

United States. Approximately one in five, an extraordinary incidence, has been the

result of lung cancer . . . . We were not able to find evidence that the use of chrysotile

in insulation work was associated with a greater risk than was amosite or vice versa.

359

Some of the data presented at the 1972 Conference illustrated the feasibility of

reducing the contamination of the environment by asbestos dust. For example, in a

Discussion Summary published as part of the Report, Dr. V. Timberell of the M. R. C.

Pneumoconiosis Unit, Llandough Hospital, Wales, noted that asbestos-cement spraying had

often been documented as a significant source of environmental exposures. Referring to a

U.K. study of an asbestos spray-fireproofing operation which employed a pre-dampening

apparatus and a wet-sprayed process, during which the applicators wore protective clothing

and close-fitting respirators covering the nose and mouth, he reported that:

The fall-out of asbestos fibre was studied as it affected the asbestos spray workers,

other workmen on the building site and neighbourhood contamination. The results

illustrated the dust control that can be achieved even in such difficult conditions.

. . . . . . .

No stray fall-out of fibre in the surrounding neighbourhood was observed during or

after the spray operation. The important point was made that whereas the fall-out of

fibre in the vicinity of the spray operation was relatively small and the operators were

protected by their respirators, other workers on the building site were possibly

subsequently at risk when handling the dried waste.

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139

360

Drs. W. J. Nicholson of the Environmental Sciences Laboratory, Mount Sinai School

of Medicine, New York, and F. L. Pundsack of the Johns-Mansville Research Centre,

together presented a paper, entitled Asbestos in the Environment, in which they observed

that:

Once an asbestos-containing product has been manufactured, whether or not it

constitutes a source of asbestos in the environment will depend to a great extent on

whether or not the asbestos is firmly "locked-in" the product with a binder, saturant,

coating or bonding agent such that normal handling, application and use do not

release it. Asbestos cement products are a good example of "locked-in" products

which probably do not constitute a significant source of asbestos to the environment

under normal conditions of use. On the other hand, the use of asbestos in spray-on

fireproofing compounds is an example of a non locked-in use. The major source of

environmental contamination in this case is the application of the spray itself and the

subsequent dissemination of airborne asbestos fibre from the application site. This

problem is serious enough that asbestos spraying has been banned in a number of

cities in the United States.

361

Also discussed at the 1972 Conference, was the work of Dr. Stanton, who had been

investigating the possibility that it was the size and shape of the fibre that caused the disease

and not its chemical compositions. The "Stanton Hypothesis" is that long, narrow fibres are

the most hazardous, and it remains part of the dogma on asbestos health effects to this day.

362

There was some discussion of pleural plaques at the 1972 Conference. It had been

discovered that in persons exposed to asbestos, small areas of the outer lining of the lung )

one of the two layers of pleura surrounding the lungs ) would sometimes thicken into

"plaques" about the size of a walnut. This condition had been detected on X-rays made

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140

during surveys of British and Swedish shipyard workers, and it was found that a much higher

percentage of those workers suffered from pleural plaquing than the general population. At

the time, although the fact had been established, no one really knew what it meant, and the

plaques were not then considered to have an adverse effect on the functioning of the lung.

Dr. Bates explained that, at the time of the Conference, the systematic classification

of X-rays of various occupational diseases, including asbestosis, was just beginning. This

led, in due course, to a classification system which enables information about cases being

studied to be clinically summarized in terms of the extent of the radiological change.

363

364

365

By 1972, a start had been made in identifying fibre quantities and types in the lung,

particularly in cases of mesothelioma, but nothing was then known about the rates of

clearance of various types of fibres from the lungs.

The 1972 IARC Report notes the importance of clarifying "the relative amounts and

types of fibre encountered by occupationally exposed individuals, by those classed as

environmentally exposed, and by the general population". It also notes that threshold limit

values had been lowered over the years, and that detailed codes of practice had recently been

issued in the United Kingdom. In 1968, the British Occupational Hygiene Standard of 2

fibres per millilitre of air had been established as a level "designed to limit to 1% the risk of

contracting the first signs of asbestosis". There was much debate about this, as to whether or

not it was too stringent, and how much safety was built into it. Recommendations were made

for future studies to increase understanding of the relationship between dose and outcome.

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141

Simply put, the concept of "dose-response" is that the higher the dose of some entity to

which one is exposed, the more likely it is that one will develop a disease from that entity. It

is a matter which, in relation to asbestos exposure, has engaged the attention of many

research scientists, and about which a good deal of evidence was led during this trial.

366

Dr. Bates also referred to the consideration given to the possibility of there being

different dose-response levels in relation to lung cancer and mesothelioma. He said that

while the exposure data then available aroused a good deal of controversy, there was simply

not enough information available at that time to make any estimate of the degree of risk in

relation to the extent of exposure ) i.e., the "dose-response relationship". That, he said,

"comes through clearly in the report".

367

Dr. Bates testified that at the 1972 IARC Conference it was concluded that:

1. The risk of asbestosis was dependent on dose.

2. Smoking, combined with exposure to asbestos, greatly increased the risk of lung cancer.

3. While the possibility of environmentally-induced mesothelioma was recognised (sic), it was

thought that exposures had probably been high. It was also recognised (sic) that

mesotheliomas occurred without known asbestos exposure and with very few fibres in the

lung in some cases, but the interpretation of this was unclear.

4. Air sampling revealed that a significant number of asbestos fibres might be in the air some

distance from where it was being sprayed, and the presence of asbestos fibres in the lungs of

city dwellers was recognised (sic).

5. There was insufficient data to deduce a dose-response curve for the risk of mesothelioma in

relation to exposure. It was suspected that crocidolite (Blue asbestos) induced mesothelioma

more readily (and probably therefore at lower doses) than chrysotile asbestos.

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142

6. There was a suspicion that substances other than asbestos, but occurring with it (such as

benzopyrene), might contribute to the carcinogenicity.

7. The general dangers posed by handling asbestos were understood; but concentration of attention

on the induction of asbestosis as the sole outcome led some to adopt the view that high

exposures were necessary for most effects. There was no detailed discussion of the level of

risk (to cigarette smokers) of low level environmental exposures.

Dr. Frank

368

369

Dr. Frank gave evidence about the health hazards of asbestos, as they are known

today, with particular emphasis on exposure to asbestos in public buildings.

Testifying as a public health specialist, he discussed the three major diseases

associated with exposure to asbestos: asbestosis, lung cancer and mesothelioma. He

acknowledged that asbestosis is related to high-level exposure, that is, those levels of

"occupational exposure" traditionally experienced by insulation workers and, to a lesser

extent, by construction workers in allied areas such as electricians, plumbers and sheet metal

workers. However, he opined that asbestosis can also be caused by periodic or episodic high

level exposures, such as those that were in the past experienced by family members,

primarily women cleaning their husbands' contaminated work clothes. According to Dr.

Frank, as scientists have expanded the horizons of their research from the traditional miners,

millers and asbestos insulators to other employed groups, they have found evidence of

asbestos-related disease in every group exposed to asbestos.

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143

370

At the other end of the continuum, he said, is the level of asbestos exposure one finds

in the ambient air; that is, the air that surrounds us on the streets and in our buildings. It

seems that there are always asbestos fibres in the ambient air - some because it is a naturally

occurring material that releases fibres as it weathers, and some coming from products such as

car brake linings. Dr. Frank stated that the exposure level found in buildings would, in

relative terms, be "low-level" exposure, and that, so far as exposure in buildings is

concerned, the problem is not with respect to asbestosis. He would not expect to see cases of

asbestosis occurring in occupants of office buildings, other than, "perhaps", in maintenance

workers.

371

Dr. Frank testified that it is becoming increasingly clear that it is the fibrous nature of

asbestos that is the key element in the causation of the two malignant diseases, lung cancer

and mesothelioma. He said that there is no doubt that lung cancer, mesothelioma (and in his

opinion, cancers of the gastrointestinal tract as well) are associated with exposure to asbestos.

He said that ". . . there's something about the fibre coming in contact with the cells that

causes biological change, but the biological activity that causes cancer is not yet understood".

372

Dr. Frank stated that medical science does not know exactly how many

mesotheliomas are associated with asbestos, but he thinks it well recognized and accepted

that 85% to 90% of them are. He tells his students that "if you hear the word 'mesothelioma',

the word 'asbestos' needs to pop into your head".

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144

373

374

375

Dr. Frank spoke about the "Stanton Hypothesis", which, as I have noted, postulates

that fibres of a certain size, regardless of their chemical nature, have the ability to produce

cancer and that physical size is an important (but not the only) parameter of the production of

cancer. He said that the size or group of fibres that Dr. Stanton found to be the most

carcinogenic were those of 0.25 microns in diameter and greater than 8 microns in length (a

micron equals one-millionth of a metre).

Dr. Frank testified that medical science does not really understand how asbestos

produces cancer. He said that its fibrous nature is believed to be important, but that there are

many unanswered scientific questions. Nevertheless, he testified, from a public health

perspective, a great deal is known about the diseases caused by asbestos. He also said that

those who are engaged in that field have "some sense" as to how people should be protected

from exposure to asbestos.

Dr. Frank set out three important biological principles which, he said, are relevant to

an understanding of asbestos-related diseases, namely:

1.

2.

3.

the dose-response relationship;

the latency period; and

the basic principles of carcinogenesis.

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145

376

He said that the dose-response concept applies to viral diseases such as the common

cold; to infectious diseases, such as tuberculosis; to industrial diseases, such as lead

poisoning; and to those diseases related to asbestos exposure. It was Dr. Frank's opinion that:

Classically, for carcinogens there is no belief that there is a threshold and that if you

can stay below this level, cancer will not occur. You can say it is less likely to occur.

It is less likely to occur with a small dose but, since the biology involved is such that

all it takes is the so-called one-hit theory, one molecule, one unit of radiation --

and this is what is generally accepted, that there is no level below which you

could not expect to see cancer.

(emphasis added)

377

In his written report, Dr. Frank stated his opinion that "[w]hile asbestosis occurs only

after relatively high exposure, cancer can occur at any level of exposure". In other words,

there is no "safe level" below which one would not expect the possibility of cancer

developing. He stated that:

Cancer results from alterations of the basic nuclear biological material, the nucleic

acids. The exact mechanism for the production of cancer is still poorly understood.

There is some appreciation of how ionizing radiation or certain chemicals may alter

the DNA structure, but for substances such as asbestos, this remains very much a

biological enigma. However, what is well appreciated with all cancer causing

substances is that the principle of dose-response clearly prevails, and that there is no

"safe" level below which one would not expect the possibility that cancer would

develop. On a theoretical basis, one molecule of a carcinogen, one small bit of

radiation, or one asbestos fibre has the potential for causing cancer. While this

is both biologically unlikely, and from an epidemiological standpoint virtually

impossible to prove, carcinogenesis theory tells us that this is a reasonable

biological construct.

(emphasis added)

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146

378

As to the view held by some that chrysotile is a weak carcinogen, Dr. Frank stated

that, in his opinion:

The preponderance of scientific evidence to date show that all of the fibre types,

including chrysotile, are capable of producing cancer, specifically, both lung cancer

and mesothelioma. Human studies support this, as do classical animal investigations.

379

He further opined that:

. . . while it is rare in the general population, this unusual tumour is very common

when associated with asbestos exposure.

380

Dr. Frank also expressed opinions concerning the risk to workers and occupants of

buildings in which an asbestos-containing material is present. I will discuss that aspect of his

testimony later, under the heading "Asbestos in Buildings".

Dr. Elmes

381

In 1959, Dr. Elmes began to study the medical literature relating to asbestosis and the

other asbestos-related diseases. Since then, he has conducted historical research back to the

beginning of the century and he has, at the same time, kept up-to-date and informed with

regard to the scientific literature on the subject published up to 1990.

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147

382

383

384

Dr. Elmes testified that although the technology of measuring the quantities of

asbestos in the air was not then available, and one can therefore only estimate, it is safe to

assume that before regulations were introduced in Great Britain in 1933, workers in asbestos

textile factories experienced levels of exposure in the region of several hundreds of fibres per

cc or higher. After those regulations were introduced, he said, exposure levels dropped to

about 20 or slightly more fibres per cc. For a time, he said, it was thought that the sharp

reduction had brought an end to the asbestos-related disease problem.

But, by the early 1960s, that optimistic outlook had been shattered by what he

referred to as the "devastating" new findings about mesotheliomas. Dr. Elmes said that it

was a paper written in 1960 by Dr. Chris Wagner (another pre-eminent researcher in the field

of asbestos-related diseases) that first demonstrated a definite correlation between asbestos

fibres and mesotheliomas. The paper, Dr. Elmes said, was at first greeted with some

scepticism. However, by the time of the 1964 New York conference, it was acknowledged in

the medical community that there was some sort of causal connection between the two.

Dr. Elmes also noted that, while their frequency had dropped "tremendously", there

were still cases of asbestosis and lung cancer appearing in the post-1933 echelon of workers.

Thus, by the early 1960s, it was apparent that the 1933 regulations had not been entirely

effective in preventing asbestosis and lung cancer. More stringent regulations were required

and, as previously noted, in 1969 a standard of two fibres per cc was adopted in the United

Kingdom.

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148

385

By 1964, Dr. Selikoff was reporting a high proportion of asbestos-related disease in

the cohort of insulation workers that he was studying. One of the great concerns at the time

was to establish safe levels of exposure and, in order to do so, it was important to determine

what the dose-response relationship was. Dr. Elmes testified that there was then no generally

accepted method for measuring the quantities of asbestos fibres in the surrounding air. It was

not until 1969 that an air sampling technique was developed in the United Kingdom that was

considered satisfactory for the purpose of monitoring occupational exposure to asbestos.

Even that technique had two recognized limitations: it could not distinguish between the

different types of fibres that were present, and it was accurate only down to about one fibre

per cc.

386

The first "major" conference on the subject of asbestos-related diseases attended by

Dr. Elmes was that assembled by the New York Academy of Sciences in 1964. He attended

in order to report on what he and his associates had learned from their study of a cohort of

insulation workers about the risks of contracting lung cancer and mesothelioma, and to find

out what others had discovered.

387

Dr. Elmes said that one of the "puzzles" apparent by 1964, was that there were

marked differences in the incidence of mesotheliomas, depending upon the type of asbestos

fibre to which the individuals concerned had been exposed. Those exposed to crocidolite

fibres showed a much higher incidence of mesothelioma than those who had been exposed to

chrysotile. He said that one of the things that he and the others who were on the

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149

epidemiology panel wanted to do was to "sharpen up the evidence" by conducting more

careful studies of the risks associated with the milling and mining of the different types of

fibres.

388

Dr. Elmes was a member of the epidemiology panel at the 1972 IARC Conference,

where he presented papers on the clinical course of mesothelioma and the management and

treatment of that disease. He was a member of the committee that prepared the 1972 IARC

Report (The Report of the Advisory Committee on Asbestos Cancers to the Director of the

International Agency for Research on Cancer), which, as I noted earlier, he described as a

fair reflection of the state of knowledge at that time. The findings of that committee, of

which Dr. J. C. McDonald, Dr. Irving Selikoff, Dr. J. C. (Chris) Wagner, and several other

distinguished scientists were also members, are as follows:

(1)

(2)

There are clear differences in risk depending on the type of fibre and

nature of exposure.

The risk of lung cancer is not detectable when the occupational exposure

has been low. (Low being still much greater than that received by the public

from general air pollution.)

(3)

(4)

There is no evidence of a risk of lung fibrosis from low levels of exposure

to asbestos, such as have been encountered by the general population in urban

areas.

There is evidence that the risk of contracting mesothelioma varies with

different occupations and different types of asbestos. The risk is greatest with

crocidolite, less with amosite and less still with chrysotile. There is also

evidence from population studies that a proportion of cases of mesothelioma

have no known association with asbestos.

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150

(5)

There is no evidence of a risk to the general public of contracting

mesothelioma from low levels of exposure to asbestos.

389

Dr. Elmes testified that the differences in the way in which the three main types of asbestos

fibres behave in the lung over the long term was not appreciated until the mid-1970s. By

then, he said, it was realized that within a few weeks following exposure to asbestos, some

15 to 20 percent of the inhaled fibres are expelled from the lungs. After that time, the

amphiboles stay in the lung and, after a year passes, roughly the same numbers of those

fibres are present, and they retain their size and shape. Chrysotile fibres, on the other hand,

split up into individual fibrils, so that one will find more individual fibres, but they will be

thinner and shorter. Because of this, Dr. Elmes testified, the smaller chrysotile fragments are

cleared from the lung by what are called "phagocytes", the lung macrophages.

390

He described the macrophage clearance process as follows:

Q. And you used the expression macrophage clearance cells, could you explain to his

lordship what you were referring to there?

A. In the breathing part of the lung the little sacs called alveoli are lined with three kinds of

cells, there are the flat cells, which allows the gas transfers, there are little brown cells

called type 2 cells which produce a sort of film also a factant which protects the

surface of the alveoli and stops the alveoli from collapsing when you breath out. And

the third cell is the macrophage, which is a cell which picks up foreign bodies, matter,

scavengers, and they may be specialized in the lung, but they are just the same in their

function as the macrophages in other tissues of the body and also monocytes in the

blood that circulate in the blood. They are a general class of do-gooders in the body.

Q. So there is a clearance mechanism that the body has built into itself to protect itself from

dusts including asbestos fibres?

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151

A.

Yes. The ones that get down below the ciliated mucous covered airways

which work like an escalator any dust that lands on them gets taken back up to the

larynx and swallowed. These are secondary defences, the macrophages.

391

392

Dr. Elmes testified that animal experiments have shown that within six to nine

months after exposure, one-half of the chrysotile fibres initially taken into the lung will be

cleared in this way.

Dr. Elmes also testified that in recent years comparisons have been made between the

lungs of people who had once worked in an asbestos industry but had ceased to be exposed to

chrysotile some five to ten years before they died, and those of persons who were still

employed in the industry at the time of their death. It was found that the fibre content of the

lungs of the first group was indistinguishable from that of the general population, whereas

those still engaged in the industry had lung burdens well above those of the general

population.

393

With regard to the significance of fibre size, Dr. Elmes testified that:

The airways going down into the lung tubes . . . get progressively narrower as they

divide and become more and more frequent out into the lungs . . . . [T]hey divide . . .

into two equally sized tubes but smaller than the original tube so they get narrower

and narrower as you go down, and, obviously if you inhale in the air a large particle

of dust, it will get down the -- clear the main area and one of the main branches, but it

will get stuck at some stage or other because it's too big. But usually before that,

especially at the bifurcation, the air coming down, it will get thrown against the side

and then stuck, so that this is a filter mechanism protecting the lung and it means that

particles of dust larger than five microns in diameter, rounded particles of dust, I don't

mean perfectly round, they can be, you know, roughly round, don't get down and

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152

damage the lung because they get filtered out by this mechanism and cleared by the

escalator. And once you get down below that, then some of the dust particles can get

down beyond this level, which is right out near the air exchange part of the lung and

they can get stuck there. Now -- so that you got a fairly rigid demarcation between

the dust which is too big to do any harm and dusts which are harmful, if they are

rounded. Now, it's not so easy with long particles. It is in the nature of things that if

you got a lot of air down a tube it goes fastest down the middle and more slowly at

the sides. And if you have in that air elongated particles, this means that they line up

parallel to their direction of flow, so that they get down the tubes in relation to their

diameter and not their length. The length, you can get a particle that is quite long, a

hundred microns, say, long, it can get down into the lung as long as it stays straight,

but when it gets down as far as it's going to go in that breath, there is a period when

the thing stands still and then you start to breathe out and during that period it may

have twisted one way or the other and get caught on the side and the effort of

breathing out then will then drive it into the wall. So that as long as the particles are

narrower and they have to be below three microns in diameter, quite big particles will

get stuck well down in the lung and get into the lung tissue by that mechanism. So

that this is another reason why fibres are potentially more dangerous than rounded

particles.

394

Concerning mesotheliomas, Dr. Elmes stated that there is clearly a difference

between the different types of asbestos fibres as to the degree of risk involved. He stated that

there must be a long period of interaction between fibres and tissue before a mesothelioma is

produced, and he noted that, while chrysotile fibres disappear from the lungs within a short

period of time, crocidolite fibres can stay in the lung for 30 to 40 years.

395

Dr. Elmes was asked for his opinion as to whether chrysotile asbestos can cause

mesothelioma. He stated that while the evidence is that it can do so if injected straight into

the pleura of animals, the evidence so far as humans are concerned is getting "more and more

doubtful".

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153

396

Dr. Elmes discussed the state of medical knowledge, as at 1990, concerning the

asbestos-related diseases. He said that based upon what was known then (and today), he

does not believe that one has to have asbestosis before one can contract lung cancer. He also

said that he would not expect to see cases of asbestosis occur as a result of exposure to the

levels of chrysotile asbestos typically found in buildings, nor would he expect to see cases of

lung cancer.

397

He said that what is still not known is whether chrysotile asbestos, by itself, at high

doses can cause cancer in non-smokers. When asked whether it is possible, he stated:

I mean I couldn't cross my heart and say never could cause it, but in the absence of

cigarette smoking you have to be exposed continuously to a very high level of

asbestos to produce it; I'd put it that way.

. . . . . . .

. . . I am talking of levels of a thousand fibres per cc or higher everyday your working

day for a working lifetime.

398

Dr. Elmes was asked about a paper written by Dr. Wagner and published in the

British Journal of Industrial Medicine in 1991. He indicated that he was familiar with the

paper and in fact had discussed it with Dr. Wagner before it was sent in for publication. In

that paper, Dr. Wagner states that there is no evidence of increased risk of mesothelial

cancers at low levels of exposure to asbestos. He states that there is definitely no risk to the

general public, except when buildings containing crocidolite are being demolished. Dr.

Wagner further noted that the wholesale removal of chrysotile from buildings is absurd. Dr.

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154

Elmes indicated that this was one of the specific points that he discussed with Dr. Wagner,

and that he agrees with those conclusions.

399

400

According to Dr. Elmes, chrysotile fibres, at the levels found in buildings today, do

not cause mesothelioma. He stated that this conclusion applies to all building occupants,

including maintenance and custodial workers, who might be exposed to cementitiously

applied fireproofing containing chrysotile asbestos.

Dr. Elmes was asked to comment on Dr. Frank's suggestion that mesothelioma

appears to be related mostly to short chrysotile fibres, and that fibres less than 5 microns in

length can cause mesothelioma. Dr. Elmes disagreed. He said that, in his opinion, the bulk

of the evidence suggests that there is no risk of disease from fibres below 5 microns in

length.

401

402

In Dr. Elmes' opinion, there is a level of exposure to asbestos below which one will

not contract any of the asbestos-related diseases. That level, in his view, is at, or above, the

two fibre per cc limit set some time ago.

Dr. Elmes also gave evidence about the risk associated with the presence of asbestos

in buildings. As in the case of Dr. Frank's testimony on this matter, I will discuss Dr. Elmes'

views later, under the heading, "Asbestos in Buildings".

Dr. Churg

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155

403

One of the areas of research that is of particular interest to Dr. Churg is the analysis of

asbestos lung burden. Simply put, that is the study of how much asbestos there is in a lung.

It requires the determination of the type, size, number and distribution of fibres in the lung.

Once that data has been obtained, Dr. Churg tries to correlate it with the presence or absence

of disease.

404

Much of Dr. Churg's work is based on epidemiological studies. Such studies, he

stated:

. . . are population studies looking at disease in populations. Epidemiologic studies in

many senses regard the person as a black box, by which I mean, you really don't

know anything about what's going on inside, you may know a patient has a disease or

doesn't have a disease. I think as a pathologist interested in asbestos-related disease,

the only way I can understand where to look is to know what the epidemiology says.

And I use epidemiology to guide me as to what are current issues. So that will

determine what I am looking at and we will hear more about that later. What I am

looking at, what sorts of tissues I am analysing, what sorts of correlations I am

looking for in terms of disease.

405

While Dr. Churg readily acknowledged that he is not an expert in epidemiology, he

maintains that he is capable of reading the relevant studies and applying their findings and

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156

conclusions to his own work. It is his belief that the most reliable conclusions are those

drawn from epidemiological data and fibre burden studies.

406

He is reluctant to accept animal or in vitro studies on asbestos as a substitute for

epidemiological studies. This became apparent during cross-examination when, in response

to a question about an in vitro study where elevated levels of DNA were found after asbestos

was added, Dr. Churg replied:

I won't argue you that in a test tube asbestos does things to the DNA, but what I

would argue with you, I don't know how to take that data and translate it to the human

condition . . . It's a basic problem of trying to take this data and I have this data and

therefore something happened in man.

407

Dr. Churg testified at considerable length about the effects of chrysotile asbestos. He,

too, said that it was not until relatively recent times that it was understood that chrysotile

behaves quite differently in lung tissue from amphibole asbestos. He testified that the

behaviour of chrysotile, once inhaled, is distinctive in that it is very rapidly removed from

lung tissue.

408

Dr. Churg discussed this finding in the context of his study of 94 chrysotile miners

and millers from the Thetford Mines region in Quebec, and stated that:

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157

. . . chrysotile, as I am sure has come out in this case, has in it as mined both

chrysotile and the amphibole tremolite. Now, if you look at the concentration from

our data of tremolite as a function of exposure time in these 94 miners, . . . the more

exposure you have in terms of years of exposure the more you have in your lung

makes sense. But that's not true for chrysotile. If you look at chrysotile, you get a

line that is statistically dead flat. In other words, despite the fact that these are

chrysotile miners, they are exposed and these miners are exposed historically to

high levels of chrysotile despite the fact that these miners are exposed to an ore

which is on the order of analysis of 99 percent percent (sic) chrysotile, chrysotile

does not accumulate in their lungs.

(emphasis added)

409

Dr. Churg made several significant points about asbestos and its apparent health risks.

First, he stressed that asbestos cannot produce disease until it is inhaled. In that regard, he

said:

. . . I think the popular press has been influenced by too much noise about asbestos in

such a way that people regard asbestos with an unholy fear. And there is no basis for

doing so. Asbestos produces disease if you inhale it in sufficient quantity. If you

inhale it in low quantities, then in general it doesn't produce disease. And if you don't

inhale it, then it doesn't do anything. Although it sounds self-obvious there is a

tremendous panic that the press I think keeps pushing that the mere presence of

asbestos in a certain location equates to disease. And that's not true at all.

410

Dr. Churg also stated that, in his opinion, there is a clear dose-response relationship

with respect to asbestos. In other words, the more you inhale, the greater the risk of getting

the disease.

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158

411

Another point he made related to what he termed a "surprising" finding from his

study of the lung burdens carried by the general population of Vancouver. Dr. Churg's

studies have revealed that practically everyone is carrying a "very substantial" burden of

asbestos, what he calls a "background lung burden". He stated that if he were to examine the

lungs of 20 people, he might find asbestos in the lungs of as many as 19 of them despite the

fact that they had never worked occupationally with asbestos. The significance of this

finding was stated by Dr. Churg to be as follows:

The point here is . . . that we all have a lot of asbestos in our lungs . . . . Therefore, the

notion that any kind of exposure to asbestos is going to produce disease, and I say any

kind, any time you are exposed to any amount, to me becomes ipso facto ridiculous

because we are all [walking] around with this burden of asbestos, [and] none of us are

dying of asbestos-related diseases . . .

412

Moreover, Dr. Churg noted that even those people who carry a higher lung burden

than the general population do not necessarily become sick. For example, he noted that

studies have shown that the lungs of lifetime residents of mining towns who have never

worked in the industry, nor had any relatives in the industry, carry 5 to 10 times the lung

burden of chrysotile and tremolite that would be found in lungs of most people. He stated the

significance of this fact to be as follows:

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159

These observations provide clear evidence that exposure to chrysotile asbestos at

several hundred times urban background, (a level much greater than a typical building

exposure), for a whole lifetime produces no deleterious effects on health.

413

Dr. Churg also discussed the three asbestos-related diseases ) asbestosis, lung cancer,

and mesothelioma. Dealing first with asbestosis, he noted that it is a very serious, disabling

disease in terms of one's ability to work. But he stressed (as did the other expert witnesses,

including Dr. Frank) that asbestosis is only encountered where there has been very high

exposure to asbestos and where the person's lungs contain a very large number of fibres. As

an example, he noted that a study of shipyard workers revealed that their lungs contained

about 26 million fibres of amosite, whereas the average number that a person will carry is

about 1000. He referred also to a study of chrysotile miners in whose lungs were found

slightly over one hundred million fibres, compared with an average in Vancouver of 3 to 4

hundred thousand.

414

The "bottom line", according to Dr. Churg, is that it takes an "awful lot" of asbestos

to produce asbestosis. He stated that assuming building exposures are in the range of .0002

fibres per cc ) a figure taken from the Health Effects Institute of Asbestos report as being

typical ) there is simply no risk at all of building occupants contracting asbestosis.

415

Dr. Churg also discussed the relationship between asbestosis and lung cancer. In his

opinion, asbestosis is "strongly associated" with the development of lung cancer, to the point

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160

that the "threshold" for lung cancer is the presence of asbestosis. In Dr. Churg's opinion, if

you don't have asbestosis, then mere exposure to asbestos does not create any additional risk

of contracting lung cancer.

416

Dr. Churg pointed out the distinction between lung cancer (a malignant tumour

developing in the substance of the lung) and mesothelioma (a malignant tumour developing

on the covering of the lung). He stated that, in his opinion, asbestos, and specifically

chrysotile based asbestos, does cause mesothelioma. But, he said, as with asbestosis, it takes

an "enormous burden" to produce a mesothelioma in man, and, as is the case with asbestosis,

a mesothelioma cannot be caused by building level exposures to chrysotile fibres.

417

In cross-examination, Mr. Roberts put to Dr. Churg a report which discusses four

cases of mesothelioma found in school teachers who had no other apparent exposure to

asbestos than in their schools. When asked whether there could be any reason other than

their exposure to asbestos that could account for the mesothelioma, Dr. Churg responded:

Sure. A very good reason. The basic reason is we have four case reports and the

question is how many school teachers are there in the United States? 100,000, half a

million? A very high number, clearly. I don't know. There's incidence of

spontaneous mesothelioma in the general population. One has to start examining a

large population of whichever profession you might pick. We can pick lawyers, but

we have schoolteachers. You will background spontaneous mesotheliomas simply

because you are examining a large population.

You then run into exactly this problem. Lilienfeld has accumulated these four cases.

There is no evidence that these fours cases are really actually any increased incidence

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161

over background for the population as a whole. Simply is a large population to draw

from. They may well have been referred to him because of his interest. This sort of

study is simply anecdotal. Until you have proper epidemiology to say these school

teachers in asbestos buildings are at risk, you don't know if this is really what you

expect from background.

418

I think it significant that a similar response was given by Dr. McDonald, referred to

later, to a question concerning mesotheliomas found in a small number of German

mechanics.

Dr. Crystal

419

In the first part of his testimony, Dr. Crystal provided a general overview of the

workings of the lung. He explained that the lung, which transfers gases from the air to the

blood, has many defence mechanisms to protect the functioning of its tissues and allow it to

perform its tasks. He noted that, to be inhaled, a fibre of asbestos would first have to be of

"respirable" size, that is, sufficiently small to enter the respiratory tract. Assuming that the

fibre passed this hurdle, a multitude of defence mechanisms would, more often than not,

prevent it from entering the lung.

420

Dr. Crystal stated that:

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162

The vast amount of -- "vast" meaning 99.99 -- I mean the vast amount of asbestos

fibres never get to the lung. They will be removed in the upper part of the airways,

and if they do get down to the lung passages, the air passages, they will be removed

by the cleaning mechanism along the -- the walls of the airways, that the -- bronchi,

and if they do get down, a very small percentage, they get past all those defence

mechanisms and get down to the alveoli, they most likely will be removed or just sit

there. And we know that all of us have asbestos fibres in our lung that are absolutely

innocuous and don't cause disease.

421

In Dr. Crystal's opinion, there is a level of inhalation of asbestos fibres below which

there is simply no risk at all of contracting any of the asbestos-related diseases. He prefers

not to describe this as a "threshold" because that word, in his view, erroneously connotes

some sort of "on-off switch", whereas, in reality, there is a range, rather than one particular

point, where disease begins to be found. According to Dr. Crystal, this range is between 10

and 100 fibre years per cc. Below 10, he said, there is no evidence of there being any risk of

disease.

422

Speaking about asbestosis, he stated that it is associated with the inhalation of any of

the three major types of asbestos fibres ) chrysotile, crocidolite and amosite. But he

emphasized that they must be inhaled in large quantities over a long period of time before

there is a risk of asbestosis. He further noted that the majority of people who inhale even

large quantities of fibres over a long period will not get the disease.

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163

423

With respect to lung cancer, Dr. Crystal stated that the literature shows clearly that a

person who has had high and long exposure to asbestos, and who is or has been a smoker, has

an increased risk of developing lung cancer. However, he noted that there is no clear

evidence of there being an increased risk in the case of a person who does not smoke

cigarettes. According to Dr. Crystal, very few individuals who are life-long non-smokers

develop lung cancer.

424

Dr Crystal stated that, in his opinion, the third category of disease, mesothelioma, is

"quite different" from the other two, in that it has no connection with cigarette smoking, and

is only associated with two of the fibre types ) crocidolite and amosite. He said that, like the

others, mesothelioma requires the inhalation of large amounts of asbestos fibres for long

periods of time, and the ambient air in buildings is far below what is required to cause the

disease.

425

426

Dr. Crystal discussed the concept of "spontaneous mesothelioma", cases in which

there is no known etiology. In his opinion, only 60 to 70 per cent of cases of mesothelioma

are associated with asbestos exposure.

When asked what the effect would be upon the physiology of the lung of a person

who was inadvertently subjected to a high level of asbestos exposure for a short period of

time, Dr. Crystal replied:

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164

Well, the defence mechanisms are very redundant, and although they may be

overwhelmed occasionally for the short term, that does not lead to disease. You have

to -- the defence mechanisms have to be overwhelmed chronically for long

periods of time, and there is no evidence that one time or even a few times high

intensity, short exposures are associated with disease.

(emphasis added)

427

Dr. Crystal was asked for his opinion of the studies by regulatory agencies that

suggest, contrary to his conclusions, that there may be some risk of disease at low levels. He

responded:

. . . what the regulatory agencies . . . have done, and justifiably so for their -- their

mandate, is they've said, "We have to come up with some theory. We have to come

up with some risk assessment in terms of what levels we will allow workers to be

exposed to". And so what the regulatory agencies have done . . . is to say, "Let's take

the data that exists and theorize what the risk would be at the low levels". The

simplest model to use is a linear model.

428

Under a linear model, Dr. Crystal explained, a straight line is drawn, corresponding to

increasing levels of exposure. However, he noted that below 100 fibre years per cc, the line

is completely theoretical, without any data to support it. Taken to the extreme, he said, such

a line would suggest that one single asbestos fibre must create a risk ) Dr. Frank's position ) a

proposition he described as "absurd" given the number of fibres we carry within our lungs.

In fact, Dr. Crystal's studies, like those of Dr. Churg, have revealed the presence of

significant quantities of asbestos in the lungs of the general population.

- 165 -

165

429

Dr. Crystal made some general observations about the utility of various types of

studies. He noted that what gave an epidemiologic study its value was its use of a control

group. Thus, for example, a group of workers exposed to asbestos in a building might be

compared to another group of workers in a similar building not containing asbestos; the

effect is to reduce solely to asbestos the variable between the groups. This, according to Dr.

Crystal, is very different from an anecdotal study where an individual who worked in a

building containing ACM develops one of the three diseases and a conclusion is drawn that

the disease has something to do with the presence of asbestos. This latter approach, which

was followed in several studies which suggest that the presence of an ACM in a building

creates an increased risk of contracting an asbestos-related disease, is not, in Dr. Crystal's

opinion, scientifically sound.

430

Dr. Crystal was asked to comment on two other types of study: in vitro and animal.

He said that he had often used in vitro studies, but, like Dr. Churg, he suggested caution in

their application. He stated:

There are many limitations to in-vitro (sic) studies. What in-vitro (sic) studies are, for

example, taking cells and studying them with a test tube, for example, adding

asbestos, adding a cell to them or adding a chemical. I could think of many different

variations. But cells outside the body may or may not behave the way they do inside

the body, and the techniques are not available to have cells, for example, the lining

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166

cells of the lung in humans to behave the same way they do inside of the human. And

so the studies, the in-vitro (sic) studies that are published a lot are all using various

kinds of cells that bear no relevance . . . necessarily to the cells in the body in the

lung. That doesn't mean that in-vitro (sic) studies are not useful, and I carry them out

as well, but you have to interpret them with caution, and the important thing is the

human experience, what actually has been observed in humans, not what goes on in

the test tube.

431

432

Dr. Crystal expressed similar caution with experimental studies in animals.

Dr. McDonald

While he was at McGill University, Dr. McDonald studied all of the diseases that are

attributed to asbestos exposure. He indicated that he was not aware of any group that has

been as continuously and widely active in this area or research as his team at McGill.

433

Asked what factors are relevant to the risk of contracting asbestos-related diseases,

Dr. McDonald replied:

There are several but I must give priority to the intensity and duration of exposure.

All asbestos diseases that I know have either been demonstratedly (sic) related to

exposure, variously measured, or whether the evidence strongly suggests it.

. . . . . . .

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167

Oh, and I missed, of course, a very major point, and that is the type of asbestos. I

have indicated already there are several types of asbestos. The word "asbestos"

merely means a fibrous mineral silicate which is of commercial use. That's all the

word means. There are then, if you like, geologically, mineralogically, the various

types of asbestos which are chemically, physically quite different from one another

but they are all mineral fibre silicates which industry from time to time has used, and

fibre type is an important variable.

There are other variables such as the size of the fibre, in particular length and

diameter, where I think there's general agreement that for practical purposes it's only

really the long fibres that are of any importance, long, thin fibres.

434

Dr. McDonald stated that it is his opinion that there is a systematic relationship

between concentration and risk, meaning that increased exposure increases the risk of

mesothelioma. He stated:

. . . [I]t is now, I think, reasonably clear, though on much less evidence than exists for

lung cancer, for example, but reasonably clear that the probability of getting the

disease [mesothelioma] is related to the main characteristics of exposure, that is,

duration and intensity. And that applies whether it is to commercial chrysotile or to

commercial amphiboles, but, of course, at different levels of risk.

435

Dr. McDonald testified, however, that this systematic relationship is not applicable in

low levels of exposure, such as those encountered in buildings. He stated:

. . . I think this is where we have to start defining terms, what are we thinking about

when we say "low". In general, until very recently, the only concern among those

who have been studying the health effects of asbestos has been basically to determine

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168

the risks for -- occupational risks for people working with asbestos in order to identify

the control levels which will make an acceptable working environment. And when

we are talking about that, low means, let us say, under five fibres per cc. That means

low in occupational terms and, indeed, most ) in most countries where asbestos is

controlled now, which is controlled fairly strictly, in many countries, of course, the )

most countries have very strict controls for the crocidolite and amosite, particularly

crocidolite and when we talk about controls we are really talking more about

chrysotile. And for many countries, the countries are now working at perhaps two

fibres per cc., one fibre per cc., half a fibre per cc. So you see we are then working at

) that is low occupational levels. And indeed, when we have those levels, that implies

that these are the levels which the national bodies think are sufficient to prevent

disease but, of course, the concept of low has a different meaning which has come up

in relation to the general environment and in relation to buildings, which has been a

concern, and now we are talking about levels which are maybe several orders of

magnitude below that.

Q. Yes?

A. Buildings have variously observed rates which might -- I mean concentrations of fibres,

not necessarily asbestos but fibres, perhaps 1/10,000 of the lowest occupational

control limit and so there is now concern expressed in various places about that kind

of level. Is that a thing -- can we dismiss that or do we have to take that seriously?

And that is where we have to look at exposure response information to see if we can -

- for light on whether or not there's any reason to be concerned about that type of

level.

Q. And based on your experience and training, do you feel that at exposures 1/10,000 of the

occupational levels, that there is a concern with regard to mesothelioma and lung

cancer?

A. No. To me, in light of my experience, it is inconceivable that there could be a risk.

Any suggestion that there is one is done by extrapolation. It's not by

observation. There is no way in which you could observe even the risks which

probably are related to even the lowest level of occupational exposure. There's

no way we could mount a study now in Quebec which could demonstrate any

risk of an industry working at say, half a fibre per cc. We couldn't find that.

We know that the lowest level we've ever able to find any evidence of a risk is

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169

around 20 fibres per cc for a lifetime. We have to put it in context. So

epidemiologically nobody could detect that kind of risk, so if we say there is one,

that is speculation. Now, you could examine the speculation, what is that

speculation based on, but it becomes entirely speculative.

(emphasis added)

436

437

438

Dr. McDonald's research group conducted an epidemiologic study of the effect of

various fibre sizes. It was based on cases of mesothelioma from right across Canada. He

said that the results of the study show that only fibres above a certain length contribute to

mesothelioma. Moreover, the study showed that mesothelioma was common with exposure

to amphibole, but rare with exposure to chrysotile, the former creating a risk approximately

twenty times higher than the latter.

Dr. McDonald was asked to quantify the risk of contracting mesothelioma as a result

of exposure to chrysotile asbestos fibres. He said that the best data came from his study of

12,000 Quebec miners, where five cases per one thousand people was discovered. But, he

added, that figure was based on exposure levels during the 1930s-1950s, which were

"astronomic" compared to today's. He stated that the miners were then exposed to an average

of 150 fibres per cc, compared to 1/2 fibre per cc in Quebec mines today.

During cross-examination, Dr. McDonald was asked about ten cases of

mesothelioma, identified by a Dr. Woitowitz, in mechanics who serviced brakes on motor

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170

vehicles in Germany, between the period 1980-1985. According to Dr. Woitowitz, these

workers were only exposed to chrysotile. Dr. McDonald was asked why this study was not

useful for persons concerned about the public's health in relation to asbestos exposure, and he

responded:

Well, I think mainly because it is not an epidemiological study and, therefore, I think

the writer does not appreciate quite what he is saying.

Let me explain. He says, for example, that we have found 10 cases . . . in mechanics.

There are now a quarter of a million employees in this work. If you like to do a

proportional sum on that, you'll find that that is approximately the number of

mechanic -- cases in mechanics you would expect by chance. You have to

understand that. . . . It's almost dead on what you'd expect by chance.

439

According to Dr. McDonald, the latency period (i.e., the time from first exposure to

manifestation of disease) varies with each of the three diseases, and for asbestosis, it varies

with the amount of exposure. He stated that in the early days, when there was little

regulatory control over asbestos exposure, asbestosis could manifest itself in five to ten

years. He suggested that even with slightly lower levels, you seldom get evidence under

twenty years. For lung cancer and mesothelioma, the latency period varies between thirty to

forty years. He noted that with high exposure, mesothelioma may be discovered after 20

years.

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171

440

Dr. McDonald has charted the incidence of mesothelioma since 1970, and has found

that the number of cases involving males has risen at a rate of 10 per cent per annum. He

suggested this rate of increase will continue for the next 20 years. In his opinion, the

increase reflects the use of asbestos some 40 years earlier in four main types of work:

insulation (which accounts for the highest incidence); shipyard; construction; and asbestos

factory work. He stated that his findings are comparable to those in other studies from the

U.S., the U.K. and the Scandinavian countries.

441

The increasing rate in males stands in sharp contrast to females, which remains

constant. The significance of this fact is stated by Dr. McDonald as follows:

To me it implies that exposures to asbestos at that time were -- short of occupational

exposures -- [were] not sufficient to affect the detectable level of mesothelioma in

this very large population.

442

443

Hence, the indirect exposure they received from their husbands (i.e., washing clothes,

etc.) was insufficient to increase the frequency.

Dr. McDonald noted that once you take out the occupational mesotheliomas, you

have the same frequency in both men and women, which is approximately one to two cases

per million population.

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172

444

Turning to asbestosis and lung cancer, Dr. McDonald was asked where the former is a

prerequisite to the latter. He indicated that he kept an "open mind" on this question, but that:

. . . the three go together so closely that in practice it must be very rare that you get a

lung cancer that is not -- in which the worker does not also have some sign of

asbestosis. It's very rare.

On the other hand, we can't assume that that applies to lung cancer in the general

population.

445

He said that he is presently studying this question, and that it is a very important

question. He noted two primary groups who are interested in learning the answer. The first

are researchers interested in understanding why we get cancer. It is important to them, he

said, to know whether the same mechanism is involved in both diseases, i.e., whether fibrosis

is a prerequisite for cancer production. The second group interested in this question are

Compensation Boards. Dr. McDonald stated that since approximately twelve per cent of all

males die of lung cancer, it would be helpful for the Boards to know if these people have a

valid claim, in the sense of having had sufficient exposure to asbestos.

446

In cross-examination, Mr. Roberts put to Dr. McDonald a paper he had written in

1980, in which he suggested that asbestos was a cause of lung cancer, and that the

carcinogenity of asbestos was independent of, although enhanced by, tobacco use. Dr.

McDonald's response was immediate and forthright. He said that over the years he has

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173

become less dogmatic on this point and more "dubious about the ability of asbestos without

any carcinogenic to produce lung cancer . . .".

447

I accept Dr. McDonald's explanation and his current opinion on this point. The fact

that he has changed his opinion does not suggest, as argued by the plaintiffs, that he is an

unreliable witness. Rather, it is indicative of a reasonable evolution of medical opinion

following further years of study.

448

Dr. McDonald indicated that the link between mesothelioma and asbestos is much

more distant and uncertain. He indicated that cases of mesothelioma have been discovered

outside of North America that were unrelated to exposure to asbestos. When asked whether

it was reasonable to suggest that when one encounters a case of mesothelioma, one should

immediately assume asbestos exposure unless otherwise proven (Dr. Frank's view), he

replied:

Absolutely not. For example, in women, it's relatively seldom that asbestos is the

cause of mesothelioma, probably not more than ten percent of [the] mesotheliomas in

women are attributable to asbestos exposure. In men, as I pointed out yesterday, the

frequency of mesotheliomas is going up, steadily, and, therefore, as time passes the

proportion of mesotheliomas in men, in males, that are associated with asbestos is

increasing. So today in men probably asbestos exposure can explain in the order of

85 percent of them. But when we started work on mesothelioma in 1969, probably

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174

asbestos exposure only explained about 20 percent of the males cases. So there is no

absolute figure, it's a figure that changes in time and place.

449

Dr. McDonald testified that his study of textile plants revealed two main findings

concerning mesothelioma. First, there was something about the textile industry that increases

the lung cancer risk, but not the probability of mesothelioma, and second, the risk of

mesothelioma was not high in chrysotile plants.

450

Finally, Dr. McDonald was asked about the risk of contracting mesothelioma at

various fibre concentrations. He suggested that the risk at one fibre year of exposure was

approximately one in ten million. He stated that it was not his role as an epidemiologist to

decide whether the community should "worry" about that type of risk, but suggested that it is

a risk that "has to be put in context of the other risks of life".

451

The plaintiffs led a great deal of evidence as to the extent of the Grace defendants'

knowledge about the health hazards associated with asbestos. It is not necessary for me to

closely review that evidence for there is no dispute on this point. During the relevant time

period, leading up to and including the installation of the product in the Building, the

principal officers of both Grace defendants were very familiar with the subject.

452

However, in my view, the fact that the Grace defendants were fully aware of the

dangers associated with the use of asbestos has little legal significance in this case. They do

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175

not say that asbestos itself is never a health hazard, or that they did not know that it was a

hazard in certain circumstances. Rather, they maintain that the asbestos fibres in Monokote

MK-3 did not contaminate the Building and do not constitute a health hazard.

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176

XII. REGULATORY ACTION

Introduction

453

454

In this section I will discuss the actions taken with respect to asbestos-containing

spray materials by regulatory authorities in the United Kingdom, the United States and

British Columbia.

The plaintiffs argue that the WCB regulations are not designed to deal with the safety

of asbestos in buildings, and accordingly, are of no assistance in determining the safety of

MK-3. I disagree. In my view, the regulations set by both of those bodies are relevant to the

question of the safety of the product MK-3.

455

No doubt, these regulations, in and of themselves, cannot answer the question as to

whether or not MK-3 was, as the plaintiffs allege, an inherently dangerous product. But, in

my opinion, the history of regulatory action taken by the WCB provides a valuable, historical

glimpse into the important ) and for the purposes of this action, the most important )

Canadian regulatory body's perception of the potential dangers of exposure to asbestos-

containing building materials.

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177

The United Kingdom

456

Dr. Elmes provided a considerable amount of information about the activities of the

regulatory authorities in the United Kingdom with respect to the use of asbestos-containing

materials. While not directly relevant to the issues in this case, his testimony furnished an

interesting and useful look at the steps that have been taken in that jurisdiction to reduce the

risk to workers of contracting an asbestos-related disease.

457

In the early 1930s, Dr. Merriweather, then the Chief Medical Examiner of

Factories, reported on the serious dust conditions in the asbestos textile factories in Britain.

Dr. Merriweather found that workers engaged in the textile spinning and weaving processes,

as well as those whose work it was to open and blend the bags of material, were getting

asbestos-related diseases within five to ten years of starting work. As a consequence of his

studies, regulations were introduced in the United Kingdom in 1933 which applied, not only

to the asbestos textile industry, but also to other factories where workers dealt with raw

asbestos and incorporated it into other forms of manufactured goods.

458

Prior to 1933, Dr. Elmes testified, the technology of measuring asbestos in the air was

not available, and it is only possible to estimate that, in those factories that Dr. Merriweather

examined, the exposures were several hundred fibres per cc of air,

"and maybe more". Because the means of measurement were not available, the 1933

regulations, according to Dr. Elmes:

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178

. . . simply said people doing this work must wear protective clothing, they must wear

a mask if -- unless you can control the whole process in a box and control the dust by

exhaust ventilation so that the air looks as clear as it does in the rest of the factory, we

will say. And so that's how our regulations worked.

459

460

Dr. Elmes added that:

. . . we estimate that conditions in the late '30's after the 1933 regulation came in were

exposing people to about 10, 20, perhaps a bit higher in some areas fibres per cc.

He said that one could estimate that the people working in those conditions were

exposed:

. . . each day and throughout their working day to fibre concentrations of the order of

500 to a thousand or more fibres per cc, and in consequence they became ill within

five to ten years and might die in under 20 years.

461

Dr. Elmes testified that, at the time, it was generally felt that:

. . . [the 1933] regulations were going to sort the whole thing out and that we weren't

going to get any more problems with asbestos lung disease in industry. And, indeed,

that's what I was taught when I was taught by Public Health Medicine in Cleveland in

1942.

462

And he said that:

. . . it looked as though everything was alright until Merriweather produced his next

report in 1949 . . . which indicated that there was another risk, not just asbestosis, but

a risk of lung cancer . . . He was the person who proved that there was a definite

relationship, that the risk of lung cancer was increased by working with asbestos.

- 179 -

179

463

Dr. Elmes testified that in 1964, at the time of the New York Academy Conference,

people in the field of occupational hygiene were still anxiously awaiting the development of

air sampling techniques so that a dose-response relationship could be established and safe

levels determined for the purpose of future legislation. He said that work in this area, which

had been going on since the 1930s, was being done for the most part by the asbestos

companies because, he said:

. . . it was in their interests to get a method of measuring it so that they could control

the dust levels to certain standards and prevent the disease.

464

In 1969, after much discussion, a technique was adopted in Britain. It involved the

use of a small pump and filter. Air was drawn through the filter, which was fine enough to

collect the asbestos fibres in the air. After a measured quantity of air had been drawn in over

a set period of time, the filter was removed from the pump, treated with a chemical substance

to clarify it, and one could then, using the optical microscope, count the number of fibres that

were of the size that could get into the lung and cause damage. Dr. Elmes described the

process as "a very satisfactory technique for measuring and testing the situation in factories

such as the ones who were covered by the '33 regulations". And, with minor modifications, it

was adopted as the standard technique for monitoring occupational exposures to asbestos.

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180

465

However, according to Dr. Elmes, it had two limitations. One was that it could not

distinguish between the different types of asbestos. The other was that below .5 fibres per cc,

it was unreliable. At that time, using the optical microscope, one could not see the finest of

the fibres that could be retained in the lung and damage it. It was not until the late 1960s, he

said, that "proper fibre counting techniques" became available.

466

According to Dr. Elmes, while one cannot know exactly how much of a reduction in

exposure levels resulted from the adoption in the United Kingdom of the 1933 regulations:

. . . we've been able to recreate those conditions in some factories, and we know that

they were exposed to 5 to, say, 30 fibres per cc in the thirties and forties gradually

falling in the fifties, and so on, until the two-fibre limit was fairly easily achieved in

industry by the end of the 1960's.

467

The "two-fibre limit" mentioned by Dr. Elmes was the British Occupational Hygiene

Standard of 2 fibres per millilitre (2 fibres/ml") established in Britain in 1969. This was

stated to be "... a dose level designed to limit to 1% the risk of contracting the first signs of

asbestosis".

The United States

468

A recurring theme in the plaintiffs' argument as to the allegedly hazardous nature of

MK-3 is the action taken by the United States Environmental Protection Agency on April 6,

1973, when it enacted national Emissions Standards for three Hazardous Air Pollutants )

asbestos, beryllium and mercury.

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181

469

Preliminary, as it were, to that action, several cities in the United States (notably,

New York, Philadelphia and Chicago) had, in 1970 and 1971, taken steps to prevent the

spraying of asbestos-containing fireproofing materials. In the fall of 1971, the EPA

advanced proposals for a review of the practice, and in 1972, it began conducting hearings on

the subject. That process culminated in the new standards promulgated on April 6, 1973,

which banned all spraying in the United States of fireproofing materials containing more than

1% asbestos.

470

The bases for the Agency's decision are set out in a preamble to the regulations in the

following words:

Asbestos is a hazardous air pollutant . . . . Many people exposed to asbestos dust

developed asbestosis when the dust concentration was high or the duration of

exposure was long . . . . A large number of studies have shown that there is an

association between occupational exposure to asbestos and higher-than-expected

incidence of bronchial cancer . . . . Asbestos also has been identified as a causal factor

in the development of meso-theliomas, cancers of the membranes lining the chest and

abdomen . . . . There are reports of mesothelioma associated with nonoccupational

exposures in the neighborhood of asbestos sources . . . . An outstanding feature has

been the long period, commonly over 30 years, between the first exposure to asbestos

and the appearance of a tumour . . . . There is evidence which indicates that

mesotheliomas occur after much less exposure to asbestos dust than the exposure

associated with asbestos . . .

It is not practicable, at this time, to establish allowable numerical concentrations or

mass emission limits for asbestos. Satisfactory means of measuring ambient asbestos

concentrations have only recently been developed, and satisfactory means of

measuring asbestos emissions are still unavailable. Even if satisfactory means of

measuring asbestos emissions did exist, the previous unavailability of satisfactory

means of measuring ambient levels of asbestos makes it impossible to estimate even

roughly the quantitative relationship between asbestos-caused illness and the doses

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182

which caused those illnesses. This is a major problem, since some asbestos-caused

illnesses have a 30-year latency period.

EPA considered the possibility of banning production, processing, and use of asbestos

or banning all emissions of asbestos into the atmosphere, but rejected these

approaches. The problem of measuring asbestos emissions would make the latter

approach impossible to enforce. Either approach would result in the prohibition of

many activities which are

extremely important; moreover, the available evidence relating to the health hazards of

asbestos does not suggest that such prohibition is necessary to protect public health. For

example, demolition of any building containing asbestos fireproofing or insulating materials

would have to be prohibited as would the use of materials containing even trace amounts of

asbestos which would escape into the atmosphere.

Finally, the available evidence suggests a gradient of effects from direct occupational,

to indirect occupational exposure, to families of workers exposed to asbestos and

persons in the neighborhood of asbestos sources ) in all of which situations asbestos

concentrations are undoubtedly high by comparison with most community air. This

suggests that there are levels of asbestos exposure that will not be associated with any

detectable risk, although these levels are not known.

It is probable that the effects of asbestos inhalation are cumulative; that is, low-level

and/or intermittent exposure to asbestos over a long time may be equally as important

in the etiology of asbestotic disease as high level and/or continuous exposure over a

shorter period. On the other hand, the available evidence does not indicate that levels

of asbestos in most community air cause asbestotic disease. Taking both of these

considerations into account, the Administrator has determined that, in order to

provide an ample margin of safety to protect the public health from asbestos, it is

necessary to control emissions from major man-made sources of asbestos emissions

into the atmosphere, but that it is not necessary to prohibit all emissions.

. . . . . . .

. . . the major sources of asbestos emissions were considered to fall into five

categories: (1) mining and milling; (2) manufacturing; (3) fabrication; (4)

demolition; and (5) spraying.

471

Referring to the earlier (December 1971) proposed standard, the Preamble continues

as follows:

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183

The proposed standard would have prohibited visible emissions of asbestos

particulate material from the repair or demolition of any building or structure other

than a single family dwelling. Comments indicated that the no visible emission

requirement would prohibit repair or demolition in many situations, since it would be

impracticable, if not impossible, to do such work without creating visible emissions.

Accordingly, the promulgated standard specifies certain work practices which must

be followed when demolishing certain buildings or structures. The standard covers

institutional, industrial and commercial buildings or structures . . . which contain

friable asbestos material. This coverage is based on the National Academy of

Sciences report [published in 1971] which states, "In general, single-family

residential structures contain only small amounts of asbestos insulation. Demolition

of industrial and commercial buildings that have been fireproofed with asbestos-

containing materials will prove to be an emission source in the future, requiring

control measures." . . . The standard requires the Administrator to be notified at least

20 days prior to the commencement of demolition.

. . . . . . .

The proposed standard would have prohibited the spraying of any material containing

asbestos on any portion of a building or structure, prohibited the spraying of any

material containing asbestos in an area directly open to the atmosphere, and limited

emissions from all other spraying of any material containing asbestos to the amount

which would be emitted if specified air-cleaning equipment were used. Comments

received pointed out that this would: (1) prohibit the use of materials containing only

trace amounts of asbestos which occur in numerous natural substances; (2) prohibit

the use of materials to which very small quantities of asbestos are added in order to

enhance their effectiveness; and (3) prohibit the use of materials in which the asbestos

strongly bound and which would not generate particulate asbestos emissions. The

promulgated standard applies to those uses of spray-on asbestos materials which

could generate major emissions of particulate asbestos material. For those spray-on

materials used to insulate or fireproof buildings, structures, pipes and conduits, the

- 184 -

184

standard limits the asbestos content to no more than 1 percent. Materials currently

used contain from 10 to 80 percent asbestos . . . . Although a standardized reference

method has not been developed to quantitatively determine the content of asbestos in

a material, there are acceptable methods available, based on electron microscopy,

which independent laboratories have developed . . . .

472

The EPA contacted Grace-Conn. directly regarding the impending ban and, in a letter

dated July 31, 1972, advised them that:

. . . Asbestos emissions as a result of use of asbestos-containing fireproofing materials

were extensively studied prior to our decision that banning spraying of asbestos-

containing materials was necessary to protect the public health. Such emissions may

occur during spraying, cleanup and disposal of overspray, and demolition of the

building, and control in each of these operations is unsatisfactory. Thus, we feel the

prohibition action is necessary. The building is a source when sprayed and when

demolished, and one well recognized method of air pollution control is substitution of

material that reduces potential emissions of the substance in question when such

substitution is feasible.

473

474

Grace-Conn. continued the manufacture and sale of MK-3 in the United States until

the April 1973 ban went into effect, and in this country, through its subsidiary, Grace

Canada, until the late summer of 1975.

The plaintiffs make much of that decision, suggesting (as I have already noted) that it

demonstrated:

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185

. . . arrogant and reckless conduct by a multi-billion dollar corporation bent on

wringing every last cent out of a product they knew was hazardous and which for that

reason had been banned in the United States where this Defendant had its corporate

headquarters.

and that:

After that ban [the Grace Defendants] sought to extract that profit from sales in

Canada by continuing their export of this environmental hazard to this country. Their

attitude is no different from those who commit acts of environmental terrorism

against third world countries we too frequently hear about. For this they should be

made to pay and the amount of that payment should be large.

475

476

I will return later, in a more specific discussion of the product MK-3, to address the

question of whether or not the Grace defendants considered, as the plaintiffs allege, that they

were manufacturing and selling a dangerous product.

However, I think one final point regarding the action taken by the EPA must be

emphasized. The EPA did not ban ) as is suggested in the first quote from the plaintiffs'

opening statement ) either the production or sale of the product MK-3. What was banned

was its application by spraying. Thus, MK-3 could still have been applied by trowelling

rather than spraying. In my opinion, this is a distinction that clearly has relevance to the

question of whether or not the product was, as the plaintiffs allege, inherently dangerous.

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186

British Columbia

477

The British Columbia Workers' Compensation Board was established in 1916 with

the enactment of the Workers' Compensation Act, S.B.C. 1916, ch. 77, the purpose of which

was to ". . . provide for compensation to workmen for injuries sustained and industrial

diseases contracted in the course of their employment".

478

Although the WCB did not recognize asbestosis as a compensable industrial disease

until 1949, workers' safety with respect to asbestos and other airborne contaminants was first

covered by the enactment of Regulations in 1935 which provided, in part, as follows:

1. Gases, Fumes and Dust. ) Where workmen are exposed to injurious gases, fumes,

or dust, they shall be supplied with such masks, helmets, or respirators as will afford

protection.

. . . . . . .

6. Ventilation of Garages and Work-rooms. ) Adequate means of ventilation shall be

provided and maintained in all garages and work-rooms for the removal of smoke,

steam, gas, fumes, vapours, dust, or other impurities which are created or generated

by any process carried on in such building or work-room.

479

In 1966, regulations were enacted in which, under the heading "Air Contamination",

the following regulation appears:

- 187 -

187

Control of Hazards. ) When work processes produce or are likely to produce a health

hazard to workmen from the contamination of air by gases, vapours, fumes, dust, or

other impurities, means shall be provided to reduce the contamination to below the

recognized threshold limit value for the contaminant involved or to a point where the

hazard has been reduced to conditions satisfactory to the Board.

480

By 1970, the potential hazards of asbestos were being discussed within the industrial

hygiene field, and in that year the WCB created an Industrial Hygiene Department. During

the 1970s, the department grew from 3 members, at its inception, to approximately 20-25

workers by 1978. The department's mandate was the assessment and prevention of industrial

diseases.

481

During that time, the members of an Advisory Committee, comprised of labour and

industry representatives, were considering significant revisions to the regulations. According

to the testimony of Mr. Albert Riegert, who was the Director of the Industrial Hygiene

Department from 1978 to 1983, the Committee considered submissions from a variety of

different groups, and also considered the medical knowledge of the day, including the work

of Dr. Selikoff.

482

Following public hearings and the circulation of draft regulations, the WCB rescinded

the 1966 Regulations and adopted new ones which became effective on May 1, 1972,

approximately one year before the EPA banned, inter alia, the spray application of ACMs

with an asbestos content greater than 1%.

- 188 -

188

483

I think it important to emphasize that the WCB made these regulations fully

cognizant of the asbestos controversy. Indeed, workers' concerns over the use of asbestos-

containing sprayed fireproofing materials were brought to the WCB's attention in the spring

of 1971, when, during the construction of the Toronto Dominion Bank Tower in downtown

Vancouver, the workers staged a walk-out, protesting the application of a sprayed fibre

fireproofing product. The event was widely covered by the media, and the WCB was

actively involved in the situation.

484

The 1972 Regulations comprised some 300 pages, divided into 38 sections. They

applied to matters as diverse as guardrails, illumination, proper housekeeping, noise, proper

footwear and headgear, mechanical equipment guards, welding, overhead power lines,

ladders, scaffolds, floor openings, perimeter guards, excavations, hoists, rigging, cranes and

painting, as well as airborne contaminants. A list of nearly 500 contaminants and 37 types of

dust was appended to the Regulations.

485

Asbestos concerns were dealt with through a combination of general and specific

provisions. For example, the regulations specifically identified asbestos as a health hazard

and harmful substance, set threshold limit values ("TLVs") for asbestos use in industries

subject to the Act, and set minimum requirements for the spray application of insulation

materials containing asbestos.

- 189 -

189

486

Significantly, the 1972 Regulations did not ban the spray application of asbestos-

containing fireproofing materials at this time. In so doing, the WCB made a different

decision from that made a year later by the EPA. Accordingly, the spray application of MK-

3 in the Building was permitted by the WCB.

487

488

When asked about the 1972 Regulations, Mr. Riegert testified that ". . . [they]

provided the means by which the application would be sprayed with a minimal risk to the

people ) to the workers involved, the applicators and the people around them".

With regard to the action taken by the EPA in 1973, Mr. Riegert gave the following

evidence:

Q. Were you aware of that banning in or around 1973?

A. I probably was.

Q. Did that prompt, that banning prompt any response from the WCB in British Columbia

directly?

A. There were earlier public pronouncements, if you want to call them that, coming from

eastern United States which described the various precautions that had to be taken in

the application of spray-on fireproofing materials containing asbestos. These were

known prior to the final draft of the 1972 regulations.

Q. I take it, then, that the board felt that the 1972 regulations were adequate, notwith-

standing the more stringent action taken in the United States?

A.

Q.

That's correct.

Did the 1973 ban in the United States cause any increase in the attention

paid to that particular product in British Columbia by the board?

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190

A.

Insofar as we had more requests and inquiries placed to us by workers

who either were working in proximity to asbestos materials or working with them.

Q.

And, of course, the board responded to those increased requests and

inquiries?

A.

Q.

A.

That's correct.

Other than that, there was no other official response?

No.

489

Following the enactment of the 1972 Regulations, the WCB continued to monitor

developments and research regarding asbestos hazards. In October 1972, the WCB held a

Conference on Health and the Industrial Environment in Vancouver. The conference was

attended by over 600 management, labour and health professional delegates. One of the

subjects discussed was the treatment of asbestos hazards by regulatory bodies in the United

Kingdom. Members of the Industrial Hygiene Department also attended conferences

organized by American hygiene associations in order to monitor developments in that

country.

490

Information from these conferences and other studies led to the enactment of new

regulations in 1978. The 1978 Regulations provided, in part, that:

35.03 When workers are exposed or likely to be exposed to asbestos, or dusts

containing asbestos, such dusts shall be maintained at or below the concentrations

listed in Appendix "A".

. . . . . . .

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191

35.07 Spraying of asbestos or materials containing asbestos is prohibited unless

exempted by the Board.

491

492

The permissible concentration level specified in Appendix A with respect to materials

containing chrysotile asbestos is 2 fibres per millilitre of air over an 8 hour period.

I think it significant that the Regulation prohibited the spraying of asbestos or

materials containing asbestos "unless exempted by the Board". In other words, despite all

of the information that it had gathered by that time, the WCB did not consider it necessary to

enact an outright ban on the spraying of asbestos-containing materials.

493

494

Those Regulations were still in force as of the date of this trial.

When asked directly about the Board's opinion of the product Monokote MK-3, so far

as asbestos dust was concerned, Mr. Riegert testified as follows:

Q. With respect to asbestos dust, did the Worker's (sic) Compensation Board consider the

risk of airborne asbestos from properly applied cementitious Mono-Kote (sic) MK3 to

be a problem, or a significant problem, rather, in 1975?

A.

Q.

Clarification, that means after the material was applied and had set?

Yes.

A. We did not consider it a problem until it was considerably disturbed.

Q.

A.

Is that still the case?

Yes.

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192

495

496

I think it is also worth noting that during the relevant time period - 1972 through 1975

- the City of Vancouver Building Department did not have any regulations governing the use

of asbestos-containing fireproofing materials.

Mr. Adrian Geraghty, who was the Structural Engineer Plan Checker in the Building

Department during that period, gave the following evidence:

Q. Was the City of Vancouver building department, to your knowledge, aware that some

formulations of Grace's fireproofing product Monokote contained 12 to 13 percent

asbestos?

A.

No. But generally speaking, we were aware that most fireproofing

products did contain asbestos.

Q.

Was the City of Vancouver building department, to your knowledge,

aware at this time of any health hazard associated with asbestos generally or as an

ingredient in fireproofing?

A.

Well, I wasn't aware of any hazard associated with it as an ingredient in

fireproofing. I believe some hazards did exist of -- to the people who were actually

making the product in Quebec, but whether that recollection was correct, I'm not sure,

because it's this many years ago.

Q.

Was there any prohibition on the use of asbestos-containing building

materials, to your knowledge, by the City building department, City of Vancouver

building department, during the period 1972 to 1975?

A.

No, there wasn't.

Conclusion

497

The plaintiffs argue that compliance with the WCB Regulations, or with the

Vancouver City Building Code is not, per se, a defence to their claims. I agree. But, by the

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193

same token, non-compliance, in this jurisdiction at least, with an order of the EPA is not, in

itself, proof of negligence or breach of contract.

498

What the history of the regulatory position in this Province provides is, I think, some

important evidence to show that the product was not an inherently dangerous one. This must

be so, when the statutory body charged with the protection of the health and safety of the

work force, if not the general population, after careful consideration of the available

information, does not enact an outright ban on the sprayed application of the product.

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194

XIII. THE MONOKOTE PRODUCTS

Introduction

499

I turn now to the evidence concerning the spray fireproofing materials produced and

distributed by the Grace defendants, their response to the asbestos controversy, and their

belief in the safety of MK-3.

The Evidence

500

501

MK-3 was one of three Monokote spray fireproofing products manufactured and sold

by the Grace defendants at the relevant time, but it was the only one that contained asbestos -

12% to 13% chrysotile asbestos.

At the time of its installation in the Building, MK-3 had been on the market for many

years. When first introduced, it was hailed as a "breakthrough" and considered by many to

be a significant improvement over other dry-sprayed fireproofing products. This was

acknowledged by the plaintiffs' expert architectural witness, Alfred Roberts, who, under

cross-examination by counsel for the Grace defendants, testified as follows:

Q.

Is it fair to say that one of the reasons that the cementitious products such

as Monokote became very popular in this timeframe is that they did not have some of

the problems that sprayed fibre materials had and the need for tamping and sealing,

the different methods?

A.

Well, I think to architects, it was an improvement simply because it had

that seemingly crust surface that kept the -- everything together. I mean -- and the

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195

others, you only had to touch them once they dried, I mean physically with your

hands, and they were damaged. So to an architect, it was a breakthrough and

certainly one which was welcomed at the time.

. . . . . . .

Q.

Would it be fair to say that, at the time, in the early 70's, when you

considered on the one hand cementitious products versus sprayed fibre products, that

you had a rough guide that cementitious products tended to have a more adhesive

bond than the fluffier product?

A.

Oh, very much so, but to the degree, as I say, you wouldn't know.

502

The Grace defendants assert that MK-3 was an effective fireproofing product which

had performed well on several occasions. Mr. Tom Feit, who, before joining the Grace

Conn. organization was a fire-testing engineer with ULI, gave evidence about several fires

that occurred during the 1960s and 1970s in buildings fireproofed by MK-3. In each case, he

said, the product had done its job well, and structural damage to the buildings had been

prevented.

503

Another example, closer to home, was given by Mr. Ted Ladd. He spoke of the fire

that occurred during 1972 or 1973 in the Westcoast Transmission Building in Vancouver.

That building is rather unique in that its floors are supported by cables rather than by steel

columns. Mr. Ladd testified that he saw the building after the fire and that the MK-3

fireproofing had performed very well.

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196

504

During the course of Mr. Ladd's testimony about the Westcoast Transmission

Building fire, plaintiffs' counsel objected to the relevance of his testimony on this point

saying, "[t]he utility of MK-3 is not in issue here". Nevertheless, in argument, the plaintiffs

saw fit to describe MK-3 as a "very dubious product". There is no evidence to support that

latter-day assertion, and I find on the evidence that MK-3 was an effective fireproofing

product.

505

506

Of course, I do not suggest that simply because MK-3 was a useful and effective

product it cannot, at the same time, be dangerous and unfit for its purpose: (see Lambert v.

Lastoplex Chemicals Co. Ltd. et al., supra).

Grace Conn. acquired ownership of the MK-3 formula in 1963, and from then until

1971, it was produced in Vancouver and elsewhere in Western Canada by Grant Industries

Ltd. under direct licence from Grace Conn. In 1971, Grace Conn.'s wholly-owned Canadian

subsidiary, then known as Grace Construction Materials Ltd. ("GCM"), now Grace Canada,

acquired the assets of Grant Industries Ltd., and from then until its production was stopped in

the late summer of 1975, MK-3 was then produced in Western Canada by GCM.

507

During the 1960s, it became common practice to use the plenum space in buildings )

the space between a suspended false ceiling and the underside of the floor above it ) as part

of the air ventilation system. Mr. Feit testified that this new development presented a

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197

problem and that Grace had to "prove" that, when subjected to moving air, MK-3 would not

create dust.

508

Grace Conn. therefore arranged to have a series of tests of MK-3 performed by

independent testing laboratories. Those tests were conducted in accordance with the

specification requirements of the General Services Administration ("GSA"), an agency of the

United States Government, and to the standards laid down by the American Society of

Testing Materials ("ASTM").

509

Mr. Feit, who was familiar with the two organizations and the testing processes,

described the GSA as "the designer, specifier and owner of federal buildings, not only in

Washington, D.C., but throughout the United States". He said that it had created guide

specifications for a variety of building materials, including one for sprayed fireproofing, with

which Mr. Feit was familiar. That specification required that a proposed fireproofing

material pass a number of tests, in addition to the fire tests conducted at ULI, if it was to be

used on a federal government building project.

510

511

The ASTM is a body of technical experts, including engineers, which produces

standardized methods of testing various products, including sprayed fireproofing products.

The tests of fireproofing products required by the GSA in the 1960s were as follows:

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198

511.1.1

Bond Strength Under Deflection;

Corrosion Resistance;

Bond Strength Under Impact;

Bond Strength; and

Dusting.

511.1.2

511.1.3

511.1.4

511.1.5

512

The deflection and dusting tests of MK-3 were carried out according to the standards

set by the GSA. The corrosion, bond impact and bond strength tests were also carried out

according to GSA standards and, as well, those of the ASTM. The results of the tests were as

follows:

1) Deflection:

A steel deck sprayed with MK-3 was deflected 1/120 of the span or 1.2 inches,

without any cracking, flaking or delamination of the applied MK-3.

2) Bond Impact:

A 60 pound weight was dropped from 4 foot height onto a panel to which MK-3 had

been applied. The panel was then closely examined with a magnifying glass and no

trace of flaking, cracking or delamination of the MK material could be found.

3) Bond Strength:

The average bond strength of MK-3 on uncoated steel was 1131 pounds per square

foot ("PSF"), on shop coated steel 1312 PSF; and on galvanized steel 1161 PSF. The

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199

GSA standard for bond strength required that the bond strength be 20 times the

weight of the material. The bond strength of MK-3 was well over double that

standard.

4) Dusting:

There was "no measurable loss of weight" from MK-3 after running an air stream

over it for 87 hours at 104.8 mph. That is equal to over 9000 feet per minute,

whereas the GSA air erosion standard was based on air flows of only 800 feet per

minute. The GSA standard also allows weight loss of up to .025 grams per square

foot.

513

The dusting test was conducted by Boyle Engineering in April 1964. It satisfied

Grace's concern and, in Mr. Feit's words, "proved beyond doubt that Monokote was, indeed,

an extremely durable material and able to withstand, from a dusting aspect, as tested better

than any other product on the market".

514

In 1968, the California Department of Health carried out tests during the application

of MK-3 in a high school. The results of the air samples collected at that time showed that

the particle counts at the time of application were below the threshold limits or levels

recommended by the American Conference of Governmental Industrial Hygienists. Mr. Tom

Egan, who was the National Fireproofing Products Manager of Grace Conn. from 1968 to

1971, testified that this was another piece of evidence that reinforced Grace-Conn.'s belief

that MK-3 was a safe product.

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200

515

In January 1969, Grace Conn. formed a Construction Products Division ("CPD") and

Mr. Rodney Vining became its first President, a position he held until 1986. The CPD then

handled several hundred products, including roofing, insulation, and waterproofing materials,

horticultural products, concrete and chemical products, as well as fireproofing materials ) the

most important of which was Monokote.

516

When Mr. Vining became President of the CPD, there were two basic types of

fireproofing products on the market. One was a sprayed fibre material and the other was

Grace's product, MK-3. The sprayed fibre material, which was the "dominant" product in the

market, contained about 80% to 85% fibre content, predominantly asbestos fibres. MK-3, on

the other hand, contained roughly 12% to 13% asbestos fibres, approximately 58% gypsum

(as a bonding agent), approximately 29% vermiculite, and a small amount of Duponal.

517

The various components of MK-3 were mixed together at a plant, then bagged and

shipped to the job sites. There, the bags were emptied into a hopper and mixed with a

stipulated quantity of water. This formed a "slurry" that was then pumped to wherever it was

to be applied, as high as 50 or 60 stories or more. At the far end, the material came out of a

nozzle and was "hosed" onto the building structure.

518

The other sprayed fibre material was also mixed at a plant and put into bags. But at

the job site the process was quite different. There, the bags would be emptied into hoppers,

- 201 -

201

stirred around to loosen the material, and then pumped dry to the application point. Then, as

it came out of the hose nozzle, it was propelled through a "halo" of water to wet it down and

applied to the building structure.

519

Mr. Vining testified that he saw the other fibre product applied once or twice. He

said that he remembers standing some 50 or 60 feet away from the application point and

seeing nothing but a white cloud as the material came out of the hose, through the water

spray and onto the building. He compared this to the manner in which Monokote was

sprayed, and said that there were "real differences" between the two products. His evidence

on this point was consistent with all of the other evidence I heard about the performance

characteristics of the two different products.

520

Notwithstanding the difference between the two products and application processes,

the plaintiffs reject the validity of the "cementitious" description applied to MK-3. They go

so far as to suggest that the use of that term in Grace's promotional material is misleading, in

that MK-3 did not form into "cement" and lock in the fibres.

521

522

That argument is not supported by the evidence. The "cementitious" nature of MK-3

was accepted by numerous bodies, including two major testing laboratories, ULI and ULC,

as distinguishing MK-3 from the dry-sprayed products.

That distinction was also noted and accepted by the WCB when it conducted

inspections of the Harbour Centre Building during its construction in the first half of the

- 202 -

202

1970s. Mr. Albert Riegert, a former director of the Research and Standards Department of

the Occupational Safety and Health Division of the WCB, whose evidence on examination

for discovery was read into the record, testified that:

The inspector was reasonably satisfied that the cementitious material would not

present a hazard as compared to the very fluffy Limpet applied material.

523

524

Based on all of the evidence, I find that the description of MK-3 as a "cementitious"

product is a valid one.

In 1968, or thereabouts, Mr. Egan became aware of the concerns then being expressed

by Dr. Selikoff and others about the use of asbestos-containing spray fireproofing materials.

However, according to Mr. Egan and other Grace witnesses, the projects described by Dr.

Selikoff involved the use of a dry-sprayed fibre product, not Monokote.

525

One of the first things that Mr. Vining can recall about the asbestos controversy is

reading the Brodeur articles about Dr. Selikoff's studies. While he, too, felt that Dr.

Selikoff's findings related to other sprayed asbestos products, and not to Monokote, he,

together with Mr. Egan and other Grace officials, became afraid that even a cementitious

product such as MK-3 would be "tarred with the same brush". Therefore, when some of

CPD's employees came to him in the first half of 1969, and told him that they wanted to

develop an asbestos-free fireproofing product, Mr. Vining gave them the go-ahead.

526

When asked about that decision, Mr. Vining testified:

- 203 -

203

We had two objectives at that point in time. Our fellows were worried that we would

get tarred or in some way get involved with the problems the spray asbestos

fireproofing was having in the marketplace. They felt, given that possibility, that they

needed to develop a non-asbestos Monokote to offer along with our Monokote 3.

They were concerned about this, even though it was an entirely different product.

Secondly, our guys saw an opportunity to significantly increase the market share of

non-asbestos product and offering both of those. Particularly in the Midwest and the

East. That was our second objective behind doing that.

527

In a memorandum dated December 1, 1969, Mr. Egan wrote:

Knowing the building pressure against the use of asbestos in sprayed fireproofing,

particularly in the New York, Philadelphia area, and concern spreading rapidly

throughout the country, there are two prime reasons why we should get asbestos out

of Mono-Kote (sic). They are:

1. We are going to get included in the indictment since we have asbestos in Mono-

Kote (sic).

2. Mono-Kote (sic) without asbestos would give us a tremendous sales increase at

once.

Also, we have an ethical obligation to get it out.

(emphasis added)

528

The plaintiffs have seized upon those words "ethical obligation" as evidence that,

contrary to Grace Conn.'s public statements and the testimony given by its representatives

during this trial, at least one senior employee of Grace Conn. had serious concerns at that

time about the safety of MK-3.

- 204 -

204

529

When asked at trial to explain what he meant by the words "an ethical obligation to

get it out", Mr. Egan testified that:

As I have stated previously, Dr. Selikoff's premise more or less was that raw

asbestos, the danger, and the evidence showed that people that worked with raw

asbestos daily for given periods of time per day and being exposed to it over a relative

long period of time were in great danger. Their health was in great danger, and the

one area, since the formulated product we felt had such a small amount, it was mixed

in with the gypsum and the vermiculite, when the gypsum got hard and set it tends to

lock in or encapsulate everything that was in there. It kept it all in place, that any

amounts of asbestos were nil, they weren't there, or very, very minimal at best and if

that, and the only place that there was exposure to any of our people was in the

mixing plant where they made Monokote, where -- and recognized, Grace purchased

asbestos from outside vendors, people that mined and refined asbestos.

Grace mined and refined its own vermiculite. They bought gypsum from the gypsum

companies, they bought asbestos from the asbestos miner and mills, and the people in

our plants would take the gypsum, the vermiculite that they expanded in the plants

and the asbestos that they mixed and dumped that all together and blended it and

there was -- their exposure to raw asbestos, and I felt in the strongest term as possible

to say that we should not, we can get away from this. We have an ethical obligation

to -- I used the term ethical obligation to get it out.

530

During cross-examination, Mr. Roberts attempted to show that Mr. Egan was

dissembling, and that his concerns were much broader than he would admit. But Mr. Egan

remained steadfast in his position. He stated:

I believe I answered several times to the effect that the only place that I knew Grace

employees handled pure asbestos fibre, which was the problem identified directly by

Dr. Selikoff and others, was in our manufacturing plants where the purchased

asbestos bags were opened and mixed in with the gypsum and the vermiculite to

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205

make MK-3, and that was a direct exposure to the mineral that Dr. Selikoff was

alerting us was a danger, pure, raw asbestos.

531

532

I found Mr. Egan to be a truthful and straightforward witness and I accept his

explanation.

Under Mr. Vining's supervision, Grace Conn.'s CPD division embarked upon a "two-

pronged approach" to the problem. The first approach was to develop a new, non-asbestos

product, one that would be equal in all other respects to MK-3.

533

By mid-1970, Grace had developed a non-asbestos product, but it failed to pass a fire

test. From that point on, to use his words, Mr. Vining "rode hard" to make up for lost time.

An improved product was fire tested in early 1971 and achieved a number of rating

approvals, but not to the extent of equivalency with MK-3. That new product, designated

MK-4, was introduced to the market in May 1971, while work continued on the development

of a fully equivalent substitute for MK-3.

534

In October 1972, MK-5 was announced. It had achieved all of the fire ratings held by

MK-3.

- 206 -

206

535

When asked about discussions with other company people, during the time period of

1969 - 1970, as to whether or not MK-3 was a safe product from a health standpoint, Mr.

Vining testified that:

We believed we had a safe product, but we didn't have enough hard data to be sure of

that, to be able to talk to people who would raise questions on the subject.

536

Notwithstanding the search for and achievement of a non-asbestos product with the

same fire ratings as MK-3, every one of the senior officers and employees of both Grace

companies who testified at this trial, maintained their continuing belief that MK-3 was and

still is a safe product.

537

538

In 1970, Grace embarked upon the second "prong" of its approach to the asbestos

problem, namely, a testing programme to confirm their belief that their product was safe.

Confident that tests would show that MK-3 was different from the sprayed fibre

products, Grace Conn. retained Dr. Selikoff ) the person at the forefront of the asbestos

controversy ) to conduct tests on MK-3 in his laboratory at Mt. Sinai Hospital. However,

Grace Conn. was later informed by the hospital that the testing could not be scheduled. In

June 1970, Mr. Egan wrote to Dr. Selikoff extending a further invitation to test their product,

but it was not accepted.

- 207 -

207

539

Unable to secure the services of Dr. Selikoff, Grace Conn. retained other independent

sources to conduct a number of tests. These included:

1. The Tabershaw Cooper tests (1970), designed to test airborne dust levels during the spray

application of MK-3. A plenum study was also conducted, to compare the air in the

building with the outside ambient air. Of the thirty samples taken, all were below

California standards of the time, and only one was above a more stringent standard

proposed by the ACGIH. The plenum study revealed that the concentrations of

airborne asbestos fibres in the building were at "the low end" of the range of

concentrations found in the outside air.

2. The Valentine Fisher test (1970), which examined the levels of airborne asbestos fibres

during renovations in the plenum of a building containing MK-3. The results showed

that no asbestos particles were found, which was thought to be the result of purging of

the air.

3. The Bowser Morner Test (1970), which examined the potential for erosion of MK-3

when subjected to a high velocity airstream. Here a negligible amount of dust was

found in the collection filters, indistinguishable from dust levels in the ambient air.

4. The Werby Laboratory analyses (1970), which examined samples taken by Grace Conn.

and determined the levels of airborne asbestos fibres during mixing and application.

The results were below both actual and (more stringent) proposed standards by the

ACGIH. The lab also compared the application of sprayed fibre fireproofing with

MK-3 and found that fibre counts with the spray fibre fireproofing were higher, and

in one case above the ACGIH standard.

5. The Oregon State Board of Health Tests (1970), which were conducted to determine the

level of exposure workmen were subjected to during the application of MK-3. The

results showed that the TLV's were many times lower than the current standard.

6. The State of Washington Test (1972), which conducted air sampling tests during the

application of MK-3 in a building. The results again showed very low fibre release,

including no release during the clean up of dry overspray.

- 208 -

208

540

The plaintiffs dispute the findings of all of those tests. They argue, for example, that

many of them are unreliable because the samples obtained were analyzed by using an optical

phase contrast microscope, rather than a transmission electron microscope. I do not accept

that criticism as valid. Much evidence was led at trial about this matter and I am satisfied

that at that time, and indeed today, the phase contrast microscope is the appropriate tool to

use when analyzing the data in order to determine whether there exists a hazard to health due

to the presence of asbestos fibres. Dr. Gordon Bragg, whose evidence I will discuss in more

detail later, stated that while the transmission electron microscope reveals what type of fibre

is in the air, the phase contrast optical method is:

. . . the correct tool to answer the question, is there a health hazard or is there a

procedure which we should use to fulfil our regulatory responsibility . . .

541

542

I also note that the phase contrast microscope is still used by the WCB, and that it was

used by the plaintiffs' own consultants for the purposes of their report on asbestos in the

Building.

I am satisfied that, taken cumulatively, the results of those tests support Grace's belief

that MK-3 was safe, and that a valid distinction could be drawn between their product and

other spray fibre products lacking its "cementitious" qualities. Grace's reliance on those test

results, conducted as they were by independent sources, was in my opinion entirely

reasonable.

- 209 -

209

543

544

However, the results of those tests do not, in themselves, answer the legal question

before this Court concerning the safety of MK-3.

In further support of their belief that MK-3 was safe, the Grace defendants point to

the fact that the WCB had not, at the relevant time, classified the product, or the method of

its application, as hazardous.

545

Mr. Jim McKague, who was the General Manager and a Vice-President of Grace

Canada during the time when MK-3 was sold and installed in the Building, testified that he

thought then that MK-3 was safe, and that he believes that today. He testified that he would

not have continued to sell MK-3 if he had believed it to be hazardous. He said that the EPA's

prohibition of the sprayed application of MK-3 was not of concern to him because he had

seen no evidence of MK-3 creating any hazards, and ". . . was not aware of anybody in

Canada or any testing authority that felt that it was hazardous".

546

Mr. McKague testified that in the 1970s he was aware of testing of MK-3 by

Workers' Compensation Boards in three provinces, including British Columbia, and that none

of them had indicated that MK-3 was hazardous. He relied on the fact that, during the 1973

to 1975 period, no Canadian regulatory authority, of which he was aware, showed any

intention of following the EPA Regulation by restricting or prohibiting the use of sprayed

asbestos-containing materials. He said:

- 210 -

210

Q.

Mr. McKague, did you -- you've indicated that you knew in 1973 that the

EPA had issued a regulation that prohibited the spraying of the asbestos-

containing Monokote MK-3?

A.

Yes.

Q.

And you knew that that -- at that point that Grace - Conn. ceased

manufacturing MK-3?

Yes, I did.

A.

Q.

Now, did that action, EPA's action in itself, give you concern about

hazards as opposed to I believe ability to manufacture?

A.

Q.

No, I think I said before that I was not concerned about any hazards. I was

not aware of any hazards and I was not aware of anybody in Canada or any

testing authority or any government authority that felt it was hazardous.

Would you have continued to sell MK-3 if you believed it to be

hazardous?

A. Certainly not.

Q.

Now, from the time that you made the decision to continue, or at least

from the time of the EPA ban in 1973 and you continued in Canada to

manufacture MK-3, to the time of your retirement in 1979 with Grace Canada,

at any point during that period of time did you come to a different conclusion?

Did you come to a conclusion that there were safety hazards associated with

MK-3?

A.

No, I still feel the same way about the safety and the non-hazardous (sic)

of MK-3. At no time while I was with Grace did I have any reason to change

my opinion in that respect. I didn't change it up to the time I retired, and as

far as I'm concerned, I still feel the same way today.

547

The plaintiffs have argued that Grace-Conn. should have conducted other tests, ones

which would have examined the release of asbestos fibres from MK-3 during the demolition

of a building in which it had been installed. They place great emphasis on the fact that the

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211

EPA expressed its concern about the potential release of asbestos fibres on demolition in a

letter to Grace-Conn., dated July 31, 1972, in which it advised as follows:

Asbestos emissions as a result of use of asbestos-containing fireproofing materials

were extensively studied prior to our decision that banning spraying of asbestos-

containing materials was necessary to protect the public health. Such emissions may

occur during spraying, cleanup and disposal of overspray, and demolition of the

building, and control in each of these operations is unsatisfactory. Thus, we feel the

prohibition action is necessary. The building is a source when sprayed and when

demolished, and one well recognized method of air pollution control is substitution of

material that reduces potential emissions of the substance in question when such

substitution is feasible.

548

Assuming they could have done so, I do not think that anything turns, in this case at

least, on the fact Grace-Conn. did not conduct tests to determine the extent of fibre release

when a building is demolished. It is clear that when an asbestos-containing building is

demolished, stringent safety precautions of the nature described during this trial, and

mandated by the regulatory authorities, must be taken.

549

In any event, that is not why the plaintiffs decided to have the fireproofing material

removed from the Building. They do not say that they decided to have it removed now

because they, or some future owner, will have to take special precautions when the Building

is torn down. They allege that they decided to have it removed because, from the time of its

installation in the Building, asbestos fibres were continually released from the material, and

because further releases occurred whenever the material was disturbed in the ordinary course

of building maintenance and renovation.

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212

XIV. ASBESTOS IN BUILDINGS

550

Dr. Frank, whose evidence concerning the asbestos-related diseases I canvassed

earlier, is of the opinion that in any building containing asbestos-containing materials there

exists a risk of exposure to asbestos fibres in sufficient quantity to cause disease. He testified

that:

. . . [T]here clearly is a risk, it depends on how much exposure and for how long.

Housewives who clean their husband's (sic) clothes basically only had peak exposure,

maybe once a week when they cleaned clothes. A similar situation could occur in

buildings where from time to time renovations go on or dropped ceilings get taken

down or asbestos gets blown around the building.

He also said that:

Asbestos has been widely used in construction, and sprayed-on asbestos-containing

materials are of particular concern because of their friability.

. . . . . . .

Other asbestos-containing materials are also of significance, but those materials that

have been sprayed on in the past generally have the highest propensity for becoming

airborne and subsequently inhaled or ingested.

. . . . . . .

It is the friable material that could be expected to contribute most to the issue of peak

exposure, and for maintenance workers in buildings there is a particular risk . . . . For

building occupants and visitors, the risk, while less, is still a factor whenever asbestos

is present and could enter the air.

551

However, Dr. Frank acknowledged that there are no studies to support his view and

that:

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213

. . . all of the other evidence which is circumstantial, if you will, from what we know

about every other setting, would lead one to think that there are risks to people in

buildings, though the risk will be less than in other settings.

552

In his Report, under the heading "The Case for Removal", Dr. Frank wrote:

There are well-articulated public health principles that can be referenced with regard

to the protection of individuals, when considering the case for removal of asbestos

from buildings. Because of the propensity for asbestos to cause disease, especially

cancerous diseases, it would be prudent from a public health perspective to eliminate

the presence of asbestos whenever possible. The practical aspects of any removal

program will be dictated by a variety of factors, including the types and amounts of

asbestos present, its friability, its potential or current evidence of deterioration, as

well as other factors.

It has been suggested that removal puts individuals at risk and that this favours

leaving asbestos in place. Improper removal might well put individuals at risk for the

development of disease, but properly conducted removal should not pose any risk to

the workers performing the removal or the occupants of a building, and will once and

for all eliminate any concern or future problem related to asbestos, once it has been

removed. There are many documentable cases of proper removal technique, along

with examples to the contrary.

It is not a reasonable standard to suggest that one must wait for evidence of disease

related to building exposure in others than maintenance workers, where such evidence

already exists, because such evidence will be difficult to acquire, and in many groups,

the latency period has not been met for many individuals. Any one building may

not be the site for the development of a case of asbestos-related disease, but in

the aggregate, it is clear that with increased asbestos exposure, following the

principles of both dose-response and basic carcinogenesis theory, that additional

cases of disease would be expected to occur, and that removal of asbestos from

buildings is dictated under sound public health practice for the protection and

well-being of people.

(emphasis added)

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214

553

Dr. Elmes also gave evidence about the risk to building occupants of exposure to

asbestos. He stated that at the time the MK-3 spray fireproofing material was installed in the

Building, there were no studies to indicate that an occupant of a building had contracted any

of the asbestos-related diseases due to the presence of an ACM. He testified that:

. . . there might be boiler insulation in the building, there might be cementitious

fireproofing, there might be cementitious ceiling material, and so on, and there might

even be the dry spray material, limpet type spray material up above the ceiling,

suspended ceilings, and so on, and this -- it didn't matter what, you went around and

looked in the building and said, "Oh, goodness me. There is a lot of asbestos in this

building. The levels are going to be high." It didn't work out that way. They are

almost universally low unless there was some recurring or current damage to the

material in the building.

(e

554

When asked if these types of levels in a building, particularly if they consist only of

chrysotile asbestos fibres, present a risk to the health of the occupants of the building, Dr.

Elmes stated:

No, I -- in my opinion right now they don't present any risk at all. But if you simply

look at the arithmetic of it that this is three or four orders of magnitude, that's a

thousand to 10,000 times lower exposure level than, for instance, my insulation

workers were getting, and if there is a linear dose response relationship in this then

corres-pondingly whereas my people had a 15, 17 percent risk of getting

mesothelioma or a 20 percent risk of getting lung cancer, these people have a zero

zero something risk of getting either.

Q.

A.

And what about the latency period?

The latency period would be very long. Probably longer than the lifetime, because the

lower the dose the longer the latency period, and they might have to wait 300 or more

years, or in -- we did this arithmetic in one case, I remember, and we got it out to

10,000 years. But let's say a thousand years before they would get an appreciable risk

of either cancer working in the buildings.

- 215 -

215

Q.

A.

Not something that a epidemiologist would worry about if it was that length out in the

normal?

No, no.

555

On the subject of air sampling in buildings, Dr. Elmes testified that the first paper

concerning the analysis of air in public buildings appeared in 1969. Its authors, Byrom,

Hodgson and Holmes, concluded that the exposure levels in buildings were extremely low in

comparison to exposure levels in industry and did not constitute a risk. However, Dr. Elmes

acknowledged that the methodology employed for the purposes of that study was "pretty

primitive technology". He said that:

They were using optical microscopes, and their fibre counts looked bad by our

present day standards. They were of the order of .1 or under .1 fibres per cc -- .01

fibres per cc but they were using optical methods, and they were counting a lot of

fibres that we now suspect must have been not asbestos fibres . . . But they

nevertheless concluded that by comparison with the levels in industry these were so

low that they didn't constitute a risk.

556

That conclusion, Dr. Elmes agreed, was not generally accepted by the medical

community at the time. There were people, he said, who believed that the authors were too

closely associated with the asbestos industry. However, he maintained that the scientists who

were working in that field and who knew the authors did accept their findings.

557

Dr. Elmes also testified that right up to the end of 1975, there was no evidence of an

individual who had been exposed to asbestos fibres at the levels experienced by a building

- 216 -

216

occupant, contracting any one of the asbestos-related diseases, including mesothelioma. In

fact, he said, he is unaware of any evidence at the present time of that happening.

558

In 1975, Dr. William Nicholson, one of Dr. Selikoff's colleagues at the Mount Sinai

Hospital, was commissioned by the EPA to conduct a study of asbestos levels found in the

ambient air in buildings. He compared the outside ambient air with the air in buildings in

which asbestos-containing fireproofing material had been applied. Dr. Elmes described his

Report as one of the most important papers that has been published on this subject.

559

Dr. Nicholson's study shows that counts of asbestos fibres in the air in buildings in

which cementitious asbestos-containing material was used were lower or equivalent to the

counts found in the outside air. It also showed that some of the buildings in which dry

sprayed fireproofing or insulation materials had been applied had slightly raised fibre counts.

560

561

It is, however, important to note that, by "cementitious", Dr. Nicholson was referring

to products containing a Portland cement component. MK-3 does not. It contains gypsum as

the binding agent.

As to the current state of knowledge, in my opinion, the evidence given by all of the

medical experts, with the exception of Dr. Frank, clearly establishes that the type of exposure

encountered in buildings is far too low to increase the risk of contracting any of the asbestos-

related diseases.

- 217 -

217

562

Perhaps the most importance evidence in this area was given by Dr. Gordon Bragg.

He is a mechanical engineer, licensed to practise in the provinces of Ontario and Alberta.

During his professional career, he has been involved in a number of engineering projects,

including working as a consultant on asbestos questions for the Ontario Ministry of Labour

and Ministry of Health. During his years as a consultant, Dr. Bragg gave advice to the

government concerning proposed legislation and regulations relating to asbestos. He also

visited plants and factories to conduct fibre level measurements and to advise the owners on

the control of asbestos.

563

Dr. Bragg is currently a full professor of mechanical engineering at the University of

Waterloo. Several of the senior or graduate level courses taught by Dr. Bragg have involved

the study of asbestos-related issues. He has published approximately 50 papers in refereed

journals, another 40 in contract reports or as guidance documents, and has been involved in

the production of four books. Of these publications, about half of each category deal with

asbestos-related matters. He has also acted as a peer reviewer for a number of refereed

journals and several other publications.

564

Dr. Bragg has taken literally thousands of air samples relating to asbestos. He has

observed the manufacture and the application of ACMs, including cementitious fireproofing,

and he has evaluated ACMs in approximately one hundred buildings, including schools,

homes, and office buildings.

- 218 -

218

565

Dr. Bragg was qualified to give expert evidence concerning the measurement and

behaviour of airborne asbestos fibres released from ACMs in buildings. He was also

qualified to give expert evidence as to the sources of asbestos fibres generally found in the

ambient air.

566

Dr. Bragg spoke of the levels of asbestos fibres found in the ambient air, the scientific

term for which is the "background level". He noted that the standards for exposure to

asbestos set by the B.C. Workers' Compensation Board are approximately 2000 times what is

expected to be present in the ambient air. He said that these permissible exposure levels

("PELs") are comparable to those established in the other provinces and in a majority of the

developed countries as being an "appropriate response" to the risks of asbestos exposure. Dr.

Bragg noted that PELs set by the Occupational Safety and Health Administration in the

United States were slightly lower than those in B.C. This, he said, is because the U.S.

legislation requires that the lowest level possible must be achieved.

567

Dr. Bragg is familiar with a great many studies that compare the indoor asbestos

levels of buildings containing ACMs with the outdoor level around the same buildings. He

said that, in the great majority of those studies, it was concluded that there was no significant

difference between indoor and outdoor levels.

- 219 -

219

568

569

Dr. Bragg noted that these findings applied whether or not the ACM was in good

condition, and that they took into account the possibility of repairs being performed in the

building.

Dr. Bragg stated that, as a result of the findings that indoor and outdoor levels are

comparable, it is difficult to ascertain whether asbestos detected inside building surfaces

originated from the ACM or from other sources in the outside ambient air. He said:

Not only is it not possible in general to determine whether individual fibres have

come that way, but if we are talking about very small fibres, it's probable, certainly

it's possible that significant levels on surfaces indoors have come from the settling of

outdoor origin asbestos. So that, for example, although I have not seen data . . .

surface level fibre concentrations would be found in buildings that don't contain

asbestos and never did.

570

When asked whether the findings about indoor and outdoor levels applied to

buildings containing cementitious fireproofing, and specifically to buildings containing MK-

3, Dr. Bragg gave the following evidence:

A.

As I understand it, MK-3 consists of about 10 per cent chrysotile and some

vermiculite and about 60 per cent gypsum.

Q.

I'll give you some assumptions to base this on. Assume that the product

consists of approximately 60 per cent gypsum and approximately 30 per cent

vermiculite and approximately 10 to 15 per cent asbestos.

- 220 -

220

A.

Q.

A.

And it is a wet-sprayed product?

Yes.

Under these conditions, this set of conclusions I spoke to would certainly

apply, without question. This is particularly true because the essence of an emission,

anything that might cause an emission, is a disturbance to an asbestos-containing

material and since such a material which is wet sprayed and which has gypsum as a

binder or cement, is going to be fairly rigid. It would be considerably less susceptible

to a disturbance or to damage than, say, a dry-sprayed product. So it would certainly

be applicable in this case.

Q.

Now, Dr. Bragg, what in your opinion causes asbestos fibres in ACM to

become airborne at all?

A.

In one word, a disturbance is necessary. To explain what I mean by that, I

think it's appropriate and useful to break the disturbance which might cause an

emission into a three-step process and it clarifies a number of things that help to

understand why these levels are as they are.

The first thing we need to do if we are to get an airborne fibre of importance into

the air, is break up the matrix of the product. A matrix is a mixture of things and in

this case, vermiculite, gypsum and asbestos. We have got to break that up and create,

broken away from the material, something small enough to get into the air for any

significant amount of time and this breaking up or grinding or processing,

scientifically it's called comminution, it's the science of making small things out of

large things, requires a fair focused force of some sort.

The second stage that's required is that, assuming that that's being created, we

need to move that small particle and again I would suggest to you that the particles

that are of interest are so small that we can't see them. If we can see a particle, it's too

large to be taken in, to be inhaled or respired, and these very small particles are held

on to solid surfaces with some considerable force. Something that's unusual in our

day-to-day understanding. We need that force to bring it off the solid surface.

I might give an example of what's happening here, if you think of the dust on your

car, that particulate which is literally hundreds of times larger than that that's of

concern to us here, stays on your car in the presence of driving in high velocity, it

even stays on your car or the smaller ones do, in the presence of raindrops and things

of that nature. They're held on there by electro-static forces or things which are

similar to electrostatic forces.

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221

These small particles where [which are] of interest to us are many times smaller

and held on many more times strongly. Again, to overcome this, we need a

disturbance, a focused force. That's the second thing that needs to happen.

The third thing that needs to happen is we need to get this particle away from the

surface and into an area where it's sampled or collected or something like that, and

this is -- that happens very easily. This is just the natural room air current and

outdoors the natural wind. This will indeed happen very easily if the first two occur.

So to overcome particularly these first two requirements, to get first a particle and

then to get it into the air, we need a disturbance of some sort.

Q.

I now have a new explanation to my wife about my dirty cars. But

moving to the question of getting the product, getting the fibres off the ACM, would

an air stream over the ACM be sufficient to release fibres from the matrix?

A.

Not any normal air stream that could be contemplated in a building, would

not be sufficient to do this. This has been studied fairly extensively by myself and

there's a number of other studies that suggest that normal air streams of the type you

find in buildings simply are not sufficient to bring these respirable particles into the

air. This is the opposite of what's happening with visible debris where everyone, of

course, is familiar that the large non-inhalable debris will move relatively easily

through mechanisms of this sort.

Q.

What about vibration that occurs in a building, either from the outside,

from external sources or indeed from the operation of equipment or some other

internal source in the building?

A.

Normal forces of -- the vibration forces of the type we find in buildings,

motors vibration, equipment moving, things of this sort, is not sufficiently focused to

overcome these forces for the small respirable particles. Again, this is not the

condition for large visible debris. Everyone is, of course, aware that that larger

material can, of course, be dislodged by mechanisms of that sort.

Q.

What force then would be necessary, in more detail, to release an asbestos

fibre from the matrix?

A.

Again, we are looking for it to be of a magnitude and sufficiently focused

for it to occur, that the best example is sanding. Sanding the many small hard

particles on sandpaper cause small focused forces that are very effective, actually

creating the dispersal mechanisms or the creation of dispersal mechanisms I'm

speaking of. Even something like, for example, drilling might conceivably produce a

measurable level while it was occurring in the immediate vicinity of the drill. Sawing

- 222 -

222

would be another example where indeed you might get a measurable level in the

vicinity of the event.

Q.

A.

What about hitting the fireproofing?

There have been a number of studies of this, one of which was by Mr.

Ewing, and it suggests that is not necessarily so. That something like a hammer or

something is not necessarily sufficiently focused as to certain -- as to give a level

which is measurable above this indoor background that I spoke of earlier.

Q.

Could you turn to tab 6 in this brief of material before you, Dr. Bragg.

You mentioned Mr. Ewing and there is a paper by Mr. Ewing at tab 6. Are you

familiar with that paper?

A.

Yes.

Q.

And does that paper bear on the discussion at present concerning impact

on ACM?

A.

Q.

It is one instance of the studies I mentioned, yes.

And with respect to the questions that I originally posed, hitting

fireproofing with some object, does the paper reach a conclusion concerning that?

A. Yes, it does. Under "Results", if I may quote, it says that "Asbestos

structures" and Mr. Ewing is using a different measurement of the asbestos present

than I was speaking of, however, the general conclusion remains: "Asbestos

structures were not detected above background levels in air samples collected during

the impact test and during two hours immediately following the impact activities." . . .

571

During cross-examination, Mr. Williamson challenged Dr. Bragg's suggestion that

there must be a disturbance before fibre will become airborne. Specifically, Mr. Williamson

put to Dr. Bragg the comments contained in two EPA documents suggesting that as ACM

deteriorates with age, it releases fibres without any sort of disturbance. Dr. Bragg was

adamant in his rejection of this conclusion. He stated:

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223

. . . this is an example of the sort of thing we frequently see in regulatory and

guidance documents. These are not scientific documents, as you have heard me

speak yesterday. This is typical of the sort of thing that has been derivative for the

EPA documents. As I pointed out, the scientific basis for these -- for these

conclusions in the main is nil, they are without foundation. There is ample proof that

the majority of these statements are contrary to current findings and I would dispute

the majority of them.

572

573

He further noted that regulatory agencies often err on the side of safety which,

although a laudable objective in theory, may in practice result in a misdirection of resources

to places where there is no significant risk.

In further response to Mr. Williamson's cross-examination on the release of fibre

absent any kind of disturbance, Dr. Bragg made an important point relating to deterioration

and airborne asbestos fibre. He stressed that the presence of debris does not necessarily

indicate the presence of measurable levels of fibre. He noted that there are two kinds of

dislodging: a dislodging of a chunk of ACM, and a further dislodging of fibres from that

chunk. He stressed that the first does not necessarily lead to the second. On this point he

stated:

I would agree that the evidence is quite consistent that debris below many of these

products occurs on a quite frequent basis. Certainly we know that it has occurred in a

very significant number of the hundreds of buildings where we have done air

sampling and we know as a result that the presence of this debris is entirely

- 224 -

224

consistent with no measurable levels of asbestos fibre above the background

levels . . . .

(emphasis added)

574

575

Dr. Bragg also noted that the important distinction between dry-sprayed and

cementitious materials is often not made, the latter being less likely to be disturbed over time.

Dr. Bragg was asked to explain what happens to the fibres that have been emitted

following a disturbance of sufficient force. He stated that in any room, human movement,

forced ventilation or even minute temperature differences will cause dilution. The result is

that the number of fibres per cc of air goes down as more air becomes involved. Following

dilution, ventilation has the greatest impact on the emission of asbestos fibres. Dr. Bragg

stated that even in relatively tightly sealed office buildings, there is air entering and air

leaving the building in equal proportion. This occurrence is quantified by a phrase called "air

change per hour". Dr. Bragg stated that two air changes per hour would be expected not only

in an individual room but throughout the entire building. He stated that two changes per hour

is a typical value, one that is used by the U.S. EPA as a minimum.

576

When asked whether, over time, there could be a build-up of asbestos fibres in

buildings containing ACMs, he replied:

My explanation, I hope, has indicated that there is no reason to expect one and we

have again hundreds of buildings that have been inspected, both of varying ages and

of varying types and there is neither in the field nor on the basis of this type of

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225

description, any evidence of buildup at all. There is, to my knowledge, no such

thing as any building that's ever been demonstrated to have a consistently

elevated level that's significantly above outdoor ambient.

(emphasis added)

577

In short, Dr. Bragg's evidence confirms the opinions expressed by the medical experts

called by the Grace defendants that there is no increased risk to workers or occupants from

the low level of exposure to asbestos that one may expect to encounter in public buildings

generally.

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226

XV. THE ALLEGED CONTAMINATION OF THE BUILDING

I turn now to a consideration of the evidence regarding the Spencer Building itself,

and whether the plaintiffs have demonstrated that, contrary to the expert evidence about

buildings in general, it was "contaminated" by MK-3 to the extent that asbestos fibres posed

a substantial danger to the health of its workers and occupants.

578

579

In deciding this question I will focus, primarily, on two key reports: the May 2, 1987

report prepared by the plaintiffs' consultants, Pinchin-Harris & Associates Ltd. (and the

events leading up to the release of that report), and a later report commissioned by the

plaintiffs and prepared by Mr. William Ewing some time after the removal project had

begun.

The Pinchin-Harris Report

580

Following the shutdown of the work site on March 30, 1987, Jon Hall sought the

advice of Pinchin-Harris & Associates. They were (and, under the name Pinchin Harris

Holland, continue to be) a firm specializing in the field of asbestos containment and removal.

Their practice was, as a general rule, to first conduct a survey in order to establish or confirm

the presence of asbestos-containing materials and ascertain the condition of any such

materials. Depending upon those findings, they would then make

recommendations and specifications for the control or containment of such materials or

oversee its removal from the building.

227

581

582

Mr. John Holland, a professional engineer with many years of experience in the field,

was the person assigned to supervise the work done by Pinchin-Harris in connection with the

Building.

As stated in the introduction to their final report, Pinchin-Harris were initially

retained to establish the presence and extent of asbestos-containing materials within the third

and fourth floors of the Building (those intended for occupancy by the DFO), to survey and

establish the extent and amount of asbestos-containing materials in the balance of the

Building and to make recommendations with regard to the control of that material.

583

Upon being consulted by Mr. Hall, Pinchin-Harris ordered a test of three samples of

fireproofing, the results of which were released on April 2, 1987. The tests revealed the

presence of chrysotile asbestos in excess of 10%. Pinchin-Harris then began work on a

report which would make recommendations for a course of action. That report was

completed on May 2, 1987.

584

The plaintiffs, however, did not wait for that report before taking action. The

decision to remove the asbestos ) at least from the third and fourth floors ) was made on the

same day the test samples revealed the presence of asbestos, without the benefit of the

recommendations contained in the May 2, 1987 report.

228

585

586

587

In a letter to the DPW, dated April 2, 1987, the plaintiffs committed themselves to

removal, stating:

The Landlord will live up to its commitment and remove the contaminated material

from both the 3rd and 4th floors.

Action on this matter continued at a remarkably swift pace. The following day,

Pinchin-Harris was retained to design the scope of an asbestos removal programme and to

carry out site inspections and air sampling procedures during the removal process. By April

8, 1987, a call for bids to complete the work had closed.

According to the plaintiffs, the April 2 decision was made "after taking advice from

Pinchin-Harris". The value of any such advice would have been minimal at best, given that

the test results had only just been received and work on the report had just begun. Indeed,

Pinchin-Harris had only inspected the site once by that time, and they went on to inspect it

five more times later that month.

588

On April 9, 1987, Mr. Rainer Hackert, the President of Polaris (Canada), wrote to a

Mr. Rick Atkinson of Sears Canada advising that:

On March 31st, 1987 a routine inspection by Workers Compensation Board of B.C.

(sic) revealed the potential of small amounts of Asbestos in the fire proofing on the

third and fourth floors of [the Building]. We have previously undertaken a testing

programme ourselves which had proved negative and therefore, authorized a more

extensive testing programme be initiated to determine if asbestos was in fact present.

It was found that a small percentage of the material was asbestos and therefore in

229

accordance with the terms and conditions of our Lease Agreement with the

Department of Fisheries and Oceans will have to be removed under the supervision of

the Workers Compensation Board.

The fire proofing material is a very hard cementation material and forms no risk or

hazard in its undisturbed state . . . .

589

On July 10, 1987, Mr. Hall received a letter from Mr. Ken Stirling of Pinchin-Harris

& Associates advising that:

. . . I would confirm that there is no immediate hazard presented to tenants on the

third and fourth floors resulting from asbestos-containing materials found elsewhere

in the building. This is the unanimous conclusion of an assessment conducted by

representatives of Public Works Canada, Labour Canada and Health & Welfare

Canada following a building survey undertaken on April 15, 1987. . . . .

590

On September 25, 1987, Mr. Sterling wrote again, this time advising that:

. . . I would confirm that there is no hazard presented to tenants on the sixth and

seventh floors resulting from asbestos-containing materials found elsewhere in the

building. This was the unanimous conclusion of an assessment conducted by

representatives of Public Works Canada, Labour Canada and Health & Welfare

Canada, with regard to third and fourth floor tenencies, following a building survey

undertaken on April 15, 1987 . . . .

591

Those letters, obviously, do not support the allegation that the plaintiffs embarked

upon the removal of the asbestos-containing fireproofing material because of a concern for

the health of the workers and occupants of the Building.

230

592

593

There is another highly significant piece of evidence that casts doubt on the plaintiffs'

assertion that they embarked upon the abatement programme to protect the health of workers

and occupants, and to eliminate the cause of damage to their property.

On April 16, 1987, Mr. Douglas Robinson, then the Asbestos Coordinator for the

DPW, issued a report in which he provided his assessment of the state of the fireproofing in

the Building. In his report, based upon a number of factors, he assigned an exposure number

(or hazard rating) of six on a scale of zero to 171. His report contains the following

explanation of the significance of this rating:

A score of less than 12 indicates that the material can be considered stable and

unlikely to present a health hazard. Asbestos abatement control measures are

normally only required after a score of 10 is exceeded . . .

594

The report goes on to state the following conclusion:

Although the fireproofing is not considered hazardous in its present state, the

landlord has initiated removal procedures on the 3rd and 4th floors to comply

with lease clauses . . . [A]s outlined previously, the material is tight, well bonded

and stable. Fibre levels are therefore unlikely to reach hazardous levels unless

the material is deliberately disturbed.

(emphasis added)

595

Given the impartiality of its source, this conclusion ) while admittedly made based

upon limited inspection of the Building ) is particularly damaging to the plaintiffs' claim.

231

596

Because of the provision in the Lease Agreement warranting the Building to be

asbestos-free, removal was the only option open to the owners. From their point of view, it

would have been pointless to wait for the Pinchin-Harris report before making the decision

because, even if Pinchin-Harris had recommended against removal, this would not have been

satisfactory to the DPW. Mr. Hall confirmed as much in his evidence. He stated:

Q. Mr. Hall, you said you personally or corporately determined asbestos must be removed

from the third and fourth floors. Did you consider anything other than removal?

A. We considered and discussed with our consultants, Pinchin Harris, what is referred to as

encapsulation, which is the enclosing of the asbestos-containing material.

However, in this particular instance we had already warranted that the premises

would be provided to the Department of Public Works asbestos free or free of

friable asbestos and the encapsulation of the material would not encompass that.

(emphasis added)

597

On the evidence, I am satisfied that the decision to remove the asbestos-containing

fireproofing material from the third and fourth floors was taken solely for the purpose of

retaining the DFO as a tenant. Moreover, the evidence shows that the owners had no

intention at that time of removing the material from any other part of the building, and none

of the other tenants, save Sears, were advised of the presence of an asbestos-containing

material.

598

I find the evidence on this matter to be of particular significance. The plaintiffs have

repeatedly asserted their concern for the health of the occupants of the Building, in stark

contrast to their unflattering characterizations of the conduct of the Grace defendants with

regard to the continued manufacture and sale of MK-3 in Canada. Accordingly, I think it fair

232

to emphasize that the plaintiffs' initial decision to remove the material from the third and

fourth floors of the Building was clearly driven by economic, rather than health-related

considerations.

599

600

I will return to these matters, in greater detail, in the "Final Conclusions" section of

this judgment.

Notwithstanding my conclusion regarding the real motivating factor behind the

decision to remove the asbestos-containing material, in my opinion, that finding would not

be, in and of itself, fatal to the plaintiffs' claim if they had been able to demonstrate that, ex

post facto, they learned of facts that would establish, on a balance of probabilities, that there

did exist a health hazard sufficient to warrant the removal of the material, quite apart from

the requirements of the lease.

601

602

To that end, I turn first to the report issued by Pinchin-Harris on May 2, 1987, entitled

"Report on the Assessment and Control of Asbestos-Containing Insulation Materials in the

Sears Spencer Building".

In connection with that report, Pinchin-Harris conducted surveys over six days during

the months of March and April, and sent the samples in for testing. In argument, the Grace

defendants detailed a number of concerns with regard to what they termed "the unscientific

nature of the sample techniques" employed by Pinchin-Harris, and invited this court to view

233

the results with scepticism. While I acknowledge their concerns, I am nevertheless satisfied

that the procedures used were adequate so as to produce reliable results.

603

I should also mention one other related matter. The Grace defendants argue that the

plaintiffs have failed to prove that MK-3 was the product that was tested and eventually

removed from the Building. They say that the plaintiffs have failed to take account of the

history of the Building and the likelihood (if not the certainty) of many other asbestos-

containing products having been installed in it before 1972.

604

There is a substantial body of evidence which shows that approximately 250 tons of

MK-3 was installed in the Building by Donalco between 1972 and 1975. Several of the tests

that were made revealed a chrysotile asbestos content "consistent" with MK-3. I am satisfied

that the plaintiffs have discharged the burden of establishing the presence of that material in

the Building. The real questions are: (i) did it contaminate the Building; and (ii) was it

hazardous to health?

605

Returning to the Pinchin-Harris Report, the results of the tests of these samples

revealed the presence of four types of friable ACM in the Building: preformed thermal

insulating product; corrugated paper products; finishing cement; and spray applied products.

234

606

607

The Report provides a floor-by-floor breakdown detailing the presence, condition and

potential for disturbance of the ACM. The assessment of condition and potential for

disturbance was made in accordance with factors set out by a U.S. EPA Guidance Document.

I think it worthwhile to reproduce here the findings of the Report:

9th Floor:

This floor encompasses the "old" (Spencer) section of the building structure from grid

lines G-L/1-10. The space is largely open with the exception of sprinkler tanks

occupying the majority of space on the west side of the floor, an emergency generator

room and three elevator machine rooms. Mechanical insulation materials are limited

to preformed thermal products on a Water Tank/Separator (no longer in use) and

finishing cement on pipe elbows. Such materials are in very good condition.

Sprayed-fibre (Mineral fibre) fireproofing is applied to the deck and oversprayed on

beams and is exposed throughout the floor. This material is also in very good

condition but sees limited access during maintenance procedures. Access to the floor

is limited to building maintenance personnel.

Assessment: Mechanical Insulation ) Good Condition ) Low Disturbance Potential

8th Floor:

This floor encompasses the "old" side of the building and is used predominantly for

storage of materials. The floor at one time contained a kitchen as evidenced by

building materials found on the floor. Mechanical Insulation materials were observed

to be glass fibre along water lines including elbows and tees. Cementitious

fireproofing (Monokote) is applied to the deck and oversprayed on the beams and is

exposed throughout the floor. All materials were observed to be in good condition.

Access to the floor is limited.

Assessment: Mechanical Insulation ) Good Condition ) Low Disturbance Potential

Spray-applied Insulation ) Good Condition

) Low Disturbance Potential

- 235 -

8th Floor Void Space:

235

This space circumvents the southwest side of the building and contains pipes left in

place from the old chiller system. Mechanical insulation on these pipes has

delaminated over extensive areas and significant amounts of debris were observed on

the floor slab. Access to this area is limited to the 8th floor.

Assessment: Mechanical Insulation ) Poor Condition ) Low Disturbance Potential

7th Floor:

This floor encompasses the "old" side of the building and comprises a number of

office areas. A suspended ceiling is in place over the entire floor with the exception

of the drywall ceiling in place over the central corridor. Mechanical Insulation

materials, found in the ceiling space, were observed to be glass fibre along water lines

and over ducted air systems. Cementitious fireproofing (Monokote) is applied to the

deck from grid lines 2-9/J-L, but does not appear to have been applied down the sides

of secondary beam structures of the double-tee construction. Q Deck assemblies

found in a few areas of the deck were also sprayed with what appears to be a

contiguous application of Monokote. No fireproofing was observed in the area

encompassed by grid lines J-G/1-10 or in areas 1-2/J-L and 9-10/J-L. Monokote

applications appear in relatively good condition with the exception of those areas

where the installation of ceiling and duct hangers has resulted in disturbance. Access

to the ceiling space is limited to building maintenance personnel and authorized

renovation trades.

Assessment: Spray-applied Insulation ) Good Condition ) Low Disturbance Potential

6th Floor:

This floor encompasses the "old" side of the building and comprises one large office

area. The floor is currently vacant. A suspended ceiling is in place over the entire

floor. Mechanical Insulation materials, found in the ceiling space, were observed to

be glass fibre along water lines and over ducted air systems. Cementitious

fireproofing (Monokote) is applied to the deck and oversprayed on beams. Monokote

applications appear in relatively good condition with the exception of those areas

where the installation of ceiling and duct hangers has resulted in disturbance. Access

to the ceiling space is limited to building maintenance personnel and authorized

renovation trades.

Assessment: Spray-applied Insulation ) Good Condition ) Low Disturbance Potential

5th Floor:

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236

This floor encompasses the "old" side of the building and is currently used by Sears

as a warehouse area. A suspended ceiling is in place over the entire floor. Water

stains observed on ceiling tiles are not indicative of water damage above. This

observation was confirmed by the building engineer who indicated that tiles on this

floor are used to replace water damaged tiles in other Sears areas. Mechanical

Insulation materials, found in the ceiling space, were observed to be glass fibre along

water lines and over ducted air systems. Cementitious fireproofing (Monokote) is

applied to the deck and oversprayed on beams. Monokote applications appear in

relatively good condition with the exception of those areas where the installation of

ceiling and duct hangers has resulted in disturbance. Access to the ceiling space is

limited to building maintenance personnel and Sears Sales and Security Personnel.

Assessment: Spray-applied Insulation ) Good Condition

) Low Disturbance Potential

3rd and 4th Floors:

Both of these floors are currently under renovation including the removal of all

friable ACM. The floors encompass both old and new structural areas. Cementitious

fireproofing (Monokote) is applied on the "old" side in the area encompassing grid

lines 1-10/G-L. Mechanical Insulation materials were observed to be glass fibre

along water lines and over ducted air systems. Monokote materials are exposed and

appear in good condition other than in areas disturbed during pre-removal renovation

activities.

Assessment: Spray-applied Insulation ) Good Condition

) High Disturbance Potential

1st and 2nd Floor (Sears):

This large retail space encompasses both old and new structural areas. A suspended

ceiling is in place over retail floor spaces. Exposed cementitious fireproofing

(Monokote) can be found in non-retail areas below the mezzanine (e.g., next to the

freight elevators). Mechanical Insulation materials, found in ceiling spaces, were

observed to be glass fibre along water lines and over ducted air systems. Sprayed-

fibre (Mineral fibre) fireproofing is applied to structural support beams in elevator

shaft areas. Cementitious fireproofing (Monokote) is applied to the deck and

oversprayed on beams in the area encompassing grid lines 1-10/G-L (1-9/G-L on

Main Floor). Sprayed-fibre and Monokote applications both appear in relatively good

condition with the exception of those areas where the installation of ceiling and duct

hangers has resulted in disturbance. Access to the ceiling space and to non-retail

- 237 -

237

areas is limited to building maintenance personnel and Sears Sales and Security

Personnel.

Assessment: Spray-applied Insulation ) Good Condition ) Low Disturbance Potential

in retail areas ) High Disturbance Potential in non-retail areas

2nd Floor Mezzanine:

This storage area encompasses grid lines 1-9/K-L. Cementitious fireproofing

(Monokote) is exposed on the deck and oversprayed on beams in the area.

Mechanical Insulation materials were observed to be glass fibre along water lines and

over ducted air systems.

A Chiller unit in the mezzanine mechanical room was observed to be installed on

isolation mounts. The Monokote application appears in moderate to poor condition.

Limited physical disturbance was noted along with areas of water damage. Some

patching of the application has taken place.

Assessment: Spray-applied Insulation ) Moderate to Poor Condition ) High

Disturbance Potential

Parkade Skywalk:

This overpass joins Sears to the Parkade over Richards Street. A suspended ceiling

conceals a bare Q-deck roofing assembly. No insulation materials were observed.

Mid Plaza Level:

Two retail areas were examined (Old Birk's and J. Reid Shoe Stores). A cementitious

fireproofing (Monokote) was observed to be applied to the deck and oversprayed on

beams. Mechanical Insulation materials were observed to be glass fibre along water

lines and over ducted air systems. Monokote applications appear in relatively good

condition with the exception of those areas where the installation of ceiling and duct

hangers has resulted in disturbance. Ceiling space access is limited to building

maintenance personnel and authorized renovation contractors.

Two non-retail areas were examined (Electrical and Mechanical Areas). A

cementitious fireproofing (Monokote) was exposed on the deck and oversprayed on

beams in both areas. An additional application of cellufibre material (green in colour)

was observed over the Monokote application in the Mechanical area. The application

appears in moderate condition in both areas and has been disturbed by dry wall stud

or duct hanger installations in these areas.

- 238 -

238

Assessment: Spray-applied Insulation ) Moderate to Good Condition ) High

Disturbance Potential

Cordova Street Level:

Two retail areas were examined (Old Sony Store and Tchibo Store). Suspended

ceilings were observed in most store areas. Two distinct applications of a Sprayed-

fibre (Mineral fibre) and a cementitious fireproofing (Monokote) were observed on

deck and beam in the Tchibo area. Only Monokote materials were observed in the

Sony store. Mechanical Insulation materials were observed to be glass fibre along

water lines and over ducted air systems. Fireproofing applications appear in

relatively good condition with the exception of those areas where renovation work

has resulted in disturbance. Ceiling space access is limited to building maintenance

personnel and authorized renovation contractors.

Assessment: Spray-applied Insulation ) Good Condition ) High Disturbance Potential

Trucking Level:

A Sprayed-fibre (Mineral fibre) application is exposed on deck and beam over most

areas on the "old" side of the building. The material appears in good condition but is

accessible in a number of storage and receiving areas.

Parking Level:

No spray-applied insulation materials were observed on this level. Mechanical

Insulation materials on water tanks in the Mechanical Room may contain asbestos

(external finishing coat). Such materials appear in good condition and were not

disturbed for sampling. Insulation materials on pipe lines were observed to be glass

fibre.

Assessment: Mechanical Insulation ) Good Condition ) Low Disturbance Potential

Harbour House:

An exposed application of cementitious (Monokote) fireproofing was observed on

deck (Q-deck) and beam. The material has been sprayed black and appears in good

overall condition. Some damage was noted. Access is limited to building

maintenance personnel. Mechanical insulation materials were observed to be glass

fibre.

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239

Parkade:

An exposed application of cementitious (Monokote) fireproofing was observed on

deck and beam. The application is limited to the Cordova and Home Street Levels.

The material appears in moderate condition with some water damage and

delamination in evidence. The material is readily accessible.

608

So as to fairly and accurately reflect the information presented to the owners of the

Building in that report, I will set out the observations made in it under the heading

"Discussion":

DISCUSSION

Asbestos exposure was initially associated with a fibrotic scarring of the lungs termed

Asbestosis. Asbestosis reduces the lungs vital capacity, diffusing capacity and

arterial oxygen content leaving the victim short of breath on exertion. Asbestos

exposure has more recently been linked to lung cancer, cancer of the chest and

abdominal linings and cancer of the esophagus, stomach and colon.

A latency period of 15 to 35 years is often associated with asbestos-related diseases.

Such latency periods have made epidemiological studies difficult. Although a class

dose-response relationship has been established for asbestos-related disease, the

assessment of risk at low exposures is at best uncertain. In fact, no scientific

consensus exists as to the "safe" or "threshold" level of exposure to asbestos.

There is also a considerable amount of scientific controversy regarding the effect of

fibre type. All fibre types have been found to lead to all types of asbestos-related

disease. However, the amphiboles (crocidolite and amosite) are generally considered

to be more hazardous than the serpentines (chrysotile).

Although the mechanism and epidemiology of asbestos carcinogenesis is not yet well

defined, accumulating evidence suggests that human exposure should be maintained

at a minimum. It should be noted, however, that asbestos is a naturally occurring

mineral and that measurable concentrations of asbestos fibre in air can usually be

obtained in any given location. In addition, the presence of ACM on building and

mechanical structures does not in itself imply the presence of elevated airborne

asbestos.

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240

The ACM observed in the Spencer Building and in associated building structures are

friable materials in that they can easily be reduced to dust in the hand. One possible

exception is asbestos-cement drainage pipe which was observed throughout the

building and is non-friable. Friable materials are of concern in that they have a

potential for airborne fibre release. Friable materials in poor condition with a high

potential for disturbance or erosion will release fibres in the air.

The assessment factors outlined in Appendix 1 provide an indication of material

condition and the potential for disturbance or erosion. Water damage and direct air

stream factors have been directly correlated with elevated airborne fibre levels (3).

The assessment table in Appendix 2 provides a simple qualitative guide for the

assessment of mechanical structures with friable ACM. Possible control alternatives

include operating and maintenance programs, enclosure and removal.

Removal eliminates the potential for airborne fibre release and provides the only

permanent solution. In general, removal involves the establishment and use of

polyethylene containment barriers, an air exhaust system, a decontamination

enclosure system and appropriate protective equipment.

Enclosure applications involve the installation of various barrier materials with

appropriate consideration for future maintenance and renovation work.

Operating and maintenance programs are instituted when deferred action is warranted

by material hazard assessments. The program involves training of maintenance staff,

periodic inspection and hazard assessment, appropriate scheduling of maintenance

activities and proper work procedures.

Our control recommendations are listed in Appendix 4. The recommendations

coincide with the direction provided by the assessment table (Appendix 2) and our

experience in the field. In general, we feel that exposed ACM in non-retail areas of

the 1st and 2nd Floors and on the mezzanine level of Sears should be addressed.

Removal is the preferred control option although enclosure applications could be

considered in some areas. Similarly, removal should be considered for retail stores

on the Mid-Plaza and Cordova Street levels to coincide with planned renovations.

Immediate control measures are not required for other floor levels although removal

should precede planned renovations involving fire walls, floor penetrations etc. on

floors 5 through 8. In addition, any plans to remove, replace or reinstall pipe systems

in the 8th Floor Void Space should be preceded by asbestos removal procedures.

Finally, building maintenance personnel should be properly instructed with regard to

ceiling work procedures and the use of respiratory equipment in this regard.

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241

609

The Report concludes with the follow comments:

CONCLUSIONS

Asbestos is a proven carcinogen and any release of asbestos fibres into the

atmosphere creates a potential health hazard. A relatively high fibre release potential

exists for exposed ACM in areas delineated by Appendix 4. This potential is

somewhat reduced for ACM in unexposed areas. Building maintenance personnel

should be familiar with the location of friable ACM and with procedures to be used

when working in the vicinity of these materials.

610

Although the Report supports the plaintiffs' decision to remove the material, I do not

think it is particularly helpful in substantiating the plaintiffs' legal claim, based as it is upon

the allegation that the Building was contaminated, causing damage to property and posing a

risk to health.

611

I say that for two reasons. First, I have grave doubts about the medical premises

under which the author of the Report proceeds. The medical evidence presented in this case

does not, for example, support the conclusion that "any release of asbestos fibres into the

atmosphere creates a potential health hazard". As discussed above, I have concluded that

there is a point, depending upon the type and size of fibres, below which there is no potential

hazard.

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242

612

Second, what is striking about the Report is that, although it suggests removal as the

"preferred" option, it does not suggest it to be the only option. Indeed, the Report finds that

in some areas that the fireproofing is in good condition and has low disturbance potential.

Surely, if the Building was as contaminated as the plaintiffs allege, it would have

recommended, as the only viable option, the removal of this allegedly hazardous product.

613

In their written arguments, under the heading "Reasonableness of Removal", the

plaintiffs acknowledge that more than one option was available. They state:

The Plaintiffs were told, by their consultants, that to conform with the law in the

Province, they would be required to put in place a management program for the

asbestos through the life of the building and remove the material at demolition. Or,

they could remove it immediately and prevent forever, the possibility of an accident

with the result of exposing building occupants and workers to a lethal carcinogen.

I find this to be a significant admission, one which, in my opinion, is incongruent with their

pleadings.

614

The plaintiffs have pleaded that:

62. The presence of asbestos poses a danger to the health of the workers and

occupants . . .

. . . . . . .

65. As a consequence of the inherently dangerous health hazard and damage to

property caused by the asbestos spray fireproofing as pleaded herein, and as a

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243

consequence of the Plaintiffs' inability to repair, modify, perform ordinary

maintenance work, or renovate the Improvements without causing the further release

of asbestos fibres thereby endangering the health of workers and occupants, Plaintiffs

undertook a program of abatement . . .

615

In other words, because of the contamination and the corresponding health hazard, the

plaintiffs undertook to remove the asbestos. Yet this assertion does not make sense in light

of the fact that other alternatives were available at the time the decision was made, and other

alternatives were suggested in the final Report of May 2, 1987. One can hardly allege that

the mere "presence of asbestos poses a danger" when one of the options recommended by

their own consultants involved keeping the asbestos in the building.

616

I am not persuaded by the Pinchin-Harris Report, or for that matter, by the oral

testimony given by Mr. Holland, that the Building is or was contaminated. Although the

removal may have made good business sense ) both in securing DPW as a tenant and in

improving the value of the Building ) the evidence concerning the advice and Report of

Pinchin-Harris does not substantiate the plaintiffs' claim.

The Ewing Report

617

Mr. Ewing is a certified industrial hygienist; that is, a person who, as he put it,

"focuses on the identification, evaluation and control of health hazards, both occupational

and non-occupational". He is certified under the regulations of the United States EPA

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244

Regulations as an inspector, responsible for determining whether a building contains asbestos

and, if so, the condition of the material.

618

Mr. Ewing has carried out more than 600 surveys relating to asbestos in buildings.

His certification under the Asbestos Hazard Emergency Response Act allows him to design

and supervise "response actions" in buildings that contain asbestos, such as removal or

encapsulation or enclosure of the asbestos-containing materials.

619

Mr. Ewing has been involved in the preparation of many "Operations and

Management Programmes" for various types of buildings found to contain ACM's. These

programmes constitute a set of procedures and practices for the building owners, custodians,

maintenance personnel and outside service workers to follow in order to minimize the

potential for exposure so long as the material remains in the building.

620

Mr. Ewing was qualified to give expert opinion evidence on:

1. locating and assessing the condition of asbestos-containing materials ("ACM's") in buildings;

2. assessing the degree to which ACM's have released fibres and the potential for future release;

and

3. the options available to owners of building found to contain ACM's.

621

Mr. Ewing inspected the Building in May 1990, long after the removal process had

begun. The purpose of his inspection visit was to evaluate the fireproofing material present

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245

in the Building and to determine the potential for exposure to asbestos in that material. In an

Executive Summary to his written report, entitled "Asbestos Containing Fireproofing in the

Spencer Building, Vancouver, British Columbia" (July 1990), he stated that:

Asbestos-containing fireproofing remaining in the Spencer Building is friable and

deteriorating. This deterioration and previous maintenance activities has resulted in

asbestos-containing dust and debris being deposited on surfaces above the suspended

ceiling system. The space above the suspended ceiling system serves as a return air

plenum, and is therefore an integral part of the building's ventilation system.

The implementation of control procedures contained in the operations and

maintenance programme should reduce the risk of exposure, permitting the building

to remain open and occupied.

Planned renovation activities necessitate the continued removal of the asbestos-

containing fireproofing in a safe manner.

622

The British Columbia Workers' Compensation Board defines "friable material" as a

material which, when dry, can easily be crumbled or powdered by hand. Friability is

determined by physically touching the material in question. Mr. Ewing did that, and he also

"brushed" the back of his hand across the surface of the material and saw that particles were

thereby released from the material. He said that he performed those tests to sprayed

fireproofing material which had been applied to the concrete deck of the Building, material

which he described as "spray-applied . . . vermiculite-containing material", which he had, in

his mind, narrowed down to two possible products, Monokote and another similar looking

material that contains a starch component.

- 246 -

246

623

The "potential for exposure" he was looking into was exposure through inhalation by

maintenance personnel and service workers and even by ordinary building occupants. When

determining that potential, he said, one looks at the degree of friability of the material, its

accessibility to contact, the presence of water damage, and for significant sources of

disturbance through vibration of an air system. Water damage, he said, will:

. . . dissolve the binder in the material and cause fibre release to occur faster. It can

cause delamination of the material where the fireproofing would separate from the

substrate itself.

624

Mr. Ewing spoke of the two types of exposure to asbestos in buildings. One type is

called "prevalent level exposure" which results from the long-term ) day in and day out, year

in and year out ) gradual release of asbestos fibres into the air of the building. He said that

those levels of exposure are usually very low, and for that reason, based on his own

experience, he saw no reason to incur the "tremendous expense" of testing the prevalent level

of asbestos fibres in the ambient air of the Building.

625

The other type of exposure is "episodic", which, he said, is the "primary concern with

in-place fireproofing". Episodic exposure, sometimes referred to as "peak exposure", is a

short-term exposure that may occur when, for example, a maintenance worker comes into

direct contact with the fireproofing material, or when a custodian sweeps up dust that

contains asbestos fibres that have been released from the material. Mr. Ewing noted that

there are a wide variety of activities which can cause episodic exposure in buildings, such as

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247

the renovation of the building, or even a maintenance person going up into the plenum area

to replace a piece of duct work or to install a computer cable in the vicinity of the

fireproofing. Basically, he said, episodic release can be caused by any activity that will

disturb the asbestos-containing dust that has settled down on to surfaces.

626

From the ceiling areas of the sixth and seventh floors, Mr. Ewing collected six dust

samples and four bulk samples of the in-place fireproofing material he observed. These were

numbered and the locations noted. Photographs were taken showing the presence of dust and

debris on top of light fixtures and ceiling tiles. The samples were taken by Mr. Ewing back

to Atlanta, Georgia, where the dust samples were analyzed by Dr. Millette of McCrone

Environmental Services, using transmission electronic microscopy ("TEM"), and the bulk

samples were analyzed by Environmental Analytical Laboratories, using polarized light

microscopy ("PLM"), the standard EPA method for analyzing bulk samples of friable

materials.

627

Based on the analysis of the four bulk samples taken from the concrete decks of the

sixth and seventh floors of the Building, Mr. Ewing said that two of them are "consistent

with" Monokote fireproofing, but he acknowledged that he could not make a definite

determination from the test results. In fact, the two samples he described as "consistent" with

Monokote contained 22% and 20% chrysotile asbestos respectively, a far cry from the

chrysotile content shown in the Monokote formula which was put into evidence. One of the

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248

remaining two samples contained 7% chrysotile and the other had no asbestos in it

whatsoever. The one containing 7% chrysotile was thought by Mr. Ewing to be a mixture of

two different types of fireproofing, but he could not be sure.

628

Six dust samples were taken and analyzed. Mr. Ewing said that such sampling is

done to "evaluate the extent of asbestos contamination due to the release of fibres from

fireproofing", and to ascertain "potential exposure due to dust reentrainment". TEM analysis

of dust samples provides, he said, a quantitative determination of asbestos fibres, bundles,

clusters and matrices. He defined a "fibre" as a single structure with parallel sides; a

"bundle" as two or more fibres lying side by side; a "cluster" as two or more fibres or bundles

lying across each other; and a "matrix" as one or more asbestos fibres imbedded in a non-

asbestos medium. The four different types are referred to as "structures".

629

The primary reason for distinguishing between dust and debris relates to the potential

for exposure to occur. Asbestos-containing debris is generally not considered respirable.

However, when debris drops to the floor and is crushed by foot traffic, the fibres released are

of respirable size and may be entrained into the air and create a risk of exposure.

630

In his Report Mr. Ewing stated:

Accordingly, the presence of asbestos-containing dust and debris represent a clear

potential for airborne asbestos exposure. The magnitude of exposure is related

directly to the activity causing the resuspension of the dust, the surface that the dust is

resting on, and the volume of the air into which the dust is resuspended. There is no

one number establishing a dividing line between "contaminated" and "not

contaminated". For a nonporous surface in a typical office setting the following

- 249 -

249

asbestos in dust concentrations are offered along with corresponding qualitative

descriptors.

Surface Concentration

(Asbestos Structures/cm²)Degree of Contamination

Less than 1,000

1,000 - 10,000

No Significant Contamination

Low Contamination

Moderate Contamination

Heavy Contamination

10,000 - 100,000

Greater than 100,000

631

He then reported that:

The average concentration of asbestos structures found on the upper ceiling surfaces

of the Spencer Building was 1,400,000 asbestos structures per square centimeter.

Renovation activities, such as those conducted in the Spencer Building will disturb

this surface contamination resulting in significant airborne exposures to people in the

area.

632

633

The result of the dust sampling tests show a degree of surface concentration far in

excess of what Mr. Ewing terms "heavy contamination".

Mr. Ewing also observed that, in the Building, the space above the suspended ceiling

of the sixth and seventh floors (where the samples were taken) serves as a return air plenum.

Air from occupied spaces passes through openings in the suspended ceiling and is drawn to

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250

the mechanical room to be heated or cooled and returned back to the occupied spaces via air

ducts and diffusers. He opined that:

Accordingly, asbestos-containing dust and debris which becomes airborne will be

drawn into the air handling system and redistributed elsewhere in the [B]uilding.

634

In his Report, Mr. Ewing continued by saying:

The use of dust sampling to estimate the potential for future exposure is an

appropriate supplemental assessment tool in this instance. The use of air sampling

with TEM analysis alone provides only limited information concerning the airborne

asbestos structure concentrations in the areas where the samples are collected, only

during the sampling period, and can only be considered representative for the

activities and building conditions (i.e., occupancy, ventilation) during the sampling

period. For these reasons and many more (e.g., extensive cost, methodology

limitations) regulatory agencies in British Columbia, the United States, and elsewhere

do not recommend its use as the primary assessment tool for asbestos in buildings.

. . . . . . .

Once asbestos-containing materials are identified, such as the fireproofing in the

Spencer Building, it is appropriate to implement an operations and maintenance

program. Such a program, like that recommended by Pinchin-Harris & Associates,

Ltd. and implemented by the building manage-ment, has the goal of minimizing

asbestos exposure until a permanent solution to the problem is implemented . . . .

Control measures beyond the operation and maintenance program can include

encapsulation, enclosure and removal. Encapsulation and/or enclosure are only

temporary measures, and still require the operations and maintenance program.

Concerning various control measures for sprayed-on friable materials, the Committee

on Asbestos Hazards in Public Buildings (made up of individuals from the provincial

Ministries of Labour, Education, Health and the Workers' Compensation Board)

stated the following:

Removal completely eliminates the source of exposure to asbestos and is,

therefore, a permanent solution. Both enclosure and encapsulation are

containment methods; they are not permanent solutions since the asbestos

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251

material remains in the structure. When containment methods are instituted, a

recurrence of the problem at a future date can be expected (i.e., at the time of

the building renovation or demolition).

Removal of asbestos-containing fireproofing, such as that present in the Spencer

Building, in conjunction with planned renovation activities is a prudent and

responsible course of action.

635

Under the rubric "Conclusions", Mr. Ewing opined that:

1. The fireproofing in the Spencer Building is friable.

2. The fireproofing has released asbestos fibres (predominantly chrysotile) in the past, due to

deterioration and maintenance practices, and is expected to continue to do so.

3. The fireproofing has been damaged due to previous routine maintenance and renovation

activities. The amount of future damage due to these activities should be reduced

significantly as a result of the implementation of an operations and maintenance program.

4. Encapsulation and/or enclosure of the fireproofing should not be attempted at this building.

5. Removal of the fireproofing in conjunction with the continued renovation of the Spencer

Building is the prudent course of action.

6. Removal of the fireproofing should be performed properly, using recognized abatement

techniques, and providing adequate protection to the removal workers. Failure to perform

the asbestos removal properly could result in an increased risk of exposure to workers,

bystanders, and future building occupants.

636

Mr. Ewing concluded from visual observation that the fireproofing had released

asbestos fibres in the past due to deterioration and maintenance practices. He saw the debris

and dust on surfaces below the fireproofing material.

- 252 -

252

637

638

Even with removal, some of the asbestos-containing material is left behind. It is

therefore common practice wherever that residue might be accessible, to lock in the

remaining fibres by using a sealant.

As mentioned above, two options ) encapsulation and enclosure ) were rejected by

Mr. Ewing. Encapsulation is the spraying of a paint-like material onto the surface of the

material to place a barrier across its surface. Enclosure consists of building an air-tight

barrier below the fireproofing to prevent the mixing or mingling of air between the plenum

and the enclosed area.

639

When asked to explain why he concluded that encapsulation or enclosure should not

be attempted in the building, he replied:

Primarily for the reasons that I discussed a little earlier about the ) if you were to

encapsulate or enclose. I really feel very strongly that encapsulation just is simply

not an option, it's just ) it would be a very far-fetched option, in my opinion, for the

problems of the possibility of water damage, the added weight to the fireproofing, the

cost of encapsulation, because the entire area that you're going to encapsulate will

have to be treated just like an abatement area. The workers will have to be protected

in the same manner as if they were removing the material, because when you spray

the fireproofing with the encapsulant, it tends to dislodge a significant concentration

of asbestos dust into the air, so it in itself creates exposure, and you are still left with

the problem to manage over a period of time and ultimately you have to remove it,

and that removal is going to now be more difficult because the encapsulant not

permitting the material to become ) get wet.

The option of enclosure again to create an air-tight barrier will require them to take

down the existing ceiling system, lower all the utilities, place the enclosure in place

using protected employees, then re-install all your utilities, re-install your ceiling

system, and then your operations and maintenance programme would be limited

down to ) you cannot go into the enclosure, but then again at some point you will

have to go back prior to building demolition or if you're doing a renovation that will

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253

disturb the enclosure, you will have to go back, and if the renovation will disturb the

enclosure or demolition will disturb ) the demolition obviously is going to disturb it at

that point, the removal would need to occur. So I guess put simply, it's a question of

when to do the removal, rather than if to do the removal, which is why my conclusion

for number 5, and why I thought it was a -- let me use the word appropriate in this

instance, because I did not feel that based on what I saw and based on their own end

procedures, and particularly based on them feeling the need to go through a thorough

training of myself before allowing me to disturb any of their materials to do my

inspection, which led me to believe that they are taking that seriously, that the

continued O & M procedures that they are following were appropriate, but then when

the renovation occurs, that is the appropriate time to deal with it.

640

Mr. Ewing was asked whether, in his opinion, the algorithm adopted by Pinchin-

Harris as an assessment tool (one taken from an EPA book on the subject) was an appropriate

tool to use in 1987. He replied:

In 1987, that was the recognized assessment protocol by the -- that the EPA had put

out, and it continues to be today that the primary method of assessing in-place

asbestos- containing materials is a visual assessment. Any other testing you do such

as air sampling or dust sampling, such as that that I performed in the building, are

considered secondary and supplemental assessment tools to the primary assessment

method.

641

642

Some of the experts called by the Grace defendants were asked for their opinion of

Mr. Ewing's Report.

Over the objections of Mr. Roberts, I found Dr. Elmes qualified to comment on the

Report, on the basis that he had an expertise in the interpretation of air samples taken by

others.

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254

643

Dr. Elmes was asked whether the air sampling results from the Ewing Report suggest

a risk to the Building occupants. Dr Elmes stated:

There are no air sampling, in the accepted sense of the word, results in this report.

The samples were taken by picking up dust off various surfaces. They weren't taken

from the air. So they consisted of particles, many of which were too large to be

respirable. They were then subjected to ultrasonic treatment to break up these

particles and, therefore, they may have created an artificial situation which may or

may not represent what might have occurred at some time in the air of the building . .

. .

This investigation, this examination of this dust that was taken from the surfaces

within the building can be used to give us some idea of what the fibres are in the

material which might be released if the material was damaged or disturbed. It

doesn't give us an idea of how much release was occurring or whether the people

in the building were at any risk from the presence of this material in the building

. . . .

(emphasis added)

644

645

Dr. Elmes went on to suggest that these type of sampling techniques could be used to

find out what "might be released" if the building was demolished or the material being

stripped out.

Dr. Bragg expressed similar concerns. He suggested that the surface sampling

techniques used by Dr. Ewing were procedures that existed in draft form only, in the sense

that the procedure had not been codified by any of the codifying bodies. Indeed, he

suggested that he was not aware of any regulatory body that suggests the use of this

procedure, nor was he aware of its acceptance or use by any scientific organization.

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255

646

According to Dr. Bragg, the problem with surface sampling is that it provides no

insight into the key question, namely, whether there are measurable airborne levels of

asbestos. In this regard, he stated:

There has been an enormous amount of research over the years, particularly in the

nuclear industry, attempting to relate material on surfaces to material in the air and I

think it's generally accepted now that there is no relationship and that the fundamental

reason for that is that the relationship is between disturbance and airborne material

and not between material on the surface.

In other words, simply because asbestos can be detected on the surface does not mean that

fibres from it will become airborne and in turn pose a health risk.

647

When asked in cross-examination if an examination to determine whether the particle

had moved was a reasonable thing to do, Dr. Bragg responded:

It depends on what our objective is. If our objective is to inquire whether it has

moved, yes, it is. If our objective is to determine whether or not it's going to result in

inhalable fibres in the air, then I would suggest that it is not an appropriate procedure.

648

Such a study, he acknowledged, may indicate whether there had been some form of

disturbance, but he said that:

. . . it's important to discriminate between a disturbance which produces visible debris

where the lay understanding that vibration and air flows may produce a disturbance is

indeed true. Vibration and that type of air flow will, indeed, be capable, with certain

types of materials, particularly with the dry sprayed material, of producing a

disturbance which causes a change in location. What's important to do is to

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256

discriminate, though, between that -- and we are now able to do so on the basis of the

type of study that Mr. Ewing has done, for example -- between that and the airborne

material that is small enough to be of health significance.

649

I accept the criticisms expressed by Drs. MacDonald and Bragg about the

methodology employed by Mr. Ewing. I am, accordingly, unable to accept that the results

support a finding that the Building is in fact contaminated to a point where it posed a health

hazard to its occupants, necessitating removal.

650

I should also mention that, as with the Pinchin-Harris report, Mr. Ewing does not

indicate that immediate removal is the only option. For example, while he rejects the option

of enclosure, he does so, not because leaving the material in the Building would, as the

plaintiffs have alleged, necessarily create a health hazard for its occupants, but rather

because, in his opinion, removal has to be done at some point ) either now or at the time of

demolition ) and so better now than later. As quoted above, Mr. Ewing stated:

So I guess put simply, it's a question of when to do the removal, rather than if to do

the removal . . .

651

Far from supporting the plaintiffs' claim that immediate removal was necessitated by

the contamination and the accompanying health hazard, this statement suggests that other

options ) while admittedly ones not endorsed by Mr. Ewing ) were nevertheless available.

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257

652

653

There is one final question to deal with before leaving this topic, and that is why there

was no evidence of air sampling tests taken in the Building.

In their arguments, the Grace defendants and the plaintiffs each accused the other of

conducting such tests and not disclosing the results. This point is important because an

adverse inference may be drawn against a party who has failed to produce the results of such

tests.

654

The Grace defendants maintain that they did not conduct any independent air

sampling tests and there is no evidence to support the allegation that they did. In fact, the

only evidence is to the contrary. In a letter from the plaintiffs' former counsel, dated June 15,

1988, Grace-Conn. was informed that "there is to be no air sampling by your

representatives".

655

There is, however, evidence from the plaintiffs' own correspondence suggesting that

they authorized the taking and testing of air samples within the Building. In a letter dated

November 15, 1988, the plaintiffs' former counsel instructed Pinchin-Harris as follows:

Would you please attend to air sampling, particularly in the areas of the Spencer

Building and Harbour Centre where the spray fireproofing has not yet been removed.

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258

656

657

In the absence of direct evidence to the contrary, I can only assume that such samples

were taken, and the results not tendered in evidence because they did not advance the

plaintiffs' case.

Accordingly, I draw the inference that the asbestos levels in the air of the Building are

not inconsistent with those that one would expect to find in the ambient air.

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259

XVI. THE DECISION TO REMOVE AND REPLACE THE FIREPROOFING

MATERIAL

658

I am satisfied that, contrary to the reasons alleged by the plaintiffs, their decision to

remove the existing fireproofing material was motivated entirely by economic

considerations. This was made abundantly clear during Mr. Giles' cross-examination of Mr.

Hall, when the following questions were asked and answers given:

Q. Now, it's in evidence, and you've testified to the fact, that in the spring of '86, you had an

offer to lease by the Department of Public Works on behalf of the fisheries and

oceans department?

A. A request for tender, yes.

Q. Yes. And it included a specimen lease, and we looked at that yesterday when you were

giving evidence, which called for a warranty on your part that there would be no

friable asbestos anywhere in the building?

A. That is correct.

Q. That's correct. And I think by September the 9th, '86, you were advised by

Ottawa, subject to formal contract, they were going to take the lease?

A. That is correct.

Q. And at that time, it was on the basis that you were warranting the entire building was

asbestos-free?

A. That is correct.

Q. And I suppose it was a source of some satisfaction that you had obtained this tenant for

those two floors?

A. That is correct.

Q. I've looked at the rent, it's over a million dollars for the first five years, a million dollars a

year; is that correct?

A. Yes.

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260

Q. And for the next five years, there's a very considerable jump in the rent. I notice it goes

up to close to a million six or more?

A. That is correct.

Q. And I take it this is important revenue to you?

A. It is indeed.

Q. Now, on March the 30th, '87, you were shut down by the Workers' Compensation Board -

-

A. Correct.

Q. -- on the grounds that there was asbestos. You had it looked into, and Pinchin-Harris,

with their hazard report, I think on May the 2nd, confirmed there was friable asbestos

on every floor?

A. With the exception of the ninth floor and the underground parking areas, that is correct.

Q. I beg your pardon, every floor we've just discussed.

A. That is correct.

Q. One to seven and the upper and lower mall. And this must have been a frightful shock?

A. It was.

Q. And a frightful shock in relation to the proposed deal with the Department of Public

Works, given that that was on the basis that all the asbestos had to be removed?

A. Correct.

Q. Yes. You testified yesterday -- I think your expression was a mammoth problem?

A. Yes.

Q. Yes. Now, the fact is, though, that you alleviated your problem somewhat by persuading

the Department of Public Works to amend the specimen lease, to amend the offer to

lease, with respect to the warranty that it was free from asbestos throughout the entire

building?

A. That is correct.

Q. Yes. And --

A. Incidentally, we didn't persuade them. They came forward with those -- with that

agreement as being a condition of them fulfilling their lease.

Q. They were prepared to alternate (sic) their position?

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261

A. That is correct.

Q. Yes. And certainly, that was agreeable to you?

A. That's correct.

Q. And it was something you were prepared to agree to, happy to agree to, if it meant

keeping this tenant, the Department of Public Works?

A. That's correct.

. . . . . . .

Q. Now, this morning before luncheon I suggested to you that you persuaded the

Department to agree to this amendment and, if I remember correctly, your answer

was to the effect that they were prepared to do so, that is, that they were prepared to

give you the amendment?

A. They gave us the amendment, that is correct.

Q. Yes. You certainly hoped you'd get it?

A. It was our aim to establish some relationship that would permit us to keep them as a

tenant.

Q. Yes. And in that sense you hoped that they would agree to an amendment that would

permit you to leave the asbestos in place in the premises of all the other tenants?

A. Our main aim was to keep them as a tenant, for them to honour this lease. They were the

ones that stipulated the conditions under which they would do that and they were the

ones who said that, "We will not require you to remove it out of the entire building

immediately" which, in effect, would have made us have to terminate this lease or

have to not comply with this lease.

Q. And you were pleased to get this agreement to that effect?

A. We were pleased to get that agreement.

Q. Yes. And now isn't it fair to say that you initiated the suggestion that the Specimen Lease

-- that the offer to lease be amended in this way?

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262

A. No. We took the stance that we would take the asbestos out of the third and fourth floors

and continue with the renovations in the expectation that they would then occupy the

space. The relevance to the balance of the building was not considered at that time.

That was something that was brought up by the Department of Public Works.

Q. I see. So your position was 'Look, we'll just take it out of the third and fourth floors and'

-- period?

A. At that particular time, that's correct.

Q. Yes. So what you wanted was an amendment from the requirement that it be removed

from the whole building, you wanted that down to you just have to take it out of the

third and fourth floors?

A. We did not consider the whole building at the time. We were more concerned with the

third and fourth floors. That was the damage control area.

Q. That was an amendment you wanted, that all you had to do was take it out of the third

and fourth floors; that's the amendment to the offer to lease you wanted?

A. We were planning to take it out of the third and fourth floors only, yes.

659

Mr. Hall's attention was then directed to a letter he had written to Public Works

Canada on April 2, 1987, in which he advised, in part, that:

The Landlord will live up to its' (sic) commitment and remove the contaminated

material from both the 3rd and 4th floors. This will be done under strict regulations

imposed and monitored by the Workers' Compensation Board to assure no exposure

to any hazard is incurred by workers or the occupants in the building. My

understanding is that at the conclusion of this work, both floors will be inspected and

declared asbestos free and would therefore pose no hazard to the occupants of these

floors.

. . . . . . .

Whilst no testing has been completed, it must be assumed that this contaminated

material exists on the other levels of Sears, however, we have requested an official

hazard evaluation study be undertaken to prove no risk is posed to any occupants of

the building. Initial indications would suggest that this highly cementitious material

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263

is extremely well bonded to the structure and therefore does not pose a problem

unless it is subject to unusual disturbance. All necessary precautions will be

undertaken to ensure no disturbance takes place. Any areas determined to be

contaminated will have the material removed when a change in tenancy occurs or

another opportunity for its' (sic) removal presents itself.

. . . . . . .

Whatever the outcome of the final testing, the Landlord will live up to his

responsibility to the best of his ability and trust we shall be able to work out an

amicable solution to ensure the earliest completion date for the Department of

Fisheries and Oceans.

660

Mr. Giles then continued his cross-examination of Mr. Hall:

Q. Now, the reason I suggested to you earlier that you had initiated the suggestion with the

Department of Public Works that's reflected in the amendment is because, what I find

on the second page of this letter which is dated April the second, in the second full

paragraph, I might read that and ask you a question or two as I go through. This letter

-- you signed this letter?

A. I did.

Q. And it was sent to the Public Works Canada on April the 2nd?

A. Correct.

Q. And you say in the second full paragraph, the second page,

"Whilst no testing has been completed, it must be assumed that this

contaminated material exists on the other levels of Sears, . . ."

Now this letter was written after the shutdown by the Workmen's Compensation

Board?

A. That is correct.

Q. So that by no testing having been completed, you're referring to testing in floors other

than three and four?

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264

A. Correct.

Q. And you made the assumption that the contaminated material exists on the other levels of

Sears. What was the basis of that assumption?

A. That the material was sprayed at the same time or that the construction process was all

done at the same time, therefore the assumption would have been that if it is on one

floor it would be contained on others.

Q. Thank you. You go on,

". . . however, we have requested an official hazard evaluation study be

undertaken to prove no risk is posed to any occupants of the building."

Now that's the report that you obtained, I think, on May the 2nd from Pinchin-Harris;

is that correct?

A. Correct.

Q. Yes. And that was done to, as you say, ". . . to prove no risk is posed to any of the

occupants of the building?"

A. That was done as a requirement of the WCB shutdown that we take a hazard evaluation

report.

Q. What you say this, this sentence is true, you say,

". . . we have requested an official hazard evaluation study be undertaken to

prove no risk is posed to any occupants of the building", that is a true

statement, I take it?

A. Correct.

Q. Then you go on.

"Initial indications would suggest that this highly cementitious material is

extremely well bonded to the structure and therefore does not pose a problem

unless it is subject to unusual disturbance."

And on what was that statement based?

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265

A. That statement was based on discussions with Pinchin-Harris.

Q. You then say, "All necessary precautions will be undertaken to ensure no disturbance

takes place." And then you say, "Any areas determined to be contaminated will have

the material removed when a change in tenancy occurs or another opportunity for its'

(sic) removal presents itself. Now, it's that sentence that put in my mind the idea that

you had suggested the amendment language, the effect of the amendment which was

agreed to by the Department of Public Works. Am I wrong in that?

A. No. That does seem to suggest that. I was not aware of this particular statement or line

in my letter. As I said, this letter was drafted by a legal counsel in Toronto and was,

in fact, sort of a political letter aimed at damage control in that it would permit the

Department of Public Works to stay an occupant.

Q. I see. You wouldn't sign any document containing statements you knew to be untrue?

A. No. That's true.

Q. Or a document containing expressions of opinion you didn't share?

A. No. That's true.

661

At the time it was decided to remove the fireproofing material from the third and

fourth floors of the Building, none of the other tenants in the Building were advised of the

presence of asbestos. In fact, according to Mr. Hall, some of them had not even been advised

up to the date of trial. When asked about that by Mr. Giles, Mr. Hall testified as follows:

Q. You, their landlord, have not seen fit to tell them?

A. No.

Q. Why not?

A. We do not consider the asbestos present in the 7th floor, as it exists today, to pose a

danger. Our experts have told us, provided it is handled correctly, that it does not

pose a danger.

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266

Q. All right. Is that the same explanation for not telling the tenants on the lower mall, the

upper mall and Simons on the 6th floor until '88?

A. That is correct.

Q. And I take it you formed this opinion as to the safety of this material in '87?

A. That is correct.

Q. Indeed you must have formed it at or about the time you got the Department of Public

Works agreement?

A. That is correct.

Q. Which could have been as early as May?

A. That is correct.

Q. So I mean you, in good conscience, must have been satisfied this was perfectly safe so

long as any maintenance was done with adequate protections?

A. That is correct.

Q. And so anybody who was changing a light bulb or changing an chiller pipe or going up

there for any other reason, he'd have to be careful to wear a mask and to shut off the

air conditioning?

A. And to follow all the procedures laid out.

Q. Right. And as long as that was done, no problem?

A. That is correct.

662

Mr. Hall also made it clear that there is little, if any, chance of disturbance by a

tenant. When asked about the possibility of tenants doing work that might disturb the

material, he testified:

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267

A. We would have done it for tenants.

Q. On their behalf, you mean?

A. On their behalf.

Q. But some of the work they could do could disturb the asbestos?

A. The majority of the work, not all of it, would be done by our own forces.

Q. And some could be done by their tenant forces?

A. Yes. Yes, potentially.

Q. That might result in some disturbance?

A. That is correct.

Q. Particularly if a tenant didn't know there was asbestos?

A. The tenants are required, by their lease, to inform us of any procedures or any alterations

of any nature that are carried out in their premises and get our written approval prior

to them commencing.

Q. Well, is it your experience all the tenants do that all the time?

A. Yes.

Q. Even when moving a telephone or most minor matters?

A. Minor matters such as moving a telephone, no.

Q. No?

A. But that is done below the ceiling area.

Q. All right. Anyway, in not telling the tenants, that was a chance you were prepared to take

that they wouldn't do anything that would disturb the asbestos?

A. There is no chance that they would go into that ceiling system, in my view, without our

knowledge.

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268

Q. All right. But whatever risk it was, whatever chances, is one you're prepared to take?

A. That is correct.

Q. Because you didn't tell them?

A. Correct.

663

An interesting illustration of the difference between what the plaintiffs say about the

danger posed to the health of building occupants by the presence of an asbestos-containing

fireproofing material and what they actually do about it, emerged during the testimony of Mr.

Rainer Hackert, the President of Polaris Canada. After acknowledging that Lord Realty is

the owner of another building in which asbestos has been discovered, Mr. Hackert testified as

follows:

Q.

Where is that building?

A. In Montreal.

Q. Is that the building that is referred to as 800 Dorchester?

A. It was 800 Dorchester. I think the legal address is 800 Rene Levesque.

Q. As I recall your evidence on discovery asbestos was brought to the attention of the

owners, of Lord Realty, in 1988?

A. Yes, mid-1988.

Q. I understand that that asbestos has not been removed?

A. Yes.

Q. And that is asbestos-containing fireproofing?

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269

A. Yes.

Q. With that building you had no contractual requirement by a tenant that would require the

building owners to remove the fireproofing?

A. That's correct.

664

I have set out this evidence at such length because I think it is important that I

demonstrate clearly why I have rejected the reasons given by the plaintiffs for having the

fireproofing material removed from the Building.

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270

XVII. CONCLUSIONS REGARDING THE ASBESTOS CLAIMS

665

Fundamental to the success of the plaintiffs' claims is proof, on a balance of

probabilities, that:

1. the MK-3 fireproofing material contaminated the Building by continually releasing asbestos

fibres into its atmosphere, thus causing physical damage to property of the plaintiffs and

exposing tenants and others properly using the premises to such fibres;

2. the asbestos fibres contained in the product MK-3 posed a hazard to the health of workers and

occupants of the Building;

3. as a consequence, Building workers and occupants have been exposed and continue to be

exposed to an increased risk of contracting an asbestos related disease;

and that

4. as a consequence of the inherently dangerous nature of the product, and the inability of the

plaintiffs to repair, modify, perform ordinary maintenance work, or renovate the Building

without causing the further release of asbestos fibres thereby endangering the health of

Building occupants and workers, the plaintiffs undertook the removal and replacement of all

of the asbestos-containing fireproofing in the Building.

666

That is what the plaintiffs have alleged, and that is what they must prove.

- 271 -

271

667

668

In my opinion, they have failed on all counts.

Based on the expert medical evidence I heard, I have reached the following

conclusions with respect to the three principal diseases associated with exposure to asbestos

fibres:

A.

Asbestosis

669

All of the medical experts testified that a high level of exposure to asbestos is

required in order to cause asbestosis. Based on that evidence, it can safely be said that the

state of medical knowledge at all relevant times was that there is no risk of contracting

asbestosis as a result of the low levels of exposure to asbestos encountered in public

buildings.

B.

Lung Cancer

670

One of the risks which the plaintiffs say is run by occupants of buildings which

contain sprayed asbestos-containing fireproofing materials, such as the Spencer Building, is

an increased risk of contracting lung cancer. They maintain that it is only theory, not fact,

that occupational or asbestosis levels of asbestos exposure are required in order to produce

lung cancer.

- 272 -

272

671

Dr. Bates testified that in 1972 many of those involved in asbestos research were of

the opinion that in order to get lung cancer from asbestos exposure, one must first contract

asbestosis. That assertion was confirmed by the evidence of other medical experts. For

example, Dr. Elmes testified that the medical evidence available in 1972 showed clear

differences in the risk of lung cancer, depending upon fibre type and the nature of exposure.

He confirmed that the evidence then available established clearly that at the low levels of

exposure encountered by the general public, there was no risk of lung cancer. Moreover, he

said that subsequent research has confirmed that view.

672

673

I accept Dr. Elmes' opinion.

I find that when the MK-3 was installed in the Building, the established medical

opinion was that the low levels of exposure to asbestos experienced by the ordinary

occupants of public buildings posed no increased risk of contracting lung cancer. I also find

that, while there is current disagreement among the experts as to whether asbestosis is a

prerequisite to lung cancer, there is nevertheless firm agreement today that low levels of

exposure, such as those encountered in public buildings, do not increase the risk of lung

cancer.

- 273 -

273

C.

Mesothelioma

674

The situation with respect to mesothelioma is more complicated. As the IARC

Report indicated, there was in 1972 no evidence of an increased risk of contracting

mesothelioma from the low levels of asbestos to which the general population in urban areas

was exposed. In his report, Dr. Bates quoted the following passage from the IARC report:

There is evidence of association of mesothelial tumours with air polution (sic) in the

neighbourhood of crystallite mines and of factories using mixtures of fibre types. The

evidence relates to conditions many years ago. There is no evidence of a risk to the

general public at present.

675

According to Dr. Bates, studies done by 1972 indicated that all types of asbestos

fibres produced mesothelioma in rats. However, as both Dr. Bates and Dr. Elmes

acknowledged, it was believed that the risk of contracting mesothelioma varied with the fibre

type. According to Dr. Elmes, crocidolite was thought to create the greatest risk, followed by

amosite, and less still by chrysotile fibres. It was also recognized by 1972 that a small

number of cases of mesothelioma had no asbestos-related exposure.

676

I find that at the relevant time there was no evidence of a risk of contracting

mesothelioma at low levels of exposure to asbestos, particularly where the exposure has been

to chrysotile fibres.

- 274 -

274

677

Current medical opinion is divided as to whether exposure to chrysotile fibres causes

mesothelioma. Dr. Frank suggested that it does. Dr. Elmes opined that, although it had been

found to cause mesothelioma in animals, it is becoming "more doubtful" that it does so in

humans. Dr. Churg stated unequivocally that there is no evidence that chrysotile causes

mesothelioma in humans.

678

Wherever the truth may lie so far as chrysotile being a cause of mesothelioma in

humans, I find on the evidence that the actual risk of contracting mesothelioma from

chrysotile asbestos fibres is at worst minimal, and at best non-existent. I need not make a

definitive finding on this point because, for the purposes of this case, it is not necessary to do

so. That is so because, as with asbestosis and lung cancer, what is agreed among all of the

experts ) save for Dr. Frank ) is that only high levels of exposure will produce mesothelioma.

679

Where there is a conflict between the evidence of Dr. Frank and the medical experts

called by the Grace defendants, I prefer the evidence of the latter. In my opinion, the

plaintiff was not successful during cross-examination in refuting their very convincing

opinions on this point. A good deal of those cross-examinations consisted of putting to the

witness other studies that suggested a contrary opinion. Those studies were not, for the

reasons I gave earlier, allowed into evidence for the truth of their contents, but only to test

the veracity of the witness's opinion.

- 275 -

275

680

Because of their age ) that is, when they were conducted ) many of those studies were

effectively dismissed by the witnesses as not reflecting the current thinking on the topic. For

example, when asked about the findings in study from 1970, Dr. McDonald stated in no

uncertain terms that:

. . . it does seem to me to concentrate on what we thought 23 years ago as opposed to

what we now know is of limited use.

681

682

Similar sentiments were expressed by other expert witnesses.

As I have stated, all of the medical experts, except Dr. Frank, opined that the levels of

exposure to asbestos fibres encountered in buildings is far too low to increase the risk of a

building worker or occupant contracting any of the asbestos-related diseases, including

mesothelioma. I accept those opinions.

683

684

Based on the medical evidence that I have accepted, I find that exposure to the low

levels of asbestos fibres typically found in the air circulating in public buildings poses no

appreciable risk to the health of building occupants.

So far as the Spencer Building itself is concerned, far from establishing a "real and

substantial" danger to persons, the evidence satisfies me that the MK-3 that was installed

between 1972 and 1975 was not and is not an inherently dangerous product. I have no

- 276 -

276

hesitation in concluding that the asbestos fibres contained in that MK-3 did not

"contaminate" the Building, nor did they expose its occupants and workers to an increased

risk of contracting any of the asbestos-related diseases. Nor did any asbestos fibres that were

released into the atmosphere of the Building by that product cause damage to property.

685

686

From these conclusions, it follows that there has been no negligence, no breach of a

duty of care or a duty to warn, and no misrepresentation.

In the introductory section of this judgment, I referred to the "second wave" of

asbestos property damage claims proceeding through the American courts. Several of the

American decisions that were referred to by counsel involved claims against Grace Conn.

arising out of the installation of Monokote MK-3.

687

688

I am conscious of the fact that a large number of those decisions (usually reviews by

appellate courts of jury decisions) favoured the plaintiffs. While not binding on this court,

those judgments and the views expressed therein do have persuasive authority.

However, after consideration of the testimonial and documentary evidence presented

in this case, I do not agree with those American courts that have found Monokote MK-3 to be

a dangerous product and thus awarded judgment against Grace Conn.

- 277 -

277

689

For the reasons I have given, the plaintiffs' claims are dismissed. It follows that it

will not be necessary for me to deal with the many third party claims.

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278

XVIII. FOUNDATION'S COUNTERCLAIM

690

In its counterclaim, Foundation alleges that the plaintiffs (without distinguishing

between them) were obliged by the General Conditions of the Construction Contract dated

August 1, 1974, to provide and maintain, in the joint names of the owners and Foundation,

insurance against all risks of direct loss or damage to property. They say that the insurance

was also intended to protect, as unnamed insureds, the architect, all sub-contractors, and any

others having an insurable interest in the construction and renovation work being performed

at the Harbour Centre. Accordingly, Foundation submits, if the plaintiffs suffered any

damage to property, the defendants could only be held liable to the extent that the damages

suffered exceed the amounts for which they maintained, or should have maintained,

insurance.

691

Foundation further submits that the prosecution of this action by the plaintiffs is in

breach of the November 10, 1977 Settlement Agreement, discussed above in the section

entitled "Release and Assignment". As a result, Foundations says, it has been forced to

incur the expense of defending this action.

692

In light of my finding that the plaintiffs have not proved any property damage, it is

not really necessary to address the "insurance" argument. But I do note that, in any event, the

plaintiffs' response to that argument is a simple, but effective one. Mr. Kendrick testified

279

that the insurance was placed, and there is no evidence to the contrary. The plaintiffs

maintain that none of the policies covered the alleged losses. They say that if Foundation or

any other defendant wished to argue otherwise, it was up to them to tender the insurance

policies and lead expert evidence to show that the alleged losses were covered. None of

them did that.

693

694

However, I find that by bringing this action, the plaintiffs/defendants by counterclaim

acted contrary to the terms of the November 10, 1977 Settlement Agreement.

Counsel may make arrangements to speak to the matter of costs.

"I.L. Drost"

I. L. Drost, J.

Vancouver, British Columbia

September 26, 1995