0790482 B.C. Ltd. v KBK No. 11 Ventures Ltd.

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

0790482 B.C. Ltd. v. KBK No. 11 Ventures

Ltd.,

2022 BCSC 1095

Date: 20220629

Docket: S1510418

Registry: Vancouver

Between:

And

0790482 B.C. Ltd.

Plaintiff

KBK No. 11 Ventures Ltd., 1100 Georgia Partnership, Peterson Investment

(Georgia) Limited Partnership, Abbey Adelaide Holdings Inc.,

LJV Georgia Investments Inc. and No. 274 Cathedral Ventures Ltd.

Defendants

- and -

Docket: S117461

Registry: Vancouver

Between:

The Owners, Strata Plan BCS 3206

Plaintiff

And

National Home Warranty Group Inc. and Aviva Insurance Company of Canada

Defendants

And

1100 Georgia Partnership and KBK No. 11 Ventures Ltd.

Third Parties

- and -

Docket: S117480

Registry: Vancouver

Between:

The Owners, Strata Plan BCS 3165

Plaintiff

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

Page 2

And

National Home Warranty Group Inc. and Aviva Insurance Company of Canada

Defendants

And

1100 Georgia Partnership and KBK No. 11 Ventures Ltd.

Third Parties

Brought under the Class Proceedings Act, R.S.B.C. 1996, c. 50

Before: The Honourable Mr. Justice Walker

Reasons for Judgment

Counsel for the Plaintiffs/Respondents, the

Owners, Strata Plan BCS 3206 and the

Owners, Strata Plan BCS 3165:

M. Hunt

E.N. Christian

Counsel for the Defendants/Applicants, KBK

No. 11 Ventures Ltd., 1100 Georgia

S.D. Coblin

M. Hashmi

Partnership, Peterson Investment (Georgia)

Limited Partnership, Abbey Adelaide

Holdings Inc., LJV Georgia Investments Inc.

and No. 274 Cathedral Ventures Ltd.:

Place and Dates of Hearing:

Vancouver, B.C.

April 11-14, 19-20, May 18-20,

and June 3, 2022

Place and Date of Judgment:

Vancouver, B.C.

June 29, 2022

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

Page 3

Table of Contents

INTRODUCTION ....................................................................................................... 4

WHEN A THIRD-PARTY CLAIM MAY BE BROUGHT............................................. 7

THE APPLICANTS’ RATIONALE FOR THEIR PROPOSED THIRD-PARTY

NOTICE ..................................................................................................................... 8

ISSUES...................................................................................................................... 9

DOES THE PROPOSED THIRD-PARTY CLAIM DISCLOSE A CAUSE OF

ACTION?................................................................................................................. 11

The Adams Rule: General Legal Principles.......................................................... 11

The Proposed Third-Party Claims ........................................................................ 17

Agency ................................................................................................................. 23

Introductory Comments..................................................................................... 23

Strata Property Act ........................................................................................... 23

Authorities......................................................................................................... 27

Determination on Agency.................................................................................. 35

Failure to Mitigate................................................................................................. 37

Conclusion on the Adams Rule ............................................................................ 37

Rule 3-5(1)(b) & (c) .............................................................................................. 38

DISPOSITION.......................................................................................................... 40

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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Introduction

[1]

KBK No. 11 Ventures Ltd. (“KBK”), 1100 Georgia Partnership (a general

partnership), and the latter’s four partners, Peterson Investment (Georgia) Limited

Partnership, Abbey Adelaide Holdings Inc., LJV Georgia Investments Inc., and

No. 274 Cathedral Ventures Ltd., apply for leave to file a third-party notice against

two strata corporations, the Owners, Strata Plan 3165 (“SP 3165”) and the Owners,

Strata Plan 3206 (“SP 3206”) in this class action. They seek contribution or

indemnity per s. 4 of the Negligence Act, R.S.B.C. 1996, c. 333 and R. 3-5(1) of the

Supreme Court Civil Rules [Rules].

[2]

The strata corporations are the plaintiffs in four related actions. The subject

matter of this action and the related actions concerns alleged defects in the curtain-

wall window system of the Shangri-La Hotel building located on the corner of

Georgia and Alberni Streets in Vancouver (“Building”). For ease of reference, when I

refer to all five related actions collectively, I do so as the “Related Actions”.

[3]

KBK is the legal owner of the land on which the Building is located, and 1100

Georgia Partnership is the developer of the Building.

[4]

The Building is a high-end, multi-use glazed tower, consisting of three air

space parcels: the Shangri-La Hotel itself which occupies floors 1–15; live-work

strata units (SP 3165) on certain portions of floors 5 and 6 and on floors 16–43; and

residential strata units (SP 3206) on floors 44–62.

[5]

The Building is composed of a curtain-wall system consisting of pre-fabricated

panels constructed as distinct, four-sided insulated glass units (“IGUs”) which are

said to be integral to the proper functioning of the Building and separate the exterior

and interior environments. IGUs include inner and outer glass (which are called

“lites”) separated by a metal spacer bar. The outer and inner lites have different

structural attributes. The outer lite is heat-strengthened glass while the inner lite is

tempered glass. The inner lite is twice as stiff as the outer lite and unlike the outer

lite, it is supposed to break into small pieces when shattered. Both glass lites are

sealed to the spacer using two types of sealant which are meant to provide an air-

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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and vapour-tight cavity between the glass panes. A chemical known as a

“desiccant”, designed to absorb moisture in the air between the two lites, is

contained inside of the spacer bar.

[6]

The curtain-wall system, including the IGUs, is common property.

[7]

Further Information concerning the lengthy and complex history of the

Related Actions may be gleaned from reasons for judgment indexed at 2021 BCSC

1761 and 2022 BCSC 226. In those reasons, I referred to the applicants as the

“developer defendants”.

[8]

The Related Actions are to be tried at the same time. The trial is scheduled to

commence on October 3, 2022, and estimated to take approximately 130 days.

[9]

In two of the five Related Actions, SP 3165 (VA S1510431) and SP 3206 (VA

S1510419) have sued multiple defendants, including the applicants, grounding their

claims in negligence. The parties refer to those actions collectively as the “IGU

Actions”.

[10] At the heart of the IGU Actions is the strata corporations’ assertion of

systemic dangerous defects in the IGUs which require repair or replacement. The

strata corporations claim that the systemic defects, resulting from negligent design,

manufacture, assembly, and installation, are manifesting in a number of inner and

outer lites fogging, leaking water, spontaneously breaking, cracking, and/or failing,

which have caused the IGUs and Building to be unsafe and hazardous. The strata

corporations allege that the systemic dangerous defects pose a substantial risk of

physical danger, including to the health and safety of any person in the vicinity of the

Building.

[11] In the IGU Actions, the strata corporations seek recovery of economic loss,

i.e., the cost to abate the dangerous defects in the common property through repair

or replacement, based on the decisions of the Supreme Court of Canada in

Winnipeg Condominium Corporation No. 36 v. Bird Construction Co., [1995] 1

S.C.R. 85 and 1688782 Ontario Inc. v. Maple Leaf Foods Inc., 2020 SCC 35.

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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[12] In this class action (VA S1510418), class members are defined as current or

former owners of units, excluding the applicants and their senior officers and

directors, who took title to a unit(s) in the Building by entering into or through an

assignment of a pre-sale contract of purchase and sale: 2022 BCSC 226 at para. 46.

The class excludes those persons who assigned their pre-sale contract to a

purchaser who is a member of the class.

[13] The claims of the class members, advanced by 0790482 B.C. Ltd., who is the

representative plaintiff in this class action, are grounded on breach of contract and

breach of implied warranty of fitness. Unlike the IGU Actions, the claims in this class

action in respect of loss and damages arising from the alleged defects in the IGUs

are not restricted to proof of loss arising from dangerous defects. Recovery is sought

in respect of individual losses (as opposed to common property), such as damage to

individual units, diminution in value, and loss of amenities.

[14] The other two of the five Related Actions, VA S117461 and VA S117480, are

brought by the strata corporations against warranty insurers, National Home

Warranty Group Inc. and Aviva Insurance Company of Canada (collectively,

“Warranty Actions”), for recovery of losses they maintain are covered by warranty

insurance policies.

[15] The applicants contend in their proposed third-party notice that the strata

corporations negligently breached their duty of care and statutory obligations under

ss. 3 and 72 of the Strata Property Act, S.B.C. 1998 c. 43 [SPA] to maintain and

repair common property. They assert that if there are defects in the curtain-wall

system and IGUs, then the strata corporations failed to attend to repair or replace

the defective common property since they first became aware of such defects, which

they say was in approximately 2010. The applicants also claim that the strata

corporations failed to advise the class members of any such alleged defects and

failed to recommend repairs. The applicants allege that the negligence of the strata

corporations caused or contributed to individual losses alleged to have been

suffered by the class members.

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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[16] The strata corporations and the representative plaintiff oppose the application

on several grounds: (a) the proposed claim fails to disclose a cause of action and is

also beyond the expiry of the applicable limitation period; (b) the applicants have

unreasonably delayed in bringing the application; and (c) the balance of

convenience favours dismissal of the application in any event.

When a Third-Party Claim May be Brought

[17] The right to seek contribution and indemnity is provided for in s. 4 of the

Negligence Act:

Liability and right of contribution

4 (1) If damage or loss has been caused by the fault of 2 or more persons,

the court must determine the degree to which each person was at fault.

(2) Except as provided in section 5 if 2 or more persons are found at fault

(a) they are jointly and severally liable to the person suffering the

damage or loss, and

(b) as between themselves, in the absence of a contract express or

implied, they are liable to contribute to and indemnify each other in the

degree to which they are respectively found to have been at fault.

[Bold in original]

[18] A claim for contribution or indemnity may be brought by a separate action or a

third-party notice per R. 3-5(1) of the Rules, which sets out when a claim for

contribution or indemnity may be brought by a third-party notice:

Making a third party claim

(1) A party against whom relief is sought in an action may, if that party is not

a plaintiff in the action, pursue a third party claim against any person if the

party alleges that

(a) the party is entitled to contribution or indemnity from the person in

relation to any relief that is being sought against the party in the

action,

(b) the party is entitled to relief against the person and that relief

relates to or is connected with the subject matter of the action, or

(c) a question or issue between the party and the person

(i) is substantially the same as a question or issue that relates

to or is connected with

(A) relief claimed in the action, or

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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(B) the subject matter of the action, and

(ii) should properly be determined in the action.

[Bold in original]

[19] Rule 3-5(4), brought into force on April 4, 2022, requires a third-party notice to

be brought within 42 days of a defendant’s response pleading being filed, otherwise

leave of the court is required. The applicants are beyond that time and hence,

require leave.

[20] The same principles governing R. 9-5, which concerns dismissal of a claim on

the basis that no cause of action is alleged, apply to the analysis for granting leave

or striking third-party claims. The party advancing or seeking to advance a third-

party claim is not required to adduce evidence in support of the application. The

facts pleaded are presumed to be true. A third-party notice or an application seeking

leave will only be struck or dismissed (as the case may be) if it is plain and obvious

that the pleading fails to disclose a reasonable claim that is not bound to fail:

McNaughton v. Baker, [1988] 4 W.W.R. 742 at paras. 28–30 (B.C.C.A.); Health

Sciences Association of British Columbia v. Hewitt Associates Corp., 2019 BCSC

208; The Owners, Strata Plan EPS 677 v. ASPAC Developments Ltd., 2021 BCSC

2294 at para. 16; Steveston Seafood Auction Inc. v. Bahi, 2013 BCSC 1072 at

para. 19.

The Applicants’ Rationale for Their Proposed Third-Party Notice

[21] Previously, and before this action was certified as a class action and prior to

the notices of civil claim being amended in the class action and the IGU Actions in

December 2021, the strata corporations advanced representative claims on behalf of

individual unit owners in the IGU Actions. As part of their defence to the claims in the

IGU Actions, the applicants pleaded in their response pleadings that the breach of

duty and negligence of the strata corporations caused or contributed to any losses

suffered by the individual unit owners.

[22] The applicants also challenged the strata corporations’ standing to pursue

claims beyond those relating to common property. Now, following certification of this

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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action and amendments to the notices of civil claim in this action and the IGU

Actions, claims for individual losses are only being pursued in the class action.

[23] Nevertheless, the applicants continue to maintain their allegations of breach

of duty and negligence against the strata corporations as part of their defence to the

claims in the IGU Actions.

[24] The applicants now seek to advance similar allegations of breach of duty and

negligence on the part of the strata corporations in this action. The applicants’

position is that they should be granted leave to issue a third-party notice that

captures the allegations they made in the IGU Actions as part of their defence to the

claims of the class members so that if proven, the findings will be binding on the

strata corporations, requiring them to contribute to or indemnify them for any

judgment rendered against the applicants in favour of the class members.

[25] The applicants submit that if they are not allowed to add the strata

corporations as parties to this action, they would be compelled to issue separate

proceedings against the strata corporations in order to recover contribution or

indemnity that may not be capable of being tried at the same time as the trial of the

Related Actions. That possible result, they contend, would offend the policy objective

of avoiding multiplicity of proceedings, which entails waste of resources, duplication

of evidence, and a risk of inconsistent findings.

Issues

[26] A number of complex legal and factual issues are raised by the parties’

positions and submissions.

[27] One issue is whether the proposed third-party claim fails to disclose a cause

of action since, as the strata corporations and the representative plaintiff submit, it is

directed against the strata corporations in their capacity as agents of the class

members. The parties’ submissions in this respect focused on the relationship

between the strata corporations and the class members.

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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[28] If the strata corporations are agents of the class members in all respects, then

the “Adams Rule” (fashioned in Laidar Holdings Ltd. v. Lindt & Sprungli (Canada)

Ltd., 2012 BCCA 22 from the decision in Adams v. Thompson, Berwick, Pratt &

Partners (1987), 39 D.L.R. (4th) 314 (B.C.C.A.)) applies such that there is no claim

to be made against them by the applicants under R. 3-5(1)(a) since their alleged

delicts are attributable to the class members and would potentially reduce or deny

the class members’ recovery for damages.

[29] As the strata corporations and the representative plaintiff correctly point out, a

finding that the strata corporations are agents of the class members would not

prevent the applicants from raising the conduct of the strata corporations as a

defence to the class members’ claims in this action. The Adams Rule permits the

applicants to advance such defences in their response pleading in this action. In that

respect, an order granting leave to the applicants to amend their response pleading

in this action is unopposed.

[30] The applicants submit that even if the Adams Rule applies, their third-party

claim against the strata corporations would survive under R. 3-5(1)(b) and (c), citing

Paramount Resources v. Import Tool Corporation Ltd., 2018 BCSC 599 at paras. 39-

40. In addition, the applicants argue that the wrongs alleged against the strata

corporations concern consecutive but indivisible claims that should be tried together

with the claims of the class members against the applicants.

[31] Two other issues were identified by the parties, if any of the enumerated

grounds in R. 3-5(1) potentially apply.

[32] The first issue concerns the applicable limitation period. The parties’

submissions concerning the recent decision of the Court of Appeal in Sohal v.

Lezama, 2021 BCCA 40, addressed, in part, whether the limitation period only

commenced to run when the notice of civil claim in this action was amended in

December 2021.

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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[33] The second issue concerns balance of convenience. For example: (a) did the

applicants delay in bringing their application since they were served with the notice

of civil claim in the class proceeding and in the IGU Actions approximately five years

ago; (b) is there prejudice arising to the class members and other parties if the third-

party notice is issued; and (c) if prejudice exists, is it of such significance to deny

leave? For example, in respect of the latter point, the strata corporations and the

representative plaintiff contend that if the strata corporations are added as third

parties to this action at this late stage of the proceeding, it will create a conflict that

did not previously exist because the law firm who represents the representative

plaintiff also represents the strata corporations in the other Related Actions, which in

turn will result in new counsel having to be retained.

Does the Proposed Third-Party Claim Disclose a Cause of Action?

The Adams Rule: General Legal Principles

[34] The case authorities discuss two “branches” to the Adams Rule.

[35] The “first branch” of the Adams Rule encompasses two broad circumstances

(also referred to as “categories”) under which a third-party claim is precluded. The

first is where the proposed third party acted as the plaintiff’s agent in respect of the

plaintiff’s own obligation. The second category is where the claim is that the third

party failed to advise the plaintiff in respect of its obligation to avoid or mitigate its

loss. Should the alleged negligent conduct or breach of duty of the agent or the party

assisting the plaintiff mitigate their loss be found at fault, it will be attributable to the

plaintiff. Such claims may be raised by the defendant against the plaintiff as a full or

partial answer in defence to the plaintiff’s claim in its response pleading. However,

the plaintiff is free to sue whom it chooses and cannot be forced to join its agent or a

party retained to assist mitigate its loss in the proceeding.

[36] The second branch of the Adams Rule refers to an exception to the first

branch, and arises where the proposed third-party claim raises a claim for which the

breach of duty allegedly committed by the proposed third party might not be owed or

attributable to the plaintiff but might give rise to an independent cause of action not

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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belonging to the plaintiff, and in that event, it will be allowed to stand: Adams at

para. 16; Laidar at paras. 1, 13.

[37] I turn now to review the origin of the Adams Rule.

[38] The facts in Adams are these. The defendant engineers were sued for

negligent design and delay in relation to a residential subdivision. The defendant

engineers, in turn, issued a third-party notice against the plaintiffs’ solicitors for

failing to advise the plaintiffs to file a revised prospectus which could have allowed

some of the lots not affected by a stop-work order to be sold before the market

crashed. Following her review of the case authorities, Justice McLachlin (as she

then was) determined that the third-party claim should be struck, explaining in her

reasons:

16.

It thus may be stated with confidence, in my view, that a third party

claim will not lie against another person with respect to an obligation

belonging to the plaintiff which the defendant can raise directly against the

plaintiff by way of defence. Where the only negligence alleged against the

third party is attributable to the plaintiff, there is no need for third party

proceedings since the defendant has his full remedy against the plaintiff. On

the other hand, where the pleadings and the alleged facts raise the possibility

of a claim against the third party for which the plaintiff may not be

responsible, the third party claim should be allowed to stand.

[39] Justice McLachlin described two circumstances or categories in which the

rule applies: (a) where the acts alleged in the third-party notice fall within the scope

of an agency between the proposed third party and the plaintiff concerning the

latter’s obligation; and (b) where the allegation is that the proposed third party should

have advised or assisted the plaintiff in mitigating its loss: Adams at paras. 20-21.

[40] Applying these principles, McLachlin J. found at para. 24 that in so far as the

solicitors were retained to file or amend the prospectus or otherwise deal with others

on the plaintiffs’ behalf, they were acting as the plaintiffs’ agents. Even if,

McLachlin J. said, the alleged failure to give proper advice did not fall within the

scope of an agency, the second category of the first branch of the Adams Rule

would be engaged. Any failure on the solicitors’ part to properly advise the plaintiffs

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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would give a complete remedy to the defendant engineers directly against the

plaintiffs because mitigation is an obligation of the plaintiffs: Adams at para. 25.

[41] The approach taken in Adams was reaffirmed by the B.C. Court of Appeal in

Laidar. In that case, the proposed fourth-party claim against a firm of solicitors

alleging failure to assist the plaintiff to perform its own obligations was dismissed.

The exception (or second branch as it has become known as) discussed in Adams—

that the obligation was not that of the plaintiff—did not apply because there was no

allegation that the solicitors owed an independent duty to any party other than the

plaintiff:

[34]

With respect to the Negligence Act, DTZ submits that s. 4 creates an

independent statutory right as between tortfeasors to claim contribution from

any other person who may have been at fault. On this point, DTZ cites The

Owners, Strata Plan LMS 1751 v. Scott Management Ltd. 2010 BCCA 192,

where the Court stated at para. 57:

Section 4(2)(b) of the [Negligence] Act creates an independent right of

contribution as between the defendants and the respondents since

the plaintiff had a cause of action against each of them when the

alleged tort occurred.

(The respondents in Scott were various sub-trades and consultants who had

been retained by the defendants in the construction of an allegedly “leaky

condo” owned by the plaintiffs.) Since DTZ is in the case at bar a third party

rather than a defendant, it argues that the statement from Scott may be

reformulated as follows:

Section 4(2)(b) of the Act creates an independent right of contribution

as between the third party and the fourth party since the defendant

had a cause of action against each of them when the alleged tort

occurred.

[35]

Apart from the issue of the timing of the ‘alleged torts’, this statement

overlooks the fact that on the present pleadings, the only cause of action

alleged against Blakes is the breach of a duty owed only to Lindt. The lesson

of Adams is that at least under the Negligence Act of this province, the

breach of such a duty does not give DTZ an “independent right of

contribution” against Blakes. If the law firm was negligent in its advice to its

client, DTZ would, like the engineers in Adams, “have a complete remedy” by

way of reduction of Lindt’s damages for which DTZ could be liable. A third

party claim is unnecessary.

[Emphasis in original]

[42] Citing Adams, Justice Newbury pointed out in Laidar that the Adams Rule is

consistent with ss. 1 and 4 of the Negligence Act:

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[10] The engineering firm [in Adams] argued that if it and the law firm were

found to have been at fault, it should be in a position to seek contribution and

indemnity from the law firm, and therefore sought to invoke s. 4 of the

Negligence Act, R.S.B.C. 1979, c. 298, and Rule 22. This court, however,

upheld the chambers judge’s order striking out the third party notice. The

Court cited Yemen Salt Mining Corp. v. Rhodes-Vaughan Steel Ltd. (1976) 2

C.P.C. 318 (B.C.S.C.) and Westcoast Transmission Co. v. Interprovincial

Steel & Pipe Corp. (1985) 60 B.C.L.R. 368 (S.C.), both of which illustrated

that, in the words of McLachlin J.A., “Where the fault alleged against the

proposed third party is in fact the fault of the plaintiff, the defendant can raise

the default by way of defence, making third party proceedings

unnecessary.” (At 55.) After stating the two branches of the rule in the

passage I have quoted at para. 1, she explained the distinction between

claims for contribution and indemnity between co-defendants under s. 4 of

the Negligence Act, and the reduction of damages recoverable by a plaintiff

who has contributed to his own loss, under s. 1:

The same result arises if one views the matter on the basis of

the Negligence Act and the Supreme Court Rules. Where the

third party claim can be raised by way of defence, the

substance of the matter is that the plaintiff is at fault. That

being the case, s. 1 of the Negligence Act, which deals with

the situation where fault is alleged, against the plaintiff, is

applicable. Section 1 makes no provision for contribution or

indemnity between co-defendants. By contrast, s. 4 of the

Negligence Act, which deals with cases where the plaintiff is

not at fault, provides for contribution and indemnity between

those found at fault in causing the plaintiff's loss.

Under Supreme Court Rule 22, a third party claim may be

brought for “contribution or indemnity”. That remedy is

available only where s. 4 of the Negligence Act is applicable. It

is not available where the claim is for fault for which the

plaintiff is responsible. [At 55-6; emphasis added.]

[Emphasis in original]

[43] I have cited s. 4 in para. 17 above. Section 1 of the Negligence Act provides:

Apportionment of liability for damages

1 (1) If by the fault of 2 or more persons damage or loss is caused to one or

more of them, the liability to make good the damage or loss is in proportion to

the degree to which each person was at fault.

(2) Despite subsection (1), if, having regard to all the circumstances of the

case, it is not possible to establish different degrees of fault, the liability must

be apportioned equally.

(3) Nothing in this section operates to make a person liable for damage or

loss to which the person's fault has not contributed.

[Bold in original]

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[44] Justice Newbury also pointed out that the second branch of the Adams Rule

was engaged in McNaughton because it could not be said that the allegations

against the third party “all necessarily related to acts committed as agents for the

plaintiff” and, unlike the facts in Sun Life Assurance Company of Canada v. 482147

B.C. Ltd., 2013 BCSC 1187, discussed in the next paragraph, “has also been

applied in cases involving complex contractual and tort relationships among various

parties including professional consultants who have interacted in the course of a

project of some kind”: Laidar at paras. 15–17.

[45] In Sun Life, the defendants filed a third-party claim against a general

contractor retained by the plaintiff to inspect the roof of a shopping centre, which

was subsequently purchased by the plaintiff and later found to be defective. Justice

Butler (as he then was) found the claim fell within the first branch of the Adams Rule:

[42]

The allegations in the pleadings also make it clear that the Three

Defendants do not have an independent right of action against MH. The

central allegation advanced in the third party proceedings is that MH

breached a duty to Sun Life. There is no allegation that MH owed or

breached a duty to the Three Defendants. Accordingly, the only way that the

third party proceeding can be permitted to stand is if there is some possibility

that the alleged breach of duty by MH is one for which Sun Life is not

responsible. In those circumstances, s. 4 of the Negligence Act would give

the Three Defendants a right of contribution and indemnity against MH.

[43]

In Laidar, the leasing agents argued that Lindt might not be

responsible for the negligence of its solicitors because it had hired competent

lawyers to represent its interests. While the Three Defendants did not

advance their argument in these terms, this must be part of their rationale for

suggesting that Sun Life may not be responsible for any fault attributable to

the Applicants. Madam Justice Newbury rejected this argument following a

thorough review of the jurisprudence in British Columbia and Ontario which

has considered whether to apply the first or the second branch of the rule in

Adams.

[44]

The court examined two Ontario decisions which allowed third party

proceedings to stand in circumstances which bore some similarity to Laidar:

Cardar Investments Ltd. v. Thorne Riddell (1989), 71 O.R. (2d) 29 (Div. Ct.);

and 478649 Ontario Ltd. v. Corcoran (1994), 118 D.L.R. (4th) 682 (Ont. C.A.).

In Corcoran, one of the key factors which led the court to allow the third party

proceedings to stand was that:

… The plaintiff may be able to say that it acted reasonably in retaining

the third party to advise it on the terms of the agreement and

accordingly should not be responsible for any negligence on the part

of its solicitor.

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[45]

Madam Justice Newbury noted that subsequent Ontario decisions

including Davy Estate v. CIBC World Markets Inc., 2009 ONCA 763, make it

clear that the ability of a principal to avoid liability because it selected a

competent and qualified agent or contractor is quite limited. It is necessary to

examine the particulars of the relationship to determine if the principal

nevertheless remains responsible for the negligent actions of its agent or

contractor. Madam Justice Newbury concluded her analysis with the following

statement at para. 46, in which she reconciled and applied the various

decisions to the facts in Laidar:

Returning finally to the instant case, all the threads of

argument discussed above lead in my opinion to the

conclusion that the chambers judge properly applied the first

branch of Adams. The proposed fourth party notice against

Blakes does not disclose “events giving rise to the initial loss”,

but simply alleges a failure to protect the interests of

Lindt. The conduct described in the notice clearly falls within

the scope of the firm’s retainer, which is not “questioned or

uncertain.” Lindt was not performing a pre-existing obligation

or duty; its only responsibility in the circumstances was to act

reasonably to protect itself. In the words of Adams, that was

an obligation “belonging to” Lindt, which can be raised by the

defendant by way of defence, making third party proceedings

unnecessary. Finally, I respectfully adopt the reasoning in

Davy Estate, and conclude that even if one were to assume

that in some circumstances, a client might avoid the

consequences of an agency relationship by proving that he or

she had retained a reputable agent, a defendant would

nevertheless have no basis for a claim against the solicitor

under the Negligence Act of this province for what remains the

client’s failure to mitigate.

[46]

In the present case, the Three Defendants say that the actions of MH

could not have been part of Sun Life’s mitigation efforts because at the time

the work was performed, Sun Life had not purchased the property and had

suffered no loss. In other words, the Three Defendants say that the alleged

failure by MH to provide advice which would have given Sun Life the

opportunity to avoid the loss altogether or to minimize the loss is different in

principle from advice given to a plaintiff who has an obligation to mitigate.

[47]

I cannot accept that argument. In my view the various factors

considered in Laidar result in the same conclusion in this case. Here, the

Third Party Notices do not raise events related to the “initial loss”. The actions

which form the basis of all of the claims in the main action are the actions of

the developers, contractors, consultants and suppliers who were involved in

the construction of the Shopping Centre. The initial loss – that is the alleged

deficiencies in design and construction – was complete when Sun Life

contracted with MH. The Applicants had no involvement in the development,

design or construction of the Shopping Centre. They came on the scene well

after the events which resulted in the alleged damage which forms the

substance of the claims raised in the main action. As in Laidar, the

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

Page 17

allegations against the Applicants do not disclose “events giving rise to the

initial loss”.

[48]

Further, the substance of the allegations in the Third Party Notices is

an allegation that the Applicants failed to protect the interests of Sun Life. It is

the same kind of allegation which was recently found to fall within the first

branch of the Adams rule in Laidar and Owners of Strata Plan BCS 2077 v.

Polygon Glenlloyd Park Ltd., 2012 BCSC 945.

[Emphasis added]

[46] The Court further held at para. 50 that the fact that the plaintiff incurred its

loss after receiving advice from the proposed third party did not change the nature of

the plaintiff’s obligation to perform due diligence.

[47] In summary, if a proposed third-party claim falls under the first branch of the

Adams Rule, which encompasses the two broad categories in which the breach of

duty or negligence alleged against the proposed third party is attributable to the

plaintiff, then the third-party claim should not be allowed to stand under R. 3-5(1)(a),

unless the second branch of the Adams Rule applies (e.g., where the proposed

third-party is alleged to also owe a duty to someone other than the plaintiff).

The Proposed Third-Party Claims

[48] It is useful at this juncture to set out the specific allegations advanced against

the strata corporations in the proposed third-party notice before turning to the

question of agency.

[49] I will start with the applicants’ proposed claim for contribution and indemnity,

which is set out in para. 14 of their proposed third-party notice:

14. To the extent that the Plaintiff and the Class may ultimately succeed

against any of the Defendants for damages for the alleged deficient design,

construction, assembly, manufacture and/or installation of the curtain wall

system and its components, including the IGUs, which is denied, then the

Defendants state that the costs, damages and/or expenses were also caused

or contributed to by the Residential Strata and the Live/Work Strata as a

result of the breaches of statutory duty and negligence particularized below,

and the Defendants are entitled to claim contribution and indemnity from the

same.

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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[50] The obligation to repair and maintain common property and duty of care the

strata corporations are alleged to owe to the class members are described in the

following paragraphs of the proposed third-party notice (note that para. 15 of the

proposed third-party notice repeats sub-para. (a) twice, which I have corrected to

accord with my ensuing analysis):

The Third Parties Owe a Duty to Repair and Maintain

9. Section 72 of the Strata Property Act provides that the Third Parties have a

statutory duty to repair and maintain common property and common assets

on the strata property.

10. The curtain wall system and its components, including the insulated glass

units (“IGUs”) are common property and common assets.

11. The Third Parties have not passed a bylaw requiring individual strata unit

owners to assume responsibility for repairing or maintaining the curtain wall

system and its component parts, including the IGUs.

12. The Third Parties have failed to repair or maintain the curtain wall system

and its component parts, including the IGUs.

13. Specifically, the Third Parties have failed to remedy the alleged defects to

the curtain wall system and its components, including the IGUs.

…

15. At all material times, the Third Parties owed a duty of care and statutory

duty to the Plaintiff and the Class to, inter alia:

(a) identify and investigate any and all defects and deficiencies to the

common property and common assets;

(a) [b] identify and properly advise the Plaintiff and the Class as to the

existence of defects and deficiencies with the common property and

common assets and appropriate remedial avenues;

(b)[c] identify and recommend all appropriate repairs and

maintenance to the common property and common assets; and

(c) [d] repair and maintain the common property and common assets.

[Bold and italics in original]

[51] The particulars of the breaches of the strata corporations alleged by the

applicants in the proposed third-party notice are excerpted below:

16. Particulars of the Third Parties breaches of duty of care, breaches of

statutory duty, and/or negligence:

(a) failing to identify and investigate any and all potential or realized

defects and deficiencies with the common property, including the

Defects;

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

(b) failing to identify and properly advise as concerns all and any

Page 19

potential or realized defects and deficiencies with the common

property, including the Defects;

(c) failing to identify and recommend all appropriate repairs to

common property;

(d) failing to repair and maintain the common property, and in

particular, the Curtain Wall System and is components, including the

IGUs; and

(e) such further and other particulars as may become known to the

Defendants or are proven at trial.

[52] I wish to make the following observations before turning to consider the

question of agency.

[53] First, the applicants argue that the Adams Rule is not engaged because the

strata corporations are not agents of the individual class members. At para. 2 of their

written reply, the applicants submit:

2. In an attempt to defeat this application and show that the Adams Rule

does apply, the Respondent has relied upon a number of cases, including

one written by you, that find in the facts of those cases, that the strata

corporation was acting as agent for the collective of all owners. The

Respondents, however, have failed to cite any case law that stands for the

proposition that is actually in dispute; that is, whether liability for damages

and losses caused by a breach of the Strata Corporations repair and

maintenance obligations are attributable, or belong to, the individual class

members.

[Emphasis in original]

[54] Alternatively, the applicants say that the facts alleged in their proposed third-

party notice raise the possibility of a claim for which the class members may not be

responsible, engaging the second branch of the Adams Rule. They assert that the

facts as pleaded if presumed to be true advance a claim that is not bound to fail, and

hence, leave should be granted so that the claim may be determined at trial.

[55] The strata corporations and the representative plaintiff disagree. Their

position is that the entirety of the claim advanced against the strata corporations in

the proposed third-party claim is caught by the Adams Rule because the SPA clearly

defines the position of the strata corporations as agents of all unit owners in respect

of maintenance and repair of common property.

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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[56] Second, there is no stand-alone tort of breach of statutory duty. A statutory

obligation may be breached through tortious conduct and in that respect, should be

included as part of an allegation of negligent conduct as opposed to a stand-alone

tort: The Queen (Can.) v. Saskatchewan Wheat Pool, [1983] 1 S.C.R. 205. In

Geddert v. Stokes, 2021 BCSC 656, Chief Justice Hinkson said at paras. 43-44,

citing Saskatchewan Wheat Pool, that proof of a statutory breach may be evidence

of negligence and the statutory formulation of the duty may afford useful guidance of

a reasonable standard of care. Thus, any reference to a claim for an alleged tort of

breach of statutory duty in the proposed third-party notice is not premised on a valid

cause of action and is bound to fail.

[57] Once this case authority was brought to the attention of the applicants, they

confirmed that a third-party claim predicated on a tort of breach of statutory duty

would be removed from the proposed pleading and advised they would deliver an

amended notice of application in order to put an amended proposed third-party

notice properly before me on the application.

[58] The applicants’ newly proposed pleading removing a claim of tort of breach of

statutory duty states:

The Third Parties Owe a Duty to Repair and Maintain

9. The Third Parties owe duties at common law to the Plaintiff and the Class.

These duties are informed by the Third Parties statutory duties, including

section 72 of the Strata Property Act, which provides that the Third Parties

have a statutory duty to repair and maintain common property and common

assets on the strata property.

…

Claim for Contribution and Indemnity

14. To the extent that the Plaintiff and the Class may ultimately succeed

against any of the Defendants for damages for the alleged deficient design,

construction, assembly, manufacture and/or installation of the curtain wall

system and its components, including the IGUs, which is denied, then the

Defendants state that the costs, damages and/or expenses were also caused

or contributed to by the Residential Strata and the Live/Work Strata as a

result of the breaches of duty of care and negligence particularized below,

and the Defendants are entitled to claim contribution and indemnity from the

same.

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

Page 21

15. At all material times, the Third Parties owed a duty of care to the Plaintiff

and the Class to, inter alia: …

16. Particulars of the Third Parties breaches of duty of care and/or

negligence: …

Part 3: LEGAL BASIS

…

2. The Third Parties, by the acts and omission particularized at Part 2 of this

Third Party Notice, have breached the applicable standard of care at common

law, as informed by inter alia, section 3 and 72 of the Strata Property Act,

SBC 1998, c 43

3. If the Plaintiff and the Class sustained loss or damages, which is not

admitted but expressly denied, such loss and damages were caused or

contributed to by the breaches of the Third Parties common law duties of care

and negligence described at Part 2 of this Third-Party Notice.

…

5. If the Plaintiff and the Class sustained loss or damages, which is not

admitted but expressly denied, and if the Defendants are liable to the Plaintiff

and the Class in respect of the same, which is further denied, then the

Defendants say that the Plaintiff’s and the Classes’ loss and damages was

caused or contributed by the acts, omissions, and breaches of duty of care,

and/or negligence of the Third Parties, and the Defendants seek

apportionment and contribution and indemnity from the Third Parties pursuant

to the Negligence Act, RSBC 1996, c. 333.

[Emphasis in original]

[59] The representative plaintiff and the strata corporations objected to the

applicants’ attempt, while the hearing was well underway, to recast that part of their

application concerning a breach of statutory obligations under the SPA.

[60] I will add that the applicants objected to the representative plaintiff’s

application, brought towards the end of the hearing, to amend its notice of civil claim

to limit its claim against the applicants to losses caused solely by their delicts, in an

attempt to answer the applicants’ concerns over being stuck with paying for losses

caused by the strata corporations. I ruled on the applicants’ preliminary objection to

the hearing of that amendment application, deciding that the application should be

determined based on the notice of application and application response as originally

filed.

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

Page 22

[61] Returning to the applicants’ attempt to amend their notice of application, had

they simply sought to remove a claim concerning a tort of breach of statutory duty

from their original proposed third-party claim, I would not see any prejudice to the

representative plaintiff and strata corporations in deciding the application on that

basis.

[62] However, what the applicants have done in their proposed amended third-

party notice is to add an additional claim for breach of common law duties which are

informed by the SPA. The application was not argued on that basis. Instead, the

parties’ submissions were framed on the basis that the obligations of the strata

corporations to class members and the relationship between them are found in the

SPA. Potential duties owed in common law were not the subject of argument. It

would thus be inappropriate to decide the application on any other basis.

[63] Third, the alleged obligations and breaches advanced by the applicants in the

proposed third-party notice comprise two categories.

[64] One concerns the strata corporations’ statutory obligation to repair and

maintain, i.e., that the strata corporations failed to identify, investigate, repair

defects, and maintain common property: see e.g., paras. 15(a), (d) and 16(a), (d).

[65] The other concerns the purported obligations of the strata corporations to

advise the class members of the defects in the curtain-wall system and its

components (e.g., the IGUs) and to recommend repairs to the individual unit owners:

see e.g., paras. 15(b)-(c) and 16(b)-(c). These allegations raise the spectre of the

strata corporations’ negligence in failing to advise the class members in respect of

their obligation to avoid or mitigate any losses, or both.

[66] The strata corporations and the representative plaintiff seek to characterize all

of the allegations in the proposed third-party notice as part and parcel of a failure to

mitigate claim. While it may be possible to read them in that way, it is also possible

to interpret some of them as separate allegations concerning the strata corporations’

own statutory obligations to maintain and repair.

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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[67] Lastly, the proposed claims are grounded on alleged duties owed by the

strata corporations under the SPA to the class members as unit owners. There is no

allegation in the proposed third-party notice that the strata corporations owe any

independent duty or duties to the applicants or any other persons. The proposed

claim puts squarely into focus the nature of the relationship between strata

corporations and unit owners under the SPA.

Agency

Introductory Comments

[68] The applicants’ claims respecting the strata corporations’ obligation to repair

and maintain common property raise the question of the relationship between the

strata corporations and the class members.

[69] The applicants contend that the twin issues of whether the obligation of a

strata corporation to maintain and repair is attributable to individual owners and

whether a strata corporation’s liability for losses caused by a breach of its

maintenance and repair obligations set out in the SPA are attributable to individual

unit owners have never been decided in this province. The strata corporations and

representative plaintiff disagree. They say that the answer is clear from the SPA and

various case authorities.

Strata Property Act

[70] A useful starting point is to consider the relevant provisions of the SPA.

[71] An owner of a strata unit owns the common property and common assets of

the strata corporation as a tenant in common with other unit owners in a share equal

to the unit entitlement of the owner’s strata lot divided by the total unit entitlement of

all the strata lots: SPA, s. 66.

[72] Subject to any limitation set out in the SPA, a strata corporation has the

power and capacity of a natural person of full capacity: SPA, s. 2(2). It holds

common property and common assets for all owners: Primex Industries Inc. v. The

Owners, Strata Plan LMS 1751, 2016 BCSC 2092 at para. 2. The powers and duties

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

Page 24

of a strata corporation are performed and exercised by a strata council whose

exercise of powers and performance of duties may be directed or restricted by the

strata corporation by a majority vote at an annual or special general meeting: SPA,

ss. 4, 27; Tagle v. The Owners, Strata Plan EPS2604, 2022 BCCRT 161.

[73] The responsibilities of a strata corporation to manage, maintain, and repair

common property and common assets for the benefit of the owners are included in

ss. 3 and 72 of the SPA:

Responsibilities of strata corporation

3 Except as otherwise provided in this Act, the strata corporation is

responsible for managing and maintaining the common property and common

assets of the strata corporation for the benefit of the owners.

…

Repair of property

72 (1) Subject to subsection (2), the strata corporation must repair and

maintain common property and common assets.

(2) The strata corporation may, by bylaw, make an owner responsible for the

repair and maintenance of

(a) limited common property that the owner has a right to use, or

(b) common property other than limited common property only if

identified in the regulations and subject to prescribed restrictions.

(3) The strata corporation may, by bylaw, take responsibility for the repair and

maintenance of specified portions of a strata lot.

[Bold in original; underlining added]

[74] A strata corporation’s repair and maintenance obligations are defined by the

standard of reasonableness. In The Owners of Strata Plan NWS 254 v. Hall, 2016

BCSC 2363, Justice Pearlman said at para. 24:

The strata corporation's obligation to repair and maintain is measured against

a test of what is reasonable in all of the circumstances: Taychuk at para. 30;

Wright v. The Owners, Strata Plan No. 205 (1996), 20 B.C.L.R. (3d) 343

(S.C.), aff’d (1998), 43 B.C.L.R. (3d) 1 (C.A.).

[75] Strata corporations must act in the best interests of all owners, as opposed to

any one unit owner, in respect of common property and common assets. In Gentis v.

The Owners, 2003 BCSC 120, Justice Masuhara said at para. 24:

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

Page 25

In carrying out this mandate, the Corporation must consider, and act in, the

best interests of all the owners. Put differently, the Corporation “must

endeavour to accomplish the greatest good for the greatest number”: Sterloff

v. Strata Plan No. VR 2613 (1994), 38 R.P.R. (2d) 102 at para. 35 (B.C.S.C.).

[76] While s. 72(2)(b) allows a strata corporation to require a unit owner to repair

common property, it can only do so if such right is identified in the regulation. The

Continuing Legal Education publication, Strata Property Manual, points out at

c. 22.8, there is currently no legislative authority permitting a strata corporation to

make a unit owner repair common property under s. 72(2)(b):

Although s. 72(2)(b) contemplates that a strata corporation may delegate the

responsibility to repair and maintain common property (other than limited

common property), that ability is subject to the regulations. To date, no

regulations have been adopted permitting a strata corporation to make such a

delegation. As a result, a strata corporation cannot purport, directly or

indirectly, to make an owner responsible for the repair and maintenance of

common property through the bylaws.

[Emphasis added]

[77] In any event, there is no evidence that any such responsibility was ascribed to

an individual owner in this case.

[78] Sections 163(1) and 166(3) of the SPA are also engaged in the analysis.

[79] Section 163(1) provides that “[a] strata corporation may be sued as

representative of the owners with respect to any matter relating to the common

property, common assets, bylaws or rules, or involving an act or omission of the

strata corporation.”

[80] Section 166(3) states that an owner does not have any personal liability in

their capacity as an owner for the wrongs of a strata corporation, but at the same

time, s. 166(1) makes all owners jointly and severally liable for a judgment against a

strata corporation.

[81] The provisions of s. 166 are set out below:

Owner's liability for judgment against strata corporation

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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166 (1) A judgment against the strata corporation is a judgment against all

the owners.

(2) A strata lot's share of a judgment against the strata corporation is

calculated in accordance with section 99 (2) or 100 (1) as if the amount of the

judgment were a contribution to the operating fund and contingency reserve

fund, and an owner's liability is limited to that proportionate share of the

judgment.

(3) Other than as set out in this section, an owner has no personal liability, in

his or her capacity as an owner, for loss or damage arising from any of the

following:

(a) the management and maintenance of the common property and

common assets by the strata corporation;

(b) the actions or omissions of the council or strata corporation;

(c) any contracts made or debts or liabilities incurred by or on behalf

of the strata corporation.

[Bold in original; underlining added]

[82] In addition to s. 166, s.167(2) provides that the expense of defending a suit

against a strata corporation is shared by the owners in the same manner as a

judgment against a strata corporation is shared under s. 166.

[83] The applicants argue that although s. 166(1) of the SPA provides that a

judgment against a strata corporation is a judgment against all owners (in

proportionate shares), it does not mean it is their agent because s. 166(3) states that

no owner has any personal liability for any acts, omissions, or liabilities of the strata

corporation, including any loss or damage arising from the management and

maintenance of common property. However, as I take their response, the strata

corporations and the representative plaintiff contend that the applicants’ singular

focus on one subsection of the SPA overlooks and mischaracterizes the scheme of

the SPA and the effect of the case authorities discussed below.

[84] Other relevant provisions of the SPA support the submissions of the strata

corporations and the representative plaintiff that a strata corporation owes duties to

individual owners and acts as the agent of individual unit owners. In this respect, a

strata corporation is accountable to an owner for unfair, oppressive treatment

(s. 164); an owner can obtain a court order requiring a strata corporation to carry out

its statutory duties (s. 165); a strata corporation may sue on behalf of one or a

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

Page 27

subset of owners about matters affecting only their strata lots (s. 172); and a strata

corporation may join as a party an owner whose act or omission gave rise to the

claim against the strata corporation (s. 168).

Authorities

[85] Although none of the authorities that have been brought to my attention

specifically address the points raised on this application concerning agency, they

provide useful guidance for my analysis and ultimate determination.

[86] The effect of the cases relied upon by the applicants is described in their

written submissions extracted in part below. The applicants point to four authorities

in support of their argument that a strata corporation is not the agent of individual

unit owners in respect of maintenance and repair obligations because it cannot force

a unit owner to carry out those obligations. In that sense, the applicants submit,

those obligations cannot be said to be those of the representative plaintiff and unit

owners who are class members:

62. Clearly then, Strata Corporations do not have the legislative authority to

delegate its repair and maintenance responsibility to individual owners. If that

is the case, how could the Strata Corporation’s failure to do so be visited

upon any specific individual owner?

63. The courts have affirmed this legislative directive.

64. In Strata Plan LMS 1162 v. Triple P Enterprises Ltd., 2018 BCSC 1502

(“LMS1162”), the strata corporation sought an order making the respondent

strata lot owner responsible for the repair or replacement of certain drainage

pipes, alleging that the respondent’s operations damaged the drainage pipes

(the respondent’s strata lot operated as a restaurant, and degreasing agents

were poured from time to time down the drainage pipes to prevent backups).

The court dismissed the application of the strata corporation on the basis that

the obligation to repair and maintain common property was the obligation of

the Strata Corporation and not any individual owner.¹⁶

65. In Taychuk v. Owners, Strata Plan LMS 744, 2002 BCSC 1638, this

court found a strata corporation was in breach of its statutory obligations to

repair and maintain common property piping with respect to discolouration of

domestic water over a period of several years. The strata corporation had

proposed to install a solution, on the condition that the individual owner pay

for the system and arrange for the replacement to be done. In response to

this proposal, Justice Gray held at paragraph 42, that the obligation to repair

and maintain the common property was that of the strata corporation and that

it could not “force owners to assume its duty.’’ (emphasis added).

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

Page 28

66. Thus, while each individual owner may have a proportionate ownership

share in the common property, they have no individual right or ability or

obligation to alter or repair the common property. That obligation lies with

the Strata Corporations as agent of all owners.

67. Where the strata corporation has failed to abide by its obligations, they

are liable to the individual strata lot owners for all individual losses resulting

thereof, including loss of rental income.

68. For instance, in Strata Plan LMS 3539 v. Ng, 2016 BCSC 2462, the

court held that the strata corporation was liable to a strata lot owner for rental

losses arising out of the failure of a common property pipe resulting in

significant damage to the owner’s strata lot.

…

70. The vital distinction that the Respondents have overlooked is that a strata

corporation is only the agent for all owners; it is not the agent for any one

individual owner in its personal capacity.

71. The essential qualities of an agency relationship include the following: (i)

consent of both the principal and the agent; (ii) authority of the agent to affect

the principal's legal position; and (iii) the principal's control of the agent's

actions.¹⁸

72. These essential qualities only exist when dealing with claims that are

against the collective of all owner. As Condominium Plan No. 942236

illustrates, the Strata Corporations stands as agent for the current owners in

respect to those obligations vested in the Strata Corporations and they are

answerable to “all of the owners”.¹⁹

73. The Strata Corporations in this case are not answerable to any individual

class member.

¹⁶LMS 1162 at paras. 16-28 and 42

¹⁸The Owners: Condominium Plan No. 9422336 v. The Queen, 2004 TCC 406

(“Condominium Plan No. 942236”) at para. 10

¹⁹Ibid at para. 11

[Emphasis in original]

[87] The applicants also cited the reasons of Justice Johnston in Petersen v.

Proline Management Ltd., 2007 BCSC 790 and of the Court of Appeal at 2008

BCCA 541 in support of their argument that no agency relationship exists between

the strata corporations and the class members and for their alternative argument

that it is a question of fact to be determined in each case such that they should be

granted leave to file their proposed third-party notice.

[88] I do not find Petersen to be of assistance. As I have pointed out, the

applicants’ proposed third-party claim against the strata corporations is founded

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

Page 29

upon the strata corporations’ obligations under the SPA to unit owners. It is the

nature of the relationship between strata corporations and unit owners under the

SPA that is under consideration on the instant application. In contrast, in Petersen,

the relationship between the strata corporation and the plaintiff under the

Condominium Act, R.S.B.C. 1979, c. 61, the predecessor to the SPA, was not

considered. In that case, the plaintiff unit owner sought to avoid the consequences of

the expiry of the limitation period for tort and contractual claims by advancing a

common law claim for breach of fiduciary duty against the strata corporation based

on its purported obligation to maintain a railing that was alleged to be common

property. The bylaws were reviewed as part of the factual matrix in order to assess

whether there was an assumption of a discretionary power by the strata corporation

that in turn could support the existence of a fiduciary duty at common law.

[89] In their submissions, the strata corporations and the representative plaintiff

cited certain sections of the SPA and case authorities in addition to Adams and

Laidar in support of their position that a strata corporation is the agent of all and

each unit owner in all respects, including the obligation to maintain and repair

common property.

[90] As I read their argument, they say that the applicants misconstrue the

scheme of the SPA as it clearly creates an agency relationship which engages the

Adams Rule; in particular, they characterize the statutory obligation of unit owners to

pay any judgment awarded against the strata corporation to be tantamount to their

own obligation for maintenance and repair:

23. An agency relationship is found in the statutory language. Pursuant to s.

66 of the SPA, common property is owned by individual owners in proportion

to their ownership of strata lots. Flowing from s. 66, and as established by s.

3 of the SPA, the strata corporation’s responsibility under s. 72 to repair and

11

maintain common property is “for the benefit of the owners.” Moreover, in

carrying out that responsibility, the strata corporation is authorized to deal

with others on behalf of owners. As a result, this Court and others have held

that the strata corporation is acting as agent for the owners in managing and

maintaining common property.¹²

24. The defendants state that it is essential in an agency relationship that the

principal controls the agent’s actions, which quality they say is missing

because the Stratas are not answerable to individual class members. This is

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Page 30

plainly incorrect. A strata corporation owes a duty to all owners and each

owner. For example, under s. 164 of the SPA, a court can remedy an unfair,

oppressive action of the strata corporation against an owner.

25. In their submissions, the defendants assert that a strata corporation’s

duty under s. 72 is owed only to the collective of owners. In other words, the

defendants say that Adams does not apply because the repair obligation

cannot be imputed to individual owners for the defendants to attack by way of

a defence of mitigation against the class and that is why they need the third

party claim against the Stratas.

26. The defendants’ argument is inconsistent with the scheme of the SPA. If

a strata corporation is successfully sued for breach of s. 72, an owner (unless

they were the plaintiff) must share in the costs that emanate from the action

with other owners. While a strata lot owner has no personal liability under s.

166(3) for the management and maintenance of common property, s. 166(1)

“confirms that a judgment against the strata corporation is ‘a judgment

against all the owners’” and “imposes joint and several liability on owners for

the wrongs of the strata corporation.”¹³As among themselves, owners would

each be liable for the proportionate share of their unit entitlement under s.

166(2).

27. Simply put, the defendants pursuing an argument that the Stratas

breached their s. 72 repair obligation as a mitigation defence against class

members is consistent with the scheme of the SPA. To reiterate, s. 166(1)

imposes joint and several liability on owners for the wrongs of the strata

corporation.

28. The defendants next argue that, even if the s. 72 obligation can be

imputed to individual owners, because strata communal living is an

unconventional agency claim, their proposed third party claim should be

given the benefit of the doubt under the Adams principles and allowed to

stand. However, that is only if the third party notice actually raise the

possibility of a claim against the third party for which the plaintiff may not be

responsible.

29. That was the distinction which the Court of Appeal made between Adams

and the case in Quintette Coal Ltd. v. Bow Valley Resource Services Ltd. et

al., April 2, 1986, No. C837395, Vancouver Registry: “At the same time, it

must be recognized that a person acting as agent to the plaintiff may

undertake duties toward co-contractors and others outside the scope of his

agency. To put it another way, the plaintiff’s agent may, as a consequence

of his relations with other contractors on the project, assume duties

toward persons other than the plaintiff, for breach of which the plaintiff

would not be vicariously liable. It was the possibility of such claims which led

14

McEachern C.J. in Quintette, supra, to allow the third party claim to stand.”

30. That was not the case in Adams nor is it the case here. There are no

allegations in the third party claim that the Stratas did any acts that could be

considered to be outside the scope of their agency or duties to owners.

Indeed, the defendants specifically plead in the third party notice that the

Stratas would be liable “pursuant to section 3 and 72 of the Strata Property

Act.” Nor can the Stratas be said to have interacted with the defendants in the

construction of the Shangri-La development.

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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12

Primex Industries Inc. v. The Owners, Strata Plan LMS 1751, 2016 BCSC 2092

(Walker, J.) at paras. 1-2; Trans Canada Trenchless Ltd. v. Targa Contracting

(2013) Ltd., 2022 BCSC 438 at para. 21; The Owners: Condominium Plan No.

9422336 v. The Queen, 2004 TCC 406 at paras. 10-16.

13

Oldaker v. Strata Plan VR 1008, 2010 BCSC 776 at para. 34.

14

Adams at para. 20 [emphasis added].

[Emphasis in original]

[91] I find the reasoning in Hamilton v. Ball, 2006 BCCA 243, York Condominium

Corp. No. 104 v. Supreme Automatic Washing Machine Co. (1978), 18 O.R. (2d)

596 (H.C.J.), and Oldaker v. The Owners, Strata Plan VR 1008, 2010 BCSC 776,

cited by the strata corporations and the representative plaintiff, to be particularly

helpful.

[92] The issue raised on appeal in Hamilton was whether one or more strata

owners may sue a third party for injury to their common property without involving

the strata corporation as a plaintiff, and without the approval of the statutory majority

required by s. 171 of the SPA.

[93] In her reasons in Hamilton, Newbury J.A. described the nature of ownership

of common property and the role of a strata corporation. Strata lot owners, she

wrote, are members of the strata corporation, as opposed to shareholders, and do

not enjoy limited liability as do shareholders of a corporation. Common property is

owned directly by unit owners as tenants in common and the strata corporation’s

role is to maintain and manage it for the unit owners.

[94] I have excerpted below Newbury J.A.’s discussion of the ownership scheme

of the SPA:

[2]

I begin with a general outline of the provisions of the Act that are

relevant to the appeal. First, ss. 2-4 of the Act provide that a strata

corporation is established upon the deposit of a strata plan in a Land Titles

Office. The corporation has the powers and capacity of a natural person, and

its name is required to be "The Owners, Strata Plan ______". The owners of

the strata lots are the members of the corporation, but it does not have share

capital and the members are not shareholders. Nor do members enjoy

limited liability as do shareholders of ordinary companies: s. 166(1)

provides that a judgment against the strata corporation is a judgment against

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

Page 32

all the owners. By s. 291 of the Act, the Business Corporations Act,

S.B.C. 2002, c. 57, does not apply to strata corporations

[3]

Section 66 of the Act deals with property ownership. It states:

66 An owner owns the common property and common

assets of the strata corporation as a tenant in common in a

share equal to the unit entitlement of the owner's strata lot

divided by the total unit entitlement of all the strata lots.

[Emphasis added.]

Although the phrase "of the strata corporation" may be confusing, other

provisions of the Act confirm that the common property and common

assets are held and owned directly (i.e., not through the medium of the

corporation) by the owners in proportion to their respective unit

entitlements. Section 251, for example, requires the Registrar of Titles to

include on each indefeasible title representing a strata lot, a reference to "the

owner's share in the common property created by the strata plan". Further,

s. 251(3) states that a document dealing with the strata lot deals as well,

without express reference, with the share of the owner in the common

property and common assets. (See also ss. 253(4), 67 and 81.) At the same

time, the use, enjoyment, alteration and disposition of common property are

subject to various restrictions, and the strata council is responsible for

managing and maintaining it "for the benefit of the owners": see ss. 3

and 72(1).

[Bold emphasis on citations in original omitted; underlining emphasis in

original; bold emphasis added]

[95] Justice Newbury rejected the argument that s. 171 of the SPA (which, as

pointed out above, empowers a strata corporation, upon a resolution passed by

three-quarter’s vote of unit owners at an annual general meeting or special general

meeting, to sue as a representative of all owners) takes away the common law right

of an owner to sue for damage to its proportionate share ownership of common

property:

[25]

Mr. Tweedy cited no case authority, but pitched his argument on a

practical level. He argued that in a building owned by ten persons in which a

100 sq. ft. area of floor had been damaged, it would be nonsensical and

unreasonable if one owner alone could sue for the damage to his or her

proportionate share of the floor. This argument flies in the face of cases such

as Baker and Sheehan referred to above, and fails to consider R. 5(3), supra.

However, Mr. Tweedy also relied on two British Columbia cases which have

applied Foss v. Harbottle to strata corporations – Ang, supra, and Extra Gift

Exchange Inc. v. Bryan Collins Land Surveying Inc. (2004) 35 B.C.L.R. (4th)

65, 2004 BCCA 588. The latter involved a dispute between the owner of a 1%

interest in a strata lot, the developer of the property, and a land surveying

company that had been engaged by the developer to carry out preparatory

work at the site even before the strata corporation was formed. Shabbits J.

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Page 33

dismissed the proceeding as disclosing no cause of action. He ruled that a

land surveyor does not owe a fiduciary duty to his or her client and that no

breach of any duty existing at law had been pleaded. This

Court, per Huddart J.A., agreed. However, the Court also went on to say:

To the extent that ground for relief may be arguable, it must be

put forward by the Strata Corporation, who is authorized by s. 171 of

the Strata Property Act to sue as representative of “all owners, except

any who are being sued,” if authorized by a resolution “passed by a

3/4 vote” of those owners who are not being sued. The wrong alleged

is to the Strata Corporation. Thus, only that corporation may seek

relief. Foss v. Harbottle …

In this regard I agree with the reasons expressed by Lowry J.

in Ang v. Spectra Management Services Ltd. …, particularly in

para. 17 where he wrote that an owner should not be permitted to

“circumvent the governance provisions of the Act and achieve what it

cannot achieve through a special meeting of the owners.” [At

paras. 4-5; emphasis added.]

[26]

Clearly, the Court was proceeding on the basis that the wrong being

alleged was one to the strata corporation, rather than to individual owners or

all the owners as a group. This is enough to distinguish Extra Gift from the

case at bar. I take the view, however, that Foss v. Harbottle does not

apply to strata corporations in respect of an action for injury to

common property. As has been seen, in this province the common

property is not owned by the strata corporation, but by the strata

owners in proportion to their respective unit entitlements. The concept

of injury to the corporation is not engaged by the circumstances of this

case. (See also Pender v. Lushington [1877] 6 Ch. D. 70 at 80 and Hercules

Managements Ltd. v. Ernst & Young, [1997] 2 S.C.R. 165, at paras. 62-

3.) The other side of this coin is that the strata corporation’s ability to sue

under s. 171 is purely a creation of statute. Thus as Garson J. noted in Strata

Plan LMS 1468 v. Reunion Properties Inc. (2002) 3 B.C.L.R. (4th) 79, 2002

BCSC 929, the only way in which the strata corporation could sue for damage

to common property of the owners is by means of s. 171 of the Act. As she

observed:

The common property of a strata corporation is owned by all

owners as tenants in common (s. 12(1) of the Condominium Act).

The claim for damage to the common property in this case is

not one for which the strata corporation could assert a claim other

than as a representative plaintiff. The strata corporation does not have

its own cause of action for defects in or damage to strata lots or to

common property, because neither the common property nor the units

are owned by the strata corporation. [At paras. 23-4; emphasis

added.]

[27]

As for the notion that individual owners should not be permitted

to "circumvent" s. 171 and sue directly for injury or damage to their

interests in common property, I see nothing in the Act taking away that

right, which I view not as statutorily created, but as a common law

incident of the ownership of property, albeit a type of property unknown

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

Page 34

to the common law. Section 171 creates a mechanism by which a three-

fourths majority of owners may use the strata corporation as their vehicle for

suing and spread the expenses thereof. But in the words of Seaton J.A.

in Strata Plan No. VR 368 v. Marathon Realty Co. (1982), 41 B.C.L.R. 155 at

para. 14, "that is as far as the legislation goes." It would take much clearer

language, in my respectful view, to remove the right of individual owners to

enforce their rights "on their own hook". Section 171 is not thereby

“circumvented”, but is simply inapplicable. Nor do I foresee that frivolous

actions and multiple claims are likely to result, since the court retains the

ability to make orders as to costs, and the owners who do take legal action

must bear the expenses of the litigation themselves, like any other co-owners

of property. (In the case at bar, since the plaintiffs have alleged fraud on the

defendants’ part, they run the risk of special costs.) As well, it is open to the

court to respond to any multiplicity of actions by authorizing a representative

action under R. 5(12), or by following the course ordered in Beck, supra, at

paras. 30-36. Short of this, all parties that should be before the court can be

joined under R. 5(3) as defendants if they do not consent to be plaintiffs.

[Bold emphasis on citations in original omitted; underlining emphasis in

original; bold emphasis added]

[96] Instructive reasoning concerning the issue of agency in the context of

Ontario’s strata property legislation is found in York Condominium Corp. at para. 14:

The only issue thus is whether it is ultra vires [the condominium corporation]

to act as agent for the unit owners in leasing the common elements. There is

no provision in the Condominium Act preventing the corporation from acting

as agent. The tenor of the Act is to the contrary. For example, the corporation

is made generally responsible for the performance of functions of common

concern. In carrying out these functions it is, in essence, acting on behalf of

all the unit holders. The corporation may bring actions with respect to the

common elements. In doing so it is really acting as agent for the owners. The

Act therefore contemplates the corporation acting as agent of the unit

holders.

[Emphasis added]

[97] In Oldaker, Justice Voith (as he then was) confirmed at para. 34 that s. 166 of

the SPA imposes joint and several liability on owners for the wrongs of the strata

corporation:

[1]

Several individuals who are owners of strata lots within a building

seek an order that they be insulated or exempted from having to pay their

respective shares of both the legal fees incurred by and the costs awarded

against the respondent, The Owners, Strata Plan VR 1008. The central issue

raised is whether there exists a basis within the Strata Property Act,

S.B.C. 1998, c. 43 (the “Act”) for such an order and, if so, whether the

circumstances of this case support the order.

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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…

[34]

Section 166(1), which confirms that a judgment against the strata

corporation is “a judgment against all the owners”, also does not rest easily

with the interpretation advanced by the individual respondents. Section

169(1) imposes joint and several liability on owners for the wrongs of the

strata corporation: The Owners, Strata Plan VIS 4534 v. Seedtree Water

Utility Co. Ltd., 2006 BCSC 73. Strata members do not share the limited

liability of shareholders in a limited company: Hamilton v. Ball, 2006 BCCA

243, 226 B.C.A.C. 239. Though Mr. Oldaker appears in this case to have

released his claim for costs against the individual respondents, an expanded

interpretation of “if an owner sues the strata corporation” has the prospect of

impacting on the rights of judgment creditors.

[Emphasis added]

Determination on Agency

[98] The following propositions on the issue of agency raised on this application

emerge from the cases and statutory provisions discussed above.

[99] Strata corporations derive their rights, obligations, and power from the SPA.

[100] A strata corporation is responsible for managing and maintaining common

property under ss. 3 and 72(1) of the SPA, and it must do so for the benefit of all

owners, with funds collected from individual owners in proportion to their unit

entitlements.

[101] Common property is owned directly by all strata owners in proportion to their

respective unit entitlements, not by the strata corporation.

[102] Unlike shareholders of a corporation, strata owners are not shielded from the

negligence or wrongdoings of the strata corporation in respect of an action for injury

to common property.

[103] The SPA does not remove an owner’s ultimate responsibility, in particular

liability for the fault of a strata corporation to repair and maintain common property.

Although s. 166(3) of the SPA protects the class members from being personally

liable for loss arising from the management or maintenance of common property by

the strata corporations, that section must be construed in light of the principles

reiterated in Hamilton and Oldaker and in the context of the whole of s. 166,

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

Page 36

particularly s.166 (1), which renders a judgment against a strata corporation as a

judgment against all owners in their capacity as owners of the strata.

[104] Applying the reasoning in Hamilton, just as s. 171 does not remove an

owner’s common law right to sue for damage to common property, the SPA does not

take away common law rights incidental to ownership. In that vein, the right and

ultimate responsibility of an owner, incidental to ownership, to maintain and repair

property they own is not eliminated because it is required by s. 72(1) to be carried

out by the strata corporation. The strata corporation does so on behalf of all owners

as their agent designated by statute.

[105] At the end of the day, it is the individual unit owners who are required to pay

for any monetary award ordered against the strata corporation. The SPA does not

limit the nature of the judgment unit owners are required to pay. It is also the strata

owners who are required to pay for the cost of defending any action against the

strata corporation under s. 167(2) of the SPA.

[106] In summary, there is a unique yet clear agency relationship between a strata

corporation and individual unit owners. The SPA authorizes and requires a strata

corporation to repair and maintain common property as an agent for the strata

owners. A strata corporation owes a duty to all owners to act in their best interests.

Although what is in the best interests of all owners might be in conflict with the

interests of a particular owner, that owner remains ultimately accountable (i.e.,

liable) for the fault of their strata corporation. Strata owners are thus responsible for

the wrongs of the strata corporation in relation to common property as long as the

party seeking recovery follows the proper channel of obtaining a judgment against

the strata corporation first.

[107] Assuming the facts as pleaded in the proposed third-party notice are true, I

have determined that the first category of the proposed claims advanced by the

applicants concerns the obligations of the strata corporations to maintain and repair

common property as agents of the class members, falling squarely within the ambit

of the first branch of the Adams Rule.

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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Failure to Mitigate

[108] The allegations in the second category—paras. 15(b)-(c) and 16(b)-(c)—are

akin to those advanced against the solicitors in Adams in respect of their failure to

advise their client to avoid or minimize its loss. Paragraphs 15(b)-(c) and 16(b)-(c)

concern the failure of the strata corporations to properly advise the class members

so that the class members could take steps to mitigate their own losses arising from

the alleged systemic defects in the IGUs. The duty to mitigate loss falls on the

representative plaintiff and class members. Thus, the second category of the

proposed claims falls within the ambit of the Adams Rule.

Conclusion on the Adams Rule

[109] The Adams Rule operates on the notion of necessity. If the applicants are

successful in proving fault on the part of the strata corporations, they have a remedy

by way of partial reduction of or possibly as a complete defence against the claims

of the class members, making their proposed third-party claim against the strata

corporations unnecessary: Laidar at para. 35; Adams at para. 16.

[110] The applicants’ proposed claims against the strata corporations, even as set

out in their proposed amended third-party notice, fall within both categories of the

Adams Rule and as a result, are not appropriate to be brought as a third-party claim

under R. 3-5(1)(a).

[111] During the course of the hearing, the representative plaintiff put on record its

consent to the applicants amending their response pleading to advance their claims

against the strata corporations, in accordance with the Adams Rule, as defences to

the claims of the class members. The representative plaintiff also confirmed what it

characterized as its admission of fact for this case, that the strata corporations acted

as agents of the class members in respect of repair and maintenance of common

property. As well, and in response to a concern raised by the applicants that such

consent was only in respect of a defence that could be pleaded as opposed to an

acknowledgement or admission by the class members that any proven delicts on the

part of the strata corporations are attributable to the class members, the

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

Page 38

representative plaintiff also confirmed on record its agreement that any such delicts

proven at trial shall bind the class and would, assuming an appropriate nexus is

proven, impact on their claims for damages.

[112] Those concessions further address the applicants’ submission that without

bringing the strata corporations as third parties to the main action, any findings of

breach of duty and negligence against the strata corporations at trial will not bind the

class.

[113] I will note here that the applicants and the strata corporations and the

representative plaintiff made submissions respecting whether the losses complained

of are divisible or indivisible. In my view, I need not make any findings on the

question of divisibility as I already determined that the first branch of the Adams Rule

applies. As I stated above, the first branch of the Adams Rule encompasses a

situation where the alleged negligence of the proposed third party is attributable to

the plaintiff: Adams, paras. 17-18. This is further supported by the holding in Laidar

at para. 35 that if the only cause of action alleged against the proposed third party is

the breach of a duty owed only to the plaintiff, as is the case here, the breach of

such a duty does not give the defendant an independent right of contribution against

the proposed third party under the Negligence Act.

[114] Thus, since no allegations of any independent duties owed by the strata

corporations to the applicants or to other parties are pleaded, the exception to the

Adams Rule as discussed in Laidar, i.e., the second branch of the Adams Rule, is

not engaged. The proposed third-party notice only concerns duties owed by the

strata corporations to individual unit owners, who are at liberty to sue or not sue any

other party than the defendants of this action.

Rule 3-5(1)(b) & (c)

[115] Rule 3-5(1)(b) is concerned with the applicants’ entitlement to relief against

the third party which relates to or is connected with the subject matter of the main

action.

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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[116] In The Campbell River Indian Band v. WorleyParsons Canada Ltd., 2013

BCSC 140, a case cited in Sun Life at paras. 51–53, Justice Russell found at

para. 70 that R. 3-5(1)(b) can be easily disposed of when there is no pleading with

respect to any obligations owed by the proposed third party to the defendant beyond

contribution and indemnity.

[117] I find that to be the case here. The applicants’ pleading makes it clear that the

only claim being made against the strata corporations is one for contribution and

indemnity arising from the strata corporations’ obligations owed to the strata owners.

As such, R. 3-5(1)(b) does not apply.

[118] Rule 3-5(1)(c) requires third-party claims to be (i) substantially the same as

the question related to the relief claimed in the action or its subject matter and (ii)

properly determined in the action. The court has broad discretion to determine

whether the third-party claims should be heard with the main action as between the

plaintiff, the defendant, and the third party: Campbell River at para. 75.

[119] The applicants’ position, set out in their written submissions, reads as follows:

112. The Applicants allege that if the Plaintiffs suffered losses, such loss or

expense was caused or contributed to by the fault, negligence, or breach of

duty by the Strata Corporations. There is no question that the issues of fact

and law between the Defendants and the Strata Corporations are the same

as those between the Plaintiffs and the Defendants. The claims involve the

same allegations concerning the same losses.

[120] I respectfully disagree. What is being alleged against the applicants in this

class action is that the applicants’ breach of contract and breach of implied warranty

relating to the systemic defects in the curtain wall system have caused the class

members to suffer individual losses. This is not “substantially the same” as a

question or issue between the applicants and the class members, on the one hand,

and the strata corporations, on the other. The issue between them is whether the

strata corporations breached their duty owed to individual strata owners to

investigate any defects or deficiencies with the construction of the common property

and to repair and maintain the common property.

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

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[121] This case is clearly distinguishable from Paramount. In Paramount, the

plaintiffs sued the defendant when line hanger equipment it purchased from the

defendant became stuck in their well during the installation process and a recovery

operation undertaken caused the equipment to fall down the well. The defendant

sought leave to add a third party whom the plaintiffs had retained to assist in the

recovery operation for failing to properly advise on the recovery of the equipment,

and in carrying out the recovery operation, causing or contributing to the loss of the

equipment and the well. Justice Gerow, in dicta, concluded at paras. 39-40 that R. 3-

5(1)(c) was applicable to the facts of the case explaining, “The questions or issues

between [the plaintiff] and [the third party] are substantially the same as the

questions or issue that relate to or are related with the relief claimed in the action

and the subject matter of the action.”

[122] Unlike the case at bar, the defendant and the proposed third party in

Paramount were working together in trying to recover the line hanger equipment,

during which the alleged negligence on the part of the defendant and the proposed

third party occurred. Such a close nexus between the issues between the defendant

and the proposed third party and those between the defendant and the plaintiff

cannot be found in the applicants’ proposed third-party claim.

[123] I will further add that such a broad interpretation of R. 3-5(1)(c) proposed by

the applicants would, as the strata corporations and the representative plaintiff

contend, render the first branch of the Adams Rule moot. The Adams Rule has an

important gatekeeper function in barring unnecessary third-party proceedings and

has been adopted in many cases in this province. If R. 3-5(1)(c) is construed to allow

a third-party claim whenever a defendant grounds a third-party claim against a party

in respect of the plaintiff’s obligation, the Adams Rule would effectively be

meaningless.

Disposition

[124] In view of my determination that the proposed third-party claim falls within the

ambit of the Adams Rule, and that the claim does not fall under any of the

0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd.

Page 41

enumerated grounds in R. 3-5(1), it is unnecessary to determine the other, alternate

issues raised on the application.

[125] Leave to issue the proposed third-party notice against the strata corporations

is denied.

[126] The parties should advise if they wish to address costs.

“Walker J.”