[1] The plaintiff Strata Corporation claims damages for repairs to the three buildings comprising Riverwest Estates made necessary by wood rot in the exterior wall sheathing, studs and beams. The deterioration of the wood framing at Riverwest is similar to that found in many other contemporary buildings in the lower mainland. Many buildings have required extensive repairs of the wood frame members, replacement of the sheathing and exterior wall surfaces. The repairs are costly and Strata Corporations have difficulty functioning under the stress. The individual owners have ultimately had to carry most or all of the very substantial costs of these repairs.

[2] Riverwest is situated on the south arm of the Fraser River in the Municipality of Delta. In total there are eighty-five units. The buildings were constructed in 1990 and fully occupied by the fall of 1991. Two of the buildings are identical in design and the third is similar. The design incorporates terraced decks on the east and west ends of the buildings, balconies on the north and south sides, a flat roof, stucco walls and tall half-round windows on the top floor, extending above ceiling height and covered by peaked metal roofing. The buildings are wood frame construction and suites have exterior windows and doors opening onto the decks and balconies. The suites have gas fireplaces vented to the roof through frame chimney chases annexed to the exterior walls. The exterior walls extend above the roof to parapet tops. There are no roof overhangs.

[3] The project was owned and developed by the defendant Canlan Ice Sports Corp. The defendant, Van Maren Construction (#8701) Ltd. was the general contractor.

[4] This action lists the developer and the contractor, the structural engineer, and a building design company as defendants, but the case at trial involved only the Strata Corporation and the Municipality of Delta. The plaintiffs' action alleges negligent approval of the application for the building permit, negligent inspection of construction, and negligence in the final act of issuance of the occupancy permit.

[5] In 1989 the Riverwest project was presented to the Municipality for rezoning along with architectural drawings indicating the outward appearance of the buildings. At this stage the appearance of the buildings was quite different from what became the final design. Mr. Dumbleton, an architect, prepared these drawings. Council approved the proposal and the project went to the building permit stage. At this point the defendant, Elbe, Lock, Walls & Associates Inc. became involved, preparing the plans that accompanied the permit application. The final configuration of the buildings and some of the construction details were determined by these plans.

[6] The structural design of the buildings was presented in plans drawn by the defendant, J. Novacek & Associates Ltd., structural engineers.

[7] The plans prepared by the defendants, Elbe, Lock, Walls were not drawn by a professional architect. The legend affixed to the plans had Mr. Dumbleton's name block affixed to them, but he did not act in their preparation nor authorize his name to be used. The plans met with the approval of the Building Department and a permit was issued on February 26, 1990.

[8] During the course of construction, the Municipality conducted inspections at three of the five stages indicated in the bylaw. The two other inspections required by the building bylaw, to occur on completion of the foundation footings and after framing was complete, were noted on the municipal record as being the responsibility of the structural engineer who provided the structural design.

[9] The buildings were completed in succession. Owners began to take occupancy of suites in the first building in August 1990, and virtually all of the suites in the three buildings were occupied by the end of 1991. The occupancy permit for all three buildings was issued the 27^th day of November 1991.

[10] Shortly after units were occupied owners began to complain about the construction of the decks and balconies. The developer had stipulated that the design of these features should include minimum slopes for the horizontal deck and balcony surfaces and the lowest threshold height achievable at the intersection with the patio doors. The plans approved for issuance of the building permit detailed a slope of 1:96, which indicates a fall of about one-eighth of an inch along each foot travelled toward the outside edge. The evidence given at this trial indicated this was less than the building code requirement of approximately one-quarter inch to the foot. As constructed, many surfaces apparently had no consistent slope at all, resulting in water pooling on these surfaces.

[11] Mr. Frank, an engineer consulted by the strata counsel to advise on deficiencies prior to expiry of the one-year warranty offered by the developer, inspected some of the deck repairs in October 1992. His report noted the inappropriate slope and his comment was that the efforts being made at that time to improve the slope were unlikely to produce favourable results. His recommendation was that the decks should be completely stripped and reconstructed.

[12] Despite Mr. Frank's comments improvements to the decks and balconies were attempted by building new deck surfaces over the old, increasing the slope back from the outside edge by using supporting cross strips of increasing thickness. This had the result of raising the deck below the patio doors and creating a seam between the waterproof vinyl surface of the deck and the stucco surface of the walls. Originally the vinyl membrane covering the decks and balconies was run up the adjoining walls for a distance with the stucco applied over top of the membrane. In the construction of the replacement deck surfaces, the vinyl was brought into contact with the stucco surface and a watertight joint attempted by using a sealant.

[13] The efforts to improve the decks and balconies continued for a number of years after substantial completion of the project and were a continuing concern of the owners and the Strata Corporation. These remedial efforts were undertaken by the developer and the construction company until further efforts were refused in January 1995. By this time some of the decks had been resurfaced twice.

[14] The attempts to improve the decks and balconies deserve mention in the history of this case because the original construction and remediation of these features contributed to what became the greater problem of moisture entering the walls. But also because balcony repairs eventually led to the discovery of the significant rot found in the structural framing.

[15] Starting during the first year of occupancy, the Strata Council also dealt with water leaks into the interior of many of the units. These leaks followed periods of rain and wind and were noticed above and below windows and patio doors and through ceilings of certain units. The worst leaks followed heavy rains and were usually seasonal occurrences. They were dealt with by application of sealants at likely points of entry into the exterior walls.

[16] Mr. Frank's January 1992 report dealt in part with deficiencies he noted in the application of flashings along the parapet tops, at intersections with roof membrane, and where flashings met stucco. He also noted that he could not observe the metal beads and drip moulds that were supposed to be incorporated in the fascia built into the top perimeter of the buildings, a defect that would allow moisture to enter into the wall. He commented that flashings would have to be re-detailed to achieve outward slope and needed to continue up behind the stucco. Further, that the flashings applied to the building, "require extensive and continued application of sealants in order to remain somewhat waterproof." He also noted that the complex was not protected by overhanging soffits and was located beside the Fraser River and subject to substantial wind effects on moisture and precipitation.

[17] Mr. Frank's comments were forwarded to the developer who assured that all details were pre-approved by "the architect", and that the flashings were inspected by the roofing contractor. Nothing more was done to attempt repairs beyond the application of sealant in response to leaks into the apartments.

[18] Discovery of rot in the framing began with events in 1996. On one occasion an owner brought to the Strata Council's attention a piece of trim at the base of an interior wall. The painted wood trim had rotted to the point that the moulding would give way to hand pressure, revealing the interior of the wall cavity. In July 1996 rot was found in a beam, part of the structure supporting the roof of one of the buildings, during a repair to a deck of a third floor suite. Removal of the deck revealed the beam rotted to the extent that pieces of the laminated beam could be pulled away by hand.

[19] The Strata Corporation commissioned a report from MHP Consultants, an engineering firm, to advise on the beam repair, followed by a further report dealing with the need to assess the extent of rot in the three building complex. In September 1996, the Strata Corporation took legal advice. Written notice of a potential claim was given to Delta on October 2^nd, and this action was filled on October 16 1996.

[20] The MHP reports were prepared by Mr. Morstead, an engineer with experience in building envelope design. He surveyed the owners in relation to water leaks that had occurred in the past, examined the outside cladding, design features and flashings, and inspected the ongoing beam repair. He found that 41 of the 85 suites at Riverwest had experienced water leaking onto interior walls, window surfaces or ceiling finishes. Approximately one-quarter of the suites showed evidence of ongoing water leakage problems. The summary of his findings was as follows:

[21] This report was followed by more extensive investigation of the buildings and moisture probing conducted by Mr. Frank, who was at this time employed by Morrison Hershfield, a further consulting firm hired by the Strata corporation. The testing confirmed water entry into the buildings and also recommended extensive rebuilding of the exterior walls and balconies.

[22] In early 1998 the Strata corporation hired RDH Building Engineering to provide advice, and to design and manage the repair program. The project was tendered and a bid selected. The buildings were stripped of stucco and sheathing, structural framing was replaced where required and the sheathing, building paper and exterior surface replaced. The replacement was primarily with stucco of similar composition to that originally applied, but applied onto wooden strips which allowed drainage and ventilation so that moisture that might penetrate into the wall behind the stucco would drain or dry, rather than being retained in the wall itself. Remediation also included addition of overhanging canopies over upper storey windows and doors and reconstruction of the decks. The total price paid was in the order of $3 million, or roughly $40,000 to $60,000 per unit.

[23] During the process of stripping the exterior, deficiencies in the structural design of the buildings were uncovered and repaired. The supporting joists below balconies and decks were not adequate to support these features over the distance spanned. Joists were not fixed into beams with adequate support and the deck structures were tied into chimney chases, which did not rest on foundation footings. These structural defects were improved as part of the overall project. The cost of these repairs was not isolated, but estimated to have increased the total cost by approximately $50,000 to $75,000.

[24] The law imposing liability for negligence requires that a defendant must owe the claimant a duty of care. Proof must then be given that the defendant failed to exercise a reasonable standard of care and that this failure was a material cause of the damage the plaintiff suffered.

[25] The duty of care of a government regulatory body to individuals among the public it serves is now well established by case law. In Anns v. London Borough of Merton, [1978] A.C. 728, a local government body was found liable to a private claimant for negligence in enforcing building standards. The two-step test established in Anns required, first an analysis of whether there was a sufficiently close or proximate relationship between the public body and the private claimant to be able to reasonably forecast that negligence by the regulatory body would cause damage to the claimant. The second consideration is whether there are any competing, often policy based, reasons why the public body should not be made liable.

[26] In Kamloops v. Nielsen [1984] 5 W.W. 1, the Supreme Court of Canada made it clear that the law expressed in Anns would extend liability in Canadian cases where economic loss resulted from the negligent acts of a regulatory body. In Kamloops, and traditionally, the argument advanced in favour of limiting liability was that government bodies would be subject to indeterminate and overwhelming exposure, a concern expressed in a U.S. authority, Ultramares v. Touche (1931) 255 N.Y. 170. At p.45 Wilson, J. rejected this limitation of liability:

[27] Kamloops was a case where the Municipality failed to take any effective action to require a property owner to replace an unstable retaining wall. The city inspector had discovered the defect and placed a stop work order on the site, but the city took no further action to resolve the problem. The city was found liable to a subsequent purchaser who bought the property without notice of the defect and suffered loss when the wall failed, removing support for the foundation of the home situate on the property. The failure founding negligence was therefore the failure to enforce compliance with building standards.

[28] In Rothfield v. Manolakos (1989) 63 D.L.R. (4^TH) 449, another case involving a retaining wall, the Municipality was held liable for issuing a building permit without having received proper plans for the wall and for subsequently failing to make a proper inspection. The case illustrates that municipalities may be liable not only for negligent enforcement of the building bylaw, but for negligence in the approval and inspection process. La Forest, J. said at p. 455:

[29] In each of these cases the duty to exercise proper care originated in the public law responsibility imposed by statute or adopted under permissive statutory authority by the local authority. In each case there was foreseeable loss to the plaintiff if the process of regulation was done badly or not undertaken at all.

[30] In assessing policy based reasons for avoidance of liability the court in Kamloops recognized that if the failure to act were based on a good faith employment of discretion in the allocation of resources, liability should not be imposed. The distinction was made between operational negligence and implementation of policy decisions. In any individual case, however, the difficulty often lies in properly labelling the failure in question. Was it an operational failure to implement a policy or a forgivable policy based economy of resources? The further, or perhaps initial, requirement of good faith in determining policy adds another level of analysis.

[31] In Just v. British Columbia [1989] 2 S.C.R. 1228, Cory J. said the following at p. 1242:

[32] In a subsequent case, Brown v. British Cclumbia [1994]1 S.C.R. 420, Cory J. reiterated much of what was said in Just and added the following:

[33] The requirement of good faith is an overriding consideration that will extend liability no matter how a particular government act or omission is characterized. At pp.435-6 of Brown, Cory J. said:

[34] In Ingles v. Tutkaluk [2000] 1 S.C.R. 298, the point was again made by Bastarache J. at pp. 311-2:

[35] The standard of care is set out in Ingles at p.312:

[36] It is difficult to conceive of an act or omission of a regulatory body that would be the direct or principal cause of faulty construction, but such an act or omission could be a cause of the loss, in conjunction with the other causal factors, if the negligence of the regulatory body materially contributed to the loss. This, for example, was the finding in Manolakos where the deficient construction was predominantly the fault of the contractor. The city's failing in not conducting a proper inspection, however, was judged to have contributed to the loss, which might otherwise have been avoided.

[37] Barring contributory negligence by the plaintiff, defendants mutually contributing to the loss will be jointly and severally liable to the plaintiff. In cases where the participants most contributing to the loss are those responsible for construction, these defendants may be separately incorporated for the individual project and accordingly may not be viable entities when latent defects become apparent. This leaves the other enduring entities associated with the loss exposed to the full force of the judgment.

[38] A municipality's power to regulate construction emanates from Section 694 of the Municipal Act R.S.B.C. c. 323. That section provides that a Municipal Council, "may, for the health, safety and protection of persons and property, by bylaw, do one or more of the following:

(a) regulate the construction, alteration, repair or demolition of buildings and structures;

(d) require, before occupancy of a building or part of it after construction, wrecking or alteration, or a change in class of occupancy of a building or part of it, an occupancy permit be obtained from the council or the authorised official; and

(e)     prescribe conditions generally governing the issue and validity of permits, inspection of works, buildings and structures;

[39] The provision is permissive. Municipalities, which adopt regulation of building standards in their districts, enact bylaws accepting the jurisdiction and delegating powers to their officials.

[40] The standards to be applied in regulating construction are stipulated in most part by the Provincial Government through the establishment of a Provincial Building Code for British Columbia (the Provincial Code). These standards have Provincial effect and by Section 692 (3) of the Municipal Act, a Municipal Council accepting the regulation of construction must not provide regulatory standards inconsistent with the code.

[41] The preamble to the Delta building bylaw provides:

[42] In Section 4 of the bylaw, the Municipality provides for the appointment of a Director of Permits and Licences who shall:

(i) administer this By-law;

(ii) keep records of every application received, the permits and orders issued and the inspections and tests made, and shall retain copies of all papers and documents connected with the administration of this By-law;

(iii) issue permits for the purposes mentioned in this By-law.

[43] The Director and inspectors appointed to assist in the administration of the bylaw are given powers to enter onto premises, stop work, or revoke permits in enforcement of the bylaw and building code. Sections 13 and 14(a) of the bylaw provide:

Part II - Buildings:

13. No building or any part thereof, shall be constructed, altered, repaired, or demolished, except in accordance with the provisions of this By-law and the Provincial Code.

Permit Required:

14. (a) Except as hereinafter specifically provided, no building, or any part thereof, shall be constructed, altered, repaired, or demolished until a building permit therefor has first been obtained pursuant to this By-law.

[44] The requirements for a building permit are stipulated in section 15:

Permit Application:

15. (a) Every application for a building permit shall:

(iv) be accompanied by copies, in duplicate for a single family dwelling or duplex and related accessory buildings, and in triplicate for all other buildings, of the specifications and scale drawings of the building with respect to which the work is to be carried out, showing:

(7) any technical information which is required to be included on the drawings pursuant to this By-law or the Provincial Code; and

(8) such other information as is necessary to illustrate all essential features of the design of the building; and

(v) contain any and all other information necessary to establish compliance with the Provincial Code and this By-law.

[45] Sections 7 and 17 provide for reliance upon professional certification:

Professional Design and Supervision:

7. Whenever the character of any proposed work for which a permit has been applied pursuant to this By-law is such that the project requires technical expertise, all drawings, specifications and plot plans shall be prepared and signed by and the construction carried out under the supervision of an Architect or a Professional Engineer who are registered with the appropriate Professional body to practice in the Province of British Columbia.

Inspections Required:

17. The owner or the agent of the owner of any building upon which any construction, alteration, repair, or demolition is being done shall obtain an inspection by the Director of Permits and Licences or an Inspector to determine compliance with the provisions of this By-law and the Provincial code:

(a) after the forms for footings and foundation walls are complete, but prior to the placing of any concrete therein;

(b) for single and two family dwellings, after the installation of foundation drains and drain rock, but prior to the backfilling of foundations;

(c) after the framing of floors above crawl spaces, but prior to the installation of subfloors;

(d) when framing and sheathing of the building are complete, including fire-stopping, bracing, chimneys, duct work, plumbing, gas venting and wiring, but before any insulation, lath or other interior or exterior finish is applied which would conceal such work;

(e) when insulation and vapour barriers have been installed and prior to interior finishing; and

(f) after the building or any portion thereof is complete and ready for occupancy, but before occupancy of any portion of the building takes place.

Provided, however, that where an architect or a professional engineer registered to practice in British Columbia is engaged by the owner for the inspection of the construction of the building, sealed certificates of compliance with the approved plans and the Provincial Code, submitted by the architect or engineer, may be accepted in lieu of inspections made by the Director of Permits and Licences or an Inspector.

[46] Sections 18(a) and (b) provide for an occupancy permit:

Occupancy Permit:

18. (a) No person shall occupy or permit the occupancy of any building hereafter erected or any portion thereof, until an occupancy permit therefor has been issued by the Director of Permits and Licences in the form set out in Schedule "B" hereto.

(b) No occupancy permit shall be issued for any building or portion thereof until the building meets all of the requirements of the Provincial Code, all By-laws of The Corporation of Delta, the Gas Act and the Electrical Energy Inspection Act as evidenced by certificates of approval in accordance with this By-law, the Gas Act and the Electrical Energy Inspection Act and regulations pursuant thereto.

[47] The building code is a document divided into a number of parts. Some of these focus on different aspects of a building's design. The code differentiates between buildings used for various purposes and, for example, provides standards for single family homes different from those that are applicable to the design of larger residential buildings. The smaller buildings are regulated in large part under Part 9 of the building code. Larger residential buildings are regulated under parts 3,4,5,and 6.

[48] Generally the provisions regulating smaller structures attempt to stipulate mandatory or minimum criteria. The standards for larger more complicated structures are commonly expressed as design objectives. A designer will propose to meet the design objective by an individual plan. This allows professional designers the flexibility to employ custom methods or materials to suit the requirements of a specific building while meeting the objective.

[49] The latter form of regulation, stipulating a design objective, provides challenges to Municipal Inspectors. It is easier to assure compliance with criteria or a minimum stipulation than to be satisfied that a design objective has been met. This sort of inspection is inherently more difficult and often requires professional expertise which may be beyond the abilities of many Municipal Building Departments. Section 695 of the Municipal Act and Section 7 and 17 of the Delta bylaw provide an option to Municipal inspection, allowing professional certification of design and subsequent professional inspection of construction.

[50] Part 5 of the Building Code prescribes the design objectives relating to wind, water and vapour protection for buildings having a floor area greater than six hundred square metres. Section 5.4 provides:

SUBSECTION 5.4.4. PARAPETS

(b) a through-wall flashing shall be installed immediately under a segmented or pervious cap, and at such other points in the wall as are necessary to divert rainwater to the outside.

5.4.5.1. Exterior wall cladding shall be so installed that it sheds water to prevent its entry into other components of the building assembly. Where there is a likelihood of some penetration, drainage shall be provided to take water to the outside.

[51] The evidence of the Delta Director of Permits and Licenses was that the building department did not undertake any processes to ensure compliance with most of Part 5, either by requiring plans that showed construction details designed to accomplish the objectives, on site inspection, or by requiring professional certification.

[52] He acknowledged that the bylaw adopted enforcement of all parts of the Provincial Code and that under the bylaw plans submitted for permits were required to show information necessary to establish compliance with the code. The department practice, however, was only to check plans for full compliance with Part 3, Use and Occupancy requirements. These detail features of a building prescribed to suit its use and in large part detail safety, especially fire safety, features. The Part 4 provisions, which deal with structural integrity, were not checked or inspected because the department did not have sufficient expertise in structural design and made use of the option of requiring professional certification.

[53] Inspections performed under the bylaw were also of limited scope. There were, however, two Part 5 requirements that were inspected, installation of insulation and vapour barrier, and foundation dampproofing. Insulation and vapour barrier were inspected because there had been avoidance of these features when first introduced to the code. The reason for inspecting dampproofing of the concrete walls, that in this case enclosed the car park, was not clear. This was especially so because there was no inspection of any other element of the building envelope to assure water would not penetrate.

[54] The department practice of not including inspections relating to Part 5 was explained as being the result of the difficulty involved in assessing performance based objectives and due to the fact that building envelope failures were not seen as a problem. The Director did not think that council would approve funds for more complete inspections in the absence of past problems.

[55] The role of professional practice in construction in British Columbia is stipulated in part by the Architects' Act R.S.B.C. 1979, c. 19, ss. 56-58. These sections restrict the planning, designing, and the supervision of construction of residential buildings having more than five units, to architects certified under the statute. Here the municipality took the position that the Architects' Act was not relevant to the district's administration and enforcement of the Provincial Code, which in most aspects speaks generically of a designer, defined to mean simply the person responsible for the design. Delta felt that they were not obligated to impose the additional professional requirement under the Provincial Statute.

[56] The Municipality argues that it chose not to implement procedure designed to enforce Part 5 of the code as a policy decision. The incongruity in this position is that the Municipality purported to "make provision for the administration and enforcement of the said building code," without any reservation of responsibility for individual parts. From a reading of the enabling bylaw it would seem that the applicable policy was set by the adoption of authority and it is difficult to accept that it is open to the District to say it then took no responsibility for certain parts of the code. Further, the Director's evidence was that his department recognized the bylaw was all-inclusive in its adoption of the code for regulation.

[57] The examination of whether any policy exclusion applies, however, likely requires a further level of consideration. The argument can be made that, although the responsibility undertaken was to administer and enforce the building code, it remained subject to Municipal policy determining selection of how and to what extent it was to be done. Here the decision was made at the departmental level. The question posed is whether a decision to limit the scope in administration of a public law responsibility at this level should be seen to be policy which, except for considerations of patent unreasonableness and bad faith, exempts the Municipality from a duty of care; or should the departmental decision be seen as part of its plan of implementation of the municipality's public law duty?

[58] If the latter is correct, the next step is to determine if the decision not to regulate certain sections is acceptable under the standard of care test, i.e., did the Municipality effect a reasonable level of review in light of all of the circumstances? If the former is correct, the concepts of patent unreasonableness and bad faith still remain for consideration, but to be analysed with deference to the Municipality's role as a representative body responsible for martialling its resources. The difficulty in resolving this is foreshadowed by the statement at page 1239 of Just,

[59] The evidence here is that Delta made a policy decision to administer and enforce the Provincial Code through the process of permit approval and subsequent inspection. Administration of these processes through the Building Department became implementation at the operational level. As I noted earlier, the Director acknowledged the bylaw adopted enforcement of the whole code. It was at the departmental level that the decision was made not to deal with certain provisions. In such cases, as in Ingles, at p.311,

To hold otherwise would allow for a situation where a Municipality declares in a bylaw it is going to administer and enforce a scheme of regulation, parts of which are then avoided at the departmental level, defeating significant aspects of this responsibility.

[60] If I am wrong in this analysis, I note the further comment from p.311 of Ingles,

That comment related to the Ontario Statute which imposes the duty to inspect on the Municipal authority and speaks to the obligation to show good faith in setting policy in an area of responsibility. I view the comment as equally applicable to a case in British Columbia where the Municipality adopts enforcement of the Provincial code. The last comment from Ingles illustrates that in the ultimate, in a case such as this, an analysis of the reasonableness of the approval and inspection system comes into view however the elusive `policy or operation' test is determined.

[61] The main argument in defence of liability was that the Municipality was not negligent because it could not reasonably have known of the likelihood of the problem that developed. As indicated in Manolakos, an inspection authority is not an insurer and can only be held responsible for defects it could reasonably have detected and ordered remedied. Here the evidence is that at the time Riverwest was developed the system of applying stucco directly to the exterior wall, without a backing airspace drained to the outside, was commonly employed in construction of frame apartments.

[62] Historically, the earliest stucco applications referred to in the evidence used wooden lath as the underlying surface holding the stucco, which allowed for some airspace in the application. Stucco on buildings of that time apparently performed well, likely in part due to the separation the wooden lath allowed, but perhaps also in that wall construction of that era was not otherwise as sensitive to moisture retention as modern standards dictate. Design features of earlier buildings may also have offered less opportunity for moisture entry through simpler design and fewer and smaller wall openings and may have been more forgiving through the more prevalent use of overhangs, for example.

[63] The subsequent direct application of stucco to building paper-covered sheathing, employs wire lath nailed to the wall. The modern stucco topcoat is acrylic and the efficacy of the application depends on the stucco sealing out moisture at its outer surface. The application is often referred to as a "face-seal" method. However, if sufficient water penetrates the outer surface, the application is likely to hold the moisture inside the wall. Wood framing is not tolerant of moisture levels exceeding 15% - 20% moisture content and if the moisture content persists it will rot.

[64] It is not news that the climate in the lower mainland often features wind driven rain. The engineering evidence at this trial was that the effect of this weather on an exposed wall is to coat the wall with a film of water. If a face- seal method is used this film of water is subject to significant air pressure acting on the outer surface of the cladding, markedly greater than the air pressure on the cladding's inside surface. One expert remarked that under these conditions a wall surface, to be successful in sealing out water, must perform as a roof.

[65] The degree of exposure to this effect will vary at different geographic locations as a result of climatic conditions and the exposure presented by wall height, sheltering landscapes or surrounding buildings, and protective design features such as overhangs. The success of a cladding in sealing the wall from water infiltration is often dictated by how well the seal is maintained or the wall is protected at wall openings, and where the wall meets horizontal surfaces. The greater prevalence of these design features will add to the risk of failure. Various forms of flashings are common protective measures.

[66] An alternative design scheme is to shelter the area of the wall exposed to the air pressure differential by shielding that portion of the wall from the water. This is the primary purpose of allowing air entry behind the surface that will receive the rain. The cladding becomes the shield and an air space with openings to the outside is maintained between the cladding and the inside components of the wall. The common term is a "rain screen" design. The vented air cavity allows for drainage paths to be incorporated to drain water that might enter behind the screening feature. Drainage is not impeded by air pressure because there is little air pressure differential between the outside and the space itself. The exposure to the outside also promotes drying of the inside wall surface, should water penetrate past the air space. Arguably, lapped siding and shingles use the same strategy. Masonry walls have traditionally adopted this strategy. Brick walls for example have an inside cavity drained to the outside. The outside brick surface acts as the shield, which along with the drained middle cavity protects the inside surface.

[67] The evidence in this case underscores the fact that designs have limitations. Face-seal stucco applications even after the failures of the application on many lower mainland frame apartments, continue to be used in the construction of single family homes, which generally do not present the same risk factors. Successful applications in locations where wind driven rain is not as prevalent are also common. The problem with the application is not that the stucco fails by being inherently flawed, but occurs when employed in inclement areas in designs difficult to protect, and when applied without attention to details critical to success.

[68] S. 15 of the bylaw requires that plans demonstrate compliance with the Provincial Code. However, the standard adopted by Delta in enforcing Part 5 of the Provincial Code was, with the two exceptions noted, simply to take no action in examining plans for approval or inspecting subsequent construction. In essence no useful detail was required on the plans showing the design being incorporated at points where flashings were required, for example. The details that did show on the Riverwest plans were too small in scale or not drawn to show how these features were to be constructed. One stipulation that was shown was an inappropriate deck slope but because the criteria did not relate to the limited scope adopted in the plan checking process, no one focused on the deficiency.

[69] The approval process is important because it not only has the potential to detect breaches of the standards, but also because it requires the designer to exercise foresight through the process of illustrating compliance. A failure to stipulate a design often leaves design of detail items to whoever is doing the construction.

[70] The subsequent process of inspection involves viewing the ongoing construction. Again inspection will not guarantee good construction, but it should detect that which would be apparent to an inspector exercising reasonable care. Here, the problems with the decks and many of the flashings should have been apparent during an onsite inspection. Many of these items were seen by Mr. Frank, for example, when he did an inspection to advise on deficiencies one year after substantial completion.

[71] The express purpose of Part 5.4 is to provide standards dealing with rain protection, an elementary feature to be expected of residential construction. In my view Delta should have anticipated the obvious. The public would reasonably expect that a municipality would put some effort into its responsibility to administer and enforce these Provincial Code provisions. I think it would surprise most Delta residents, for example, to find that no attention was to be paid to whether s. 5.4.3 was met: the very basic requirement that a roof shed or drain water.

[72] Many of the design limitations of a cladding that is intended to seal the outside building surface are present in the design of Riverwest. The buildings are exposed to weather and the design includes many wall openings. The walls adjoin the horizontal surfaces of the decks and balconies at each level and the building design incorporates a minimum of sheltering features. Mr. Morstead commented on this vulnerability at page 6 of the 1997 M.H.D. report:

Prior to this Mr. Frank recognized the lack of protecting overhang and exposed location in his January 1992 report.

[73] The design presented significant risks and required attention to detail. There were numerous examples of failures in these buildings caused by improper design and poor quality of construction. The listing of points of water entry by Mr. Rickets of R.D.H. Building Engineering Ltd., at page 20 of his August 1998 report, shown in order of relative importance, was as follows:

(a) Parapet flashing joints in metal and at interface with adjacent walls (saddles).

(b) Lack of continuous membrane under metal.

(c) Lack of slope on metal cap flashings on parapets and on upstand walls.

(d) Metal reveal band (simple lap joints and buckling of metal).

(e) Poorly sealed waterproof membrane at scuppers.

(f) Reverse laps between balcony membranes and building paper.

(g) Poor drainage details at edge of sloped metal roofs and adjacent stucco walls.

(h) Mitred corners of windows.

(i) Back sloped head flashing at windows.

(j) Lack of sealant at the intersection between windows and doors, and adjacent wall assemblies.

(k) Electrical and mechanical penetration through face-seal.

(l) Cracks in the stucco wall assembly.

[74] Most of these findings bring to mind provisions of s.5.4 of the building code directing the quality of construction to be maintained under the Provincial Code. Specifically, the sources of leakage listed at items (a), (d) and (g) are related to s.5.4.1, which speaks of joints and junctions in exterior claddings. The sources at paragraphs (i), (j) and (k) relate to s.5.4.2, construction of openings. Items (c), and (e) and (f), at least in reference to the decks that are also roofs over the suites below, relate to s.5.4.3, and item (b) indicates a breach of s.5.4.4.

[75] In my view, proper administration and enforcement of these sections required details to be shown on the plans presented for approval, indicating the applications designed to satisfy the provisions of s.5.4. The plans presented by Elbe, Lock, Walls were minimal in presentation of detail. The comment from Mr. Gies, an architect retained to give expert opinion, at page 15 of his report, was:

[76] The deficiency in detail on the plans left the design of these features to be accomplished by the contractors on the site who failed in taking proper measures. In some applications the use of flashings had the opposite effect of introducing moisture to the wall cavity rather than directing it to the outside.

[77] The first of the two reasons advanced by the Director of Inspections for non enforcement was the fact that part 5 for the most part stipulated design objectives which were inherently difficult to inspect. The fact is however that the construction of the decks and the parapet flashings, both identified as significant points of water entry, relate to s. 5.4.3 and s. 5.4.4. Each section either relates to an objective criteria (slope), or mandates a specific feature (a through-wall flashing). Further, to abandon inspection of design objectives leaves the public little protection where arguably it needs it most, in the design of larger more sophisticated buildings.

[78] The second reason advanced was that the council would not likely want money spent without the need being demonstrated by a record of failures. Here I think that the comment by La Forest J. at p.457 of Manolakis helps to assess this comment,

[79] Detection before a history of failure occurs can and often should be expected. The fact that a wood structure would suffer damage if water persistently entered the interior of a frame wall, which did not have the capacity to drain prescribed in s.5.4.5.1, was, in my view, reasonably foreseeable. Like a defective retaining wall, the situation shouldn't have required a history of failure before the provisions were enforced.

[80] The face-seal design presented an environment that allowed rain penetration to do its worst. This fact may now be better appreciated with the clarity of hindsight. But nonetheless from the outset significant damage was foreseeable. In these circumstances, and when the code itself prescribes features of the design which should be presented and inspected, a record of failures should not be a prerequisite to exercising a standard of care.

[81] Delta also argued that its treatment of Part 5 was to the same standard adopted by other Municipalities and that it shouldn't be obliged to have exercised greater care than was common. The evidence of the head of the Burnaby Building Department was that at the relevant time, Burnaby did not see enforcement of Part 5 as part of its primary function, which he identified as the inspection of health and safety provisions of the code. He, however, also acknowledged that there was no provision in the by-law exempting enforcement of any part of the Provincial Code and said the concentration of activity was adopted by Burnaby for the same reasons given by Delta. Like Delta, procedures in his department have subsequently changed.

[82] The evidence was that the Delta Director had previously been part of the Burnaby Building Department and a wide ranging practice is difficult to establish on this evidence alone. Mr. Gies' evidence was that at the relevant time Municipal Building Departments had inquired in respect of Part 5 issues on projects he was responsible for. He viewed the pursuit of these issues as being individual to the checker or Municipality. In the ultimate, however, whether or not it was common for municipalities to take steps to enforce Part 5, there was a clear obligation to enforce all parts of the code, and it will not do for a regulating authority to say that it, like others, did not deal with the responsibility.

[83] In turning to the question of whether an inspector exercising reasonable care would have been able to detect the deficiencies in this case, I note that Mr. Frank, who examined the construction a year after substantial completion, was able to comment on the construction of the decks, flashings and details. These are items that would have been equally apparent to an inspector viewing the site during the last stages of construction. The question then arises whether the failure to discover the bad construction was a cause of the eventual loss.

[84] Mr. Rickets gave evidence on the appropriateness of the stucco application, given the risk presented by the face-seal design, the architectural features of the buildings, and the exposure to weather. In his analysis he judged that the high quality of construction and maintenance needed to succeed with the face-seal stucco application at Riverwest gave rise to too high a risk of eventual failure. In his view a professional designer should have avoided a face-seal design. This risk or susceptibility to failure was realised by the lack of protection from rain penetration resulting from the undetected breaches of s. 5.4. These failings in this case materially contributed to the onset and extent of the failure, and hence the failure in the enforcement of the code is a cause of the loss.

[85] As a last comment on the expenditure of municipal funds, the legislative scheme allows that the District can largely avoid the costs of enforcement and supplement its resources through reliance on professional certification. The Architects Act would have required the 85 unit, three building project to have been planned, and the construction supervised, by a person licensed under the statute. The municipality had no direct role in enforcement of the act, however the requirement of the act stands as a publication that professional design and supervision are standards which should have been adopted in construction of the project. Professional involvement is no absolute guarantee of a well-constructed building as the structural failures in these buildings will attest, but it is a method that is provided for use by a municipality in supplementing a lack of expertise and resources in satisfying its responsibility under the Provincial Code. The evidence of Mr. Gies was that the standard of care of Elbe, Lock, Walls, the participant who prepared the design, was below that which should have been expected of an architect dealing with part 5 provisions. Mr. Rickets' evidence went further and suggested that a professional designer, giving proper weight to the risk factors, would have avoided a face-seal design. Had these standards been adopted, the end result may well have been avoided. The municipality through s. 7 of the bylaw could have required the professional involvement deemed appropriate under the Architects Act and in this sense failures in design or construction supervision can also be visited on the municipality.

[86] The District argues that the plaintiffs failed to give the notice required under Sections 285 and 286 of the Local Government Act R.S.B.C. 1996, c. 323. These sections provide that notice of a claim for damages should be given to a Municipality within two months from the date on which the damage was sustained and that an action against the Municipality for an unlawful action should be commenced within six months after the cause of action first arose. The law concerning these sections indicates that time begins to run when the damage referred to ought to have been discovered through reasonable diligence. In this case the Strata Corporation took reasonable efforts at all stages after occupancy to determine the nature and extent of the problem they were faced with due to the water penetration into the buildings. The final investigation that determined the full extent of the problem was the evaluation report done by Mr. Morstead dated January 10^th, 1997. This report was requested of Mr. Morstead after he proposed a "general performance assessment of wall, window and deck performance" in a letter dated July 22^nd, 1996. His recommendation that this report be done was prompted by the finding of rot in the beam below the deck of suite 301 the month before, along with what he had learned of the history of water leaks at Riverwest, and in light of then recent publicity of problems in other similar buildings. On October 3^rd, prior to any conclusions from Mr. Morstead, the Municipality was put on notice and this action was commenced later during that same month. The fact is that the notification and commencement of action preceded advice that there was extensive failure of the building envelopes at Riverwest and, in my view, there is no question of limitation arising under either of these sections.

[87] Delta argues that the Strata Council contributed by negligence in failing to properly maintain the buildings that comprise Riverwest. Contributory negligence would have the effect of restricting damages against the Municipality to the proportion corresponding to its fault. The fact is, however, that this Strata Corporation acted with a high degree of diligence in pursuing problems with these three buildings.

[88] The degree of organization exhibited by the Strata Council would, in my view, be difficult to sustain with most residential Strata Councils. Their initial efforts were to have the developer correct deficiencies. These were maintained with diligence for so long as the developer was responsive. They continued with efforts to deal with leaks into the various suites and to correct the decks in accordance with advice given them. Ultimately they took the appropriate action in receiving expert advice and undertaking the remediation. I find no substance in this claim that the Strata Council was negligent.

[89] The last argument advanced by the District was that the cost of the remediation was excessive in that the lowest quote was not accepted for the remediation project. The District also argued that certain features represented betterment or an improvement over the original design. The first of these items was the installation of canopies over certain doors. The next was the fact that a superior wall assembly was eventually put in place.

[90] The difference in the proposed cost of the remediation project received from the two construction companies was approximately $200,000. This difference in price was considered by the Strata Council with advice from the consulting engineers. The higher priced tender had the prospect of incorporating some savings during the project and this contractor was recommended as more likely to give satisfactory performance. I view their selection as being a reasonable one and don't accept that the lower initial quote establishes that there would have been likely savings had the competitor been instructed to complete the project.

[91] The installation of canopies over certain doors was a necessary remedial measure, which speaks more to making those exposed doors useful than an enhancement of the suites involved. The last item, the upgrade in the wall assembly would not be apparent to anyone viewing the building. The stucco repair was not an enhancement, but simply introduced the air space necessary to make the application functional.

[92] The total claim for damages is in the sum of $3,246,739.56. This includes the cost associated with redoing the exterior features of the buildings ($2,815,440.98); the consultant services of RDH, ($200,724.02); the cost of landscaping the grounds after construction ($35,352.98); and the accumulative costs of increased maintenance and temporary repairs, and professional advice, during the years prior to the remediation ($37,500 and $125,054.67 respectively). The plaintiffs also claim for estimated cost of future window replacement ($37,500).

[93] The cost of construction includes the cost of structural repairs. Design and inspection of the structural features of the buildings were the obligation of the structural engineer. The poor construction, the fault of the construction company. No case was made against the Municipality for any failings in this regard. The structural deficiencies stand apart from the failing to regulate features dealing with rain penetration. Accordingly, liability in this regard is assessed only against the Construction Company and the engineer. In fairness to all parties, I view the appropriate figure to assess for the work done in this regard to be the sum of $62,500.

[94] The claim for future costs should not be allowed. The windows used in this project were of a lower quality. They have served now for approximately ten years and future replacement would, in any event, be a likely requirement.

[95] The case against, Canlan Ice Sports Corp., the developer, has been discontinued in accordance with a settlement reached with this defendant. The resulting judgment against Van Maren Construction (#8701) Ltd.; Elbe, Lock, Walls & Associates Inc.; and the Municipality of Delta, will be for the total damages, $3,151,572.65 less the portion attributable to the fault of Canlan.

[96] A separate judgment will issue against J. Novacek and Associates Ltd. and Van Maren Construction (#8701) Ltd. in the sum of $62,500.

[97] The individual contributions of defendants to the two judgments are not easily fixed because this trial focused almost exclusively on the involvement of the Municipality. No authority or argument was presented dealing with the Municipality's degree of relative contribution. On first exposure I view the District's relative contribution to be significantly less than that of the primary defendants and would assess the relative contribution at 20%. There may be no need to fix this figure in the ultimate, but if I am wrong in this there will be liberty to argue this point.

[98] The plaintiffs are entitled to prejudgment interest. The issues and the presentation of evidence were significantly more complex in this trial than in the great bulk of other cases. Costs should be assessed at scale 5.

"W.G. Grist, J."
The Honourable Mr. Justice W.G. Grist

August 27, 2001 -- Corrigendum to the Reasons for Judgment issued by Mr. Justice W.G. Grist advising that the names of the plaintiffs' Counsel were inadvertently omitted and should be replaced as noted above.

The trial of this matter took place in New Westminster court on December 11^th to 15^th, 2000 and January 2^nd to 19^th, 2001 and not as previously shown in my Reasons.

This Corrigendum to the Reasons for Judgment was released from the Vancouver Registry on August 31, 2001 and is date stamped accordingly.

August 28, 2001 -- Corrigendum to the Reasons for Judgment issued by Mr. Justice W.G. Grist advising that Donald Howieson, one of two Counsel for the Corporation of Delta was inadvertently omitted and should be replaced as noted above.

This Corrigendum to the Reasons for Judgment was released from the Vancouver Registry on August 31, 2001 and is date stamped accordingly.

September 26, 2001 -- Corrigendum to the Reasons for Judgment issued by Mr. Justice W.G. Grist advising that counsel have brought to my attention that during the course of the trial a settlement was announced in respect of the liability of Canlan Ice Sports Corp., and a discontinuance entered against this defendant.

Accordingly, paragraph [95] of the Reasons for Judgment should be corrected to read as follows:

This Corrigendum to the Reasons for Judgment was released from the Vancouver Registry on October 23, 2001 and was date stamped accordingly.