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Date: |
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Docket: |
01/1447 |
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Registry: |
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IN THE SUPREME COURT OF |
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BETWEEN: |
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MARY LOUISE KIMPTON |
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PLAINTIFF |
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AND: |
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ATTORNEY GENERAL
OF HER MAJESTY THE QUEEN IN RIGHT OF THE
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DEFENDANTS |
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REASONS FOR JUDGMENT
OF THE
HONOURABLE MR. JUSTICE MACAULAY |
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Counsel for the Plaintiff: |
P. Guy |
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Counsel for the Defendant: Attorney General of Canada |
A.D. Louie and D.P. Prosser
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Counsel for the Defendant: Her Majesty the Queen in Right of the Province of British Columbia
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T.H. MacLachlan, Q.C. and C. Owen |
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Counsel for the Defendant: Canada Mortgage and Housing Corporation
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J. Sullivan |
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Date and Place of Hearing: |
September 3-6, 2002 and September 9-13, 2002 |
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Victoria, BC |
[1] The plaintiff, Ms. Kimpton, owns a residential strata unit in a condominium complex known as the Willows, constructed in Saanich in 1990. She seeks an order certifying this action as a class proceeding pursuant to sections 2 and 4 of the Class Proceedings Act, R.S.B.C. 1996, c. 50 (the "Act").
[2] In the action, Ms. Kimpton seeks to raise the question of whether the defendants, the Attorney General of Canada ("Canada") and Her Majesty the Queen in right of the Province of British Columbia (the "Province") were negligent in drafting the National Building Code (the "NBC") and the British Columbia Building Code (the "BCBC”), respectively (collectively, the “codes"). As to the remaining defendant, the Canada Mortgage and Housing Corporation ("CMHC"), Ms. Kimpton raises the question of whether CMHC, by granting mortgage insurance for construction and conventional loans in Canada, made misrepresentations as to the suitability of the NBC.
[3] I will set out the particular causes of action alleged by Ms. Kimpton when I address what I consider to be a fundamental flaw in her application, namely the failure to plead underlying causes of action as required by s. 4(1)(a) of the Act. In short, I have concluded that it is plain and obvious that all the causes of action, or claims, as set out in the pleadings, are bound to fail. It is not the novelty of the claims that prevents them from proceeding; it is because it is plain and obvious that they cannot succeed. I reach this conclusion in spite of the plaintiff’s attempts to shoehorn them into ordinarily recognizable categories of claim such as negligence, negligent misrepresentation and failure to warn.
[4] My reasons for denying certification follow.
SECTION 4(1)(A) OF THE ACT
[5] Section 4 of the Act requires the Court to certify a proceeding as a class proceeding where all of the requirements of the section are met. Section 4(1)(a) requires that the pleadings disclose a cause of action.
[6] The threshold is low. Ms. Kimpton is not required to pass a preliminary merits test. While some cases have suggested that the plaintiff bears a burden to show a cause of action, that is potentially misleading, as burdens are generally evidentiary in nature. I prefer to say that the plaintiff must demonstrate on the pleadings, or the pleadings as they might reasonably be amended, that there is a cause of action. I should only refuse to certify where Ms. Kimpton plainly and obviously cannot succeed.
[7] I agree with counsel for Ms. Kimpton that the correct approach to the issue is set out in a number of cases, including Hollick v. Toronto (City), [2001] S.C.J. No. 67 (Q.L.) (S.C.C.) at para. 16. In Endean v. Canadian Red Cross Society (1998), 48 B.C.L.R. (3d) 90 at 92-93, Braidwood J.A. said:
Any challenge by a defendant that a plaintiff has not presented a cause of action as required by s. 4(1)(a) of the Class Proceedings Act is, in essence, an application under R. 19(24) of the British Columbia Rules of Court that the pleading discloses no reasonable cause of action.
The test for determining such an issue in this Court is clearly expressed in the case of Hunt v. T & N plc, [1990] 2 S.C.R. 959, 49 B.C.L.R. (2d) 273 (S.C.C.), at 980 [S.C.R.], where Wilson J., writing for the Court, set out the test as follows:
Thus, the test in Canada governing the application of provisions like R. 19(24)(a) of the British Columbia Rules of Court is the same as in one that governs an application under R.S.C.O. 18, r. 19: assuming that the facts as stated in the Statement of Claim can be proved, is it "plain and obvious” that the plaintiff’s statement of claim discloses no reasonable cause of action? As in England, if there is a chance that the plaintiff might succeed, then the plaintiff should not be “driven from the judgement seat". Neither the length and complexity of the issues, the novelty of the cause of the action, nor the potential for the defendant to present a strong defence, should prevent the plaintiff from proceeding with his or her case. Only if the action is certain to fail because it contains a radical defect ranking with the others listed in Rule 19(24) of the British Columbia Rules of Court, should the relevant provisions of the Plaintiff’s Statement of Claim be struck out under Rule 19(24)(a).
The question to be decided, then, is whether it is "plain and obvious" that the plaintiff’s statement of claim discloses no reasonable cause of action. Is there some radical defect which would amount to an abuse of process of the court such that the claim should be struck? The fact that the point is a novel one would not prevent the issue proceeding to trial.
At this stage, I have followed the same practice as I did in Collette v. Great Pacific Management Co., [2001] B.C.J. No. 253 (Q.L.)(S.C.) at paras. 52, 57 and 59, of reading the statement of claim as generously as possible with a view to accommodating any inadequacies due solely to drafting deficiencies.
[8] The Province argued, in part, that the test under s. 4(1)(a) is not predicated on the assumption that the pleadings may be amended. I disagree. I am not aware of any authority to support a more restrictive approach than traditionally taken when analysing pleadings under Rule 19(24).
[9] While the threshold is low, it does not follow that it is sufficient for the plaintiff to merely label her claim as one in negligence. While not in the context of a class proceeding, the comments of Taylor J.A. in Kripps v. Touche Ross & Co. (1992), 69 B.C.L.R. (2d) 62 (C.A.) at para. 86, regarding the Court's role in a Rule 19(24) application, are instructive:
A court may be tempted, at the present point in the development of the Canadian law of negligence, to permit every negligence claim to proceed to trial. But that would lead to a long and costly period of uncertainty, one particularly costly in the commercial world where certainty in the law is of considerable importance. It seems to me that the courts would fail in their duty to community were they to decline to exercise jurisdiction under R. 19(24) simply because of the current state of the jurisprudence in this area of the law. It is, I think, important in some cases that the court make a decision at this stage concerning the extent to which recovery in negligence can be enlarged, and I believe this to be such a case.
Those principles are equally applicable to the s. 4(1)(a) analysis.
[10] As pointed out by the Province, and as set out below, there is a growing body of judicial authority for refusing to certify proceedings as class proceedings on the basis that the plaintiff has failed to demonstrate that a cause of action is set out in the pleadings before the Court:
Cooper v. Hobart, [2001] S.C.J. No. 76 (Q.L.);
Halvorson v. British Columbia (Medical Services Commission) (2001), 88 B.C.L.R. (3d) 319 (S.C.);
Price v. British Columbia, [2001] B.C.J. No. 2284 (Q.L.) (S.C.); and
F.G.M. Holdings Ltd. v. British Columbia (Workers’ Compensation Board) (2000), 79 B.C.L.R. (3d) 271 (S.C.).
THE PLEADINGS
[11] In this section of my reasons, I set out the relevant paragraphs in the statement of claim as they relate to the causes of action against each defendant:
Against The Province:
9. At material times the Province, through the Ministry of Municipal Affairs, Building Standards Branch, exercised its statutory discretion pursuant to the Municipal Act and established a Provincial Building Code for British Columbia ("the BC Building Code"). The Province did so by adopting the NBC with the amendments that the Province considered necessary.
10. The Province holds itself out as having the necessary skill, qualification and competence to create the BC Building Code to establish minimum standards for the construction of buildings suitable for the different climactic areas and conditions in British Columbia and that would ensure that buildings constructed in accordance with those provisions would have and maintain structural sufficiency, quality, durability, and safety with respect to the health of occupants for the reasonable lifetime of the building.
11. In and after 1985, the Province established BC Building Codes to set minimum provisions respecting standards for the construction of buildings suitable for the different climactic areas and conditions in British Columbia, and to ensure that buildings constructed in accordance with those provisions would have and maintain structural sufficiency, quality, durability and safety with respect to the health of occupants for the reasonable lifetime of the building.
12. The Municipal Act, R.S. [sic] 1979, c. 290, as amended from time to time, provided that the BC Building Code applied to all Municipalities in British Columbia and had the same force and effect as a validly enacted bylaw of a Municipality. Municipalities in British Columbia were required to, and did, enforce the minimum provisions contained in the B.C. Building Code.
...
31. The Province was in a relationship of sufficient proximity to the Plaintiff Class that it owed them a statutory duty and a duty to take care to ensure that the BC Building Code was suitable for use in all climactic areas of British Columbia, and to warn if it was not.
32. The Province also owed the Plaintiff Class a duty to warn if changes in the BC Building Code necessitated changes in common construction practices and that Buildings built in accordance with the BC Building Code would not have structural sufficiency, quality and durability for a reasonable lifetime and/or safety with respect to the health of occupants if practices used in construction of Buildings were not changed.
33. The Province owed the Plaintiff Class the statutory duty, and a duty of care to ensure that the minimum requirements of the NBC would be such that all Buildings constructed in accordance with the BC Building Code would have and maintain structural sufficiency, quality and durability for a reasonable lifetime, and that they would also have and maintain safety with respect to the health of occupants, and to warn if they would not.
34. The Province represented to the Plaintiff Class that a Building constructed in accordance with the BC Building Code would have and maintain structural sufficiency, quality and durability for [sic] reasonable lifetime, and that the Building would have and maintain safety with respect to the health of occupants.
35. The Province owed the Plaintiff Class a duty to take care in the making of the said representations.
36. The Province knew or ought to have known that the Plaintiff Class would rely and did rely on its representations and would thereby be induced to purchase Buildings.
37. Acting on the faith of the said representations of the Province and induced thereby, members of the Plaintiff Class purchased Buildings.
38. In breach of its duty, the Province was guilty of negligence in making the said representations, and failing to warn, thereby causing the Plaintiff Class loss and damage.
39. In breach of all of its said duties, the Province was guilty of negligence in establishing the BC Building Code and implementing it in British Columbia. It was unsuitable for use in British Columbia and did not anticipate or provide a remedy for the likely entrapment or condensation of water in exterior walls and/or the problems that result.
40. In further breach of its duties, the Province failed to warn that changes to the BC Building Code, in or after 1985, required changes in construction practices and failed to warn that Buildings constructed in accordance with the BC Building Code thereafter would not maintain structural sufficiency, quality, durability or safety with respect to the health of occupants for the reasonable lifetime of the Building.
41. Buildings were not suitable for use in British Columbia. They developed problems resulting from the entrapment or condensation of water vapour in exterior walls and did not maintain structural sufficiency, quality, durability, or safety with respect to the health of occupants for a reasonable time.
42. The said problems that developed in exterior walls have required changes in construction practices and both the problems and required changes were reasonably foreseeable as the result of amendments to the BC Building Code in or after 1985 and maintained thereafter.
43. Particulars of the negligence of the Province include:
a) failing to ensure that after 1985, the BC Building Code was suitable for use throughout British Columbia, and failing to warn that it was not and/or that it required changes in construction practices, and
b) failing to ensure that all Buildings would maintain structural sufficiency, quality, durability and safety with respect to the health of occupants for a reasonable time, and
c) failing to ensure that changes to the NBC relating to reduction of vapour diffusion and increased airtightness of Buildings would not, when adopted in British Columbia, lead to a decrease in or failure of structural sufficiency, quality or durability in Buildings, and/or the loss of safety in respect to the health of occupants, and
d) failing to acknowledge or investigate experience in other jurisdictions, scientific knowledge, opinions and advice of members of the Building Standards Branch and/or others that warned against the adoption in British Columbia of the provisions of the NBC that related to reduction of vapour diffusion, and increased insulation and airtightness of Buildings, and
e) failing to amend the NBC as adopted in British Columbia so that the provisions therein that related to reduction of vapour diffusion and increased insulation and airtightness of Buildings would not cause a decrease in or failure of structural sufficiency, quality and durability in Buildings, and/or the loss of safety in respect to the health of occupants, and
f) failing to ensure that the BC Building Code adequately dealt with problems that would result from condensation or entrapment of water vapour in exterior walls, and
g) failure to warn that Buildings would suffer premature depreciation, obsolescence and failure, and
h) failure to warn that after the said amendments to the BC Building Code, Buildings would henceforth be intolerant of moisture within exterior walls, while previously exterior walls had been tolerant of such moisture, and
i) failure to consider the effect on a Building if water or moisture did leak into or condense in exterior walls that were required by the BC Building Code to be airtight, and to provide a remedy for that potential problem as part of the minimum standards of the BC Building Code, and
j) failure to warn that common construction practices had to change.
Against Canada:
6. Through the National Research Council ("NRC"), Her Majesty the Queen in Right of Canada is responsible for the creation of the National Building Code for Canada ("NBC"). The NBC is a set of minimum provisions respecting the safety, quality and durability of buildings to protect public health and maintain structural sufficiency. Her Majesty the Queen in Right of Canada intended that the NBC be adopted as a building code by all jurisdictional authorities in Canada, without amendment.
7. The NRC holds itself out as having the necessary skill, qualification and competence to fulfill its responsibility to create the NBC so that it would be suitable for adoption as a building code by any authority in Canada.
8. Pursuant to its said responsibility, the NRC created, copyrighted and published the NBC from time to time.
...
13. Her Majesty the Queen in Right of Canada was in a relationship of sufficient proximity to the Plaintiff Class that it owed them a duty of care to ensure that all of the provisions of the NBC, if adopted, were suitable for use in British Columbia, and/or to warn if they were not.
14. Her Majesty the Queen in Right of Canada also owed the Plaintiff Class a duty to warn if changes in the NBC necessitated changes in common construction practices, and/or if buildings built in accordance with the NBC would not have structural sufficiency, quality and durability for a reasonable lifetime, and/or if those Buildings would not have safety with respect to the health of occupants if the practices used in construction of Buildings were not changed.
15. Her Majesty the Queen in Right of Canada owned the Plaintiff Class a duty of care to ensure that the minimum requirements of the NBC would be such that all Buildings constructed in accordance with the NBC in British Columbia would have and maintain structural sufficiency, quality and durability for a reasonable lifetime, and that such Buildings would have and maintain safety with respect to the health of occupants, and to warn if they would not.
16. By creating the NBC and holding it out as suitable for use in all parts of Canada, Her Majesty the Queen in Right of Canada represented to the Plaintiff Class that a Building would have and maintain structural sufficiency, quality and durability for a reasonable lifetime, and that it would also have and maintain safety with respect to the health of occupants.
17. Her Majesty the Queen in Right of Canada owed the Plaintiff Class a duty to take care in the making of its said representations.
18. Her Majesty the Queen in Right of Canada knew or ought to have known that the Plaintiff Class would rely on its said representation and would thereby be induced to purchase Buildings.
19. Acting on the faith of the said representations of Her Majesty the Queen in Right of Canada, and induced thereby, members of the Plaintiff Class purchased Buildings that were constructed, and that were required to be constructed, in accordance with the NBC.
20. In breach of its said duties, Her Majesty the Queen in Right of Canada was guilty of negligence in making its said representations and in failing to warn, thereby causing the Plaintiffs loss and damage.
21. Further and in the alternative, in breach of all of its duties, Her Majesty the Queen in Right of Canada was guilty of negligence in writing, publishing and holding the NBC out as suitable for adoption in all parts of Canada. The NBC did not anticipate or provide a remedy for the likely entrapment or condensation of water in exterior walls constructed in accordance with the NBC and/or the resulting problems.
22. In further breach of its duties, Her Majesty the Queen in Right of Canada failed to warn that changes to the NBC in about 1985 required changes in construction practices and failed to warn that buildings built in accordance with the NBC thereafter would not maintain structural sufficiency, quality or durability, or safety with respect to the health of occupants for a reasonable lifetime of the Building.
23. Buildings were not suitable for use in British Columbia. They developed problems resulting from the entrapment or condensation of water in exterior walls and did not maintain structural sufficiency, quality, durability, or safety with respect to the health of occupants for a reasonable time, thereby causing the Plaintiff Class loss and damage.
24. The said problems that developed in exterior walls have required changes in construction practices and both those problems and the required changes were reasonably foreseeable as the result of amendments to the NBC made in or about 1985, and maintained thereafter.
25. Particulars of the negligence of Her Majesty the Queen in Right of Canada include:
a) failing to ensure that after 1985, the NBC was suitable for adoption in all parts of British Columbia, and failing to warn that it was not, and/or that the NBC required changes in construction practices, and
b) failing to ensure that Buildings would maintain structural sufficiency, quality, durability and safety with respect to the health of occupants for a reasonable lifetime, and
c) failing to ensure that changes to the NBC relating to reduction of vapour diffusion and increased airtightness of Buildings would not, if adopted in British Columbia, lead to a decrease in, or failure of, structural sufficiency, quality and durability in Buildings, and/or the failure of safety in respect to the health of occupants, and
d) failing to obtain or investigate or adequately investigate experience in other jurisdictions, scientific knowledge, opinions or advice of members of the NRC and/or Building Standards Branch, and/or others, that warned against the adoption in British Columbia of the NBC that related to reduction of vapour diffusion and increased insulation and airtightness of Buildings, and
e) failing to recommend that the NBC as adopted in British Columbia should be amended so that the provisions therein that related to reduction of vapour diffusion and increased insulation and airtightness of Buildings would not cause a decrease in or failure of structural sufficiency, quality or durability of Buildings and/or the failure of safety in respect to the health of occupants, and
f) failing to ensure that the NBC adequately dealt with problems that would result from condensation or entrapment of water in exterior walls of Buildings, and
g) failure to warn that Buildings built in accordance with the NBC would suffer premature depreciation, obsolescence and failure, and
h) failure to warn that after the said amendments to the NBC, Buildings would henceforth be intolerant of moisture within exterior walls, while exterior walls previously had been tolerant of such moisture, and
i) failure to consider the effect on a Building if water or moisture did leak into or condense in exterior walls that the NBC required to be airtight, and to provide a remedy for that problem as part of the minimum standards of the NBC, and
j) failure to warn that common construction practices had to change.
Against CMHC:
26. For a fee, CMHC acts as an insurer of construction and conventional mortgage loans made in Canada.
27. CMHC requires that any new property against which a mortgage insured by CMHC is to be registered must be built in accordance with the NBC. At times material to this action CMHC approved plans for Buildings prior to construction commencing.
28. By its requirements and by implication CMHC represented that a Building would have and maintain structural sufficiency, quality and durability for a reasonable lifetime and/or the term of the insured mortgage, and that it would also have and maintain safety with respect to the health of occupants.
29. CMHC was in a position of sufficient proximity to members of the Plaintiff Class that it owed them a duty to take care in making the said representation.
30. CMHC was negligent in making the said representation in that Buildings for which CMHC granted mortgage insurance did not maintain structural sufficiency, quality or durability for a reasonable lifetime or the term of the insured mortgage, nor did those Buildings maintain safety with respect to the health of occupants, thereby causing the Plaintiffs loss and damage.
In paragraph 44 of the statement of claim, it is alleged as against all defendants:
44. By reason of the said breaches of duties of care and statutory duties and by reason of the said negligent misrepresentations members of the Plaintiff Class have suffered loss and damage, including:
a) the cost of repairs to their Building, and
b) the cost of alternative accommodation, and
c) diminution in the value of their Building, and
d) loss of use and enjoyment of their Building, and
e) further and other loss and damage as shall be advised.
DUTY OF CARE
[12] Ms. Kimpton contends that her pleadings disclose causes of action in negligence, breach of duty to warn and negligent misrepresentation. In law, each of those causes of action requires proof that the particular defendant owed a duty of care to the plaintiff that was breached. Accordingly, the underlying issue in each instance is whether the particular defendant owed a duty of care to Ms. Kimpton. If no duty was owed, the particular claim is bound to fail.
[13] Ms. Kimpton also suggests, albeit not forcibly, that whether a duty of care exists is, itself, a triable issue that might be certified as a common issue in a class proceeding. A similar approach was urged on the court at the certification hearing in Campbell v. Flexwatt Corp. (1996), 25 B.C.L.R. (3d) 329 (S.C.), a case decided very early in the history of class proceedings in this province. That approach, however, does not sufficiently take into account the passage from Kripps set out above.
[14] Kripps makes it clear that a court is not bound to refuse relief under Rule 19(24) simply because the relevant area of the common law is uncertain. As set out at para. 9 of the decision:
It would be wrong that those against whom action is brought in an area of law which happens to be in an active state of development should for that reason alone be required to bear the cost of inquiry into the facts before the court will decide whether the claim is one which calls for an answer.
I turn now to the analytical framework for determining whether a duty of care exists.
[15] The approach to determining the existence of a duty of care is rooted in Canadian judicial approval of the test set out in Anns v. Merton London Borough Council, [1978] A.C. 728, a recent expression of which is found in Cooper v. Hobart, referred to above. The plaintiff (appellant) in Cooper failed in a bid for certification because she could not demonstrate that the defendant Registrar of Mortgage Brokers owed her any duty of care.
[16] All counsel agreed that Cooper sets the test to be applied here, although they differ with regard to its application. Before addressing those differences, it may be helpful to review both the circumstances of Cooper and the formulation of the test, with particular regard to limiting policy considerations.
[17] In Cooper, the appellant was one of over 3000 investors who had lost funds advanced to a mortgage broker licensed by the Registrar of Mortgage Brokers. The appellant brought an action against the Registrar, alleging that the Registrar had been aware of serious violations of the Mortgage Brokers Act, R.S.B.C. 1996, c. 313, committed by the broker, but had failed to suspend the broker's licence until a year had passed and had failed to warn investors in the interim. The appellant applied to have the action certified as a class proceeding. Certification was granted by the British Columbia Supreme Court, but denied by the Court of Appeal on the ground that the pleadings disclosed no cause of action against the Registrar.
[18] On appeal to the Supreme Court of Canada, McLachlin C.J. and Major J. framed the central issue as follows:
Does a statutory regulator owe a private law duty of care to members of the investing public for (alleged) negligence in failing to properly oversee the conduct of an investment company licensed by the regulator? (para. 20)
The court held that the case did not fall within and was not analogous to a recognized category of cases in which a duty of care had previously been recognized. As such, it was necessary to apply both branches of the Anns test to determine whether a new duty of care should be recognized.
[19] For convenience, I interpose here the two branches of the Anns test, as taken from the judgment of Lord Wilberforce:
... [I]n order to establish that a duty of care arises in a particular situation, it is not necessary to bring the facts of that situation within those of previous situations in which a duty of care has been held to exist. Rather the question has to be approached in two stages. First one has to ask whether, as between the alleged wrongdoer and the person who has suffered damage there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter, in which case the prima facie duty of care arises. Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise. (pp. 751-52)
[20] Returning to Cooper, in considering the first stage of the test, the court held that any factors giving rise to proximity must be found in the statute under which the Registrar was appointed. After reviewing the Act, the court concluded that, although the statute was designed, in part, to protect investors, the Registrar’s duties were owed to the public as a whole, not to investors exclusively. The Registrar was responsible for balancing competing interests in ensuring the efficient operation of the mortgage marketplace. For these reasons, the statute could not be construed to impose on the Registrar a duty of care to investors specifically, as there was insufficient proximity between the Registrar and investors.
[21] The court also explained that even if a prima facie duty of care had been found under the first branch of the Anns test, that duty would be negated by policy considerations under the second branch of the test. The Registrar’s functions involved both policy and quasi-judicial elements. Further, imposing a duty of care between the Registrar and investors created the potential for indeterminate liability to the investing public.
[22] The court also reasoned that to impose a duty of care would amount to the creation of an insurance scheme for investors at great cost to the taxpaying public. There was no indication that the Legislature intended such a result. For these reasons, the pleadings did not disclose a cause of action and failed to satisfy s. 4(1)(a) of the Act.
[23] It is apparent from the judgment that distinctive policy considerations impact both stages of the analysis. At the first stage, the proximity analysis focuses on factors arising from the relationship between the plaintiff and defendant, including questions of policy. At the second stage, the court considers whether there are any residual policy considerations outside the relationship between the parties that may negative the imposition of a duty of care. The court accepted that the second stage generally arises only where the alleged duty of care does not fit within a recognized category. The court emphasized, however, that where a duty of care is alleged to exist in a novel situation, it is necessary to consider both stages in order to ensure that all necessary policy considerations are canvassed.
Are the causes of action pleaded the same as or analogous to categories of cases in which a duty of care has been recognized?
[24] The first step in the proximity analysis involves determining whether the cause of action is the same as or analogous to a category of cases in which a duty of care has previously been recognized. If so, and if reasonable foreseeability is established, a prima facie duty of care may be found to exist. In such a case, it usually will not be necessary to consider the second stage of the Anns test, as the court can be satisfied that there are no policy considerations that would override the imposition of a duty of care.
[25] It was at this point that the positions of the parties diverged at the certification hearing before me. Ms. Kimpton contended that the causes of action are all at least analogous to other cases in which a duty of care has been recognized and that the alleged harm was reasonably foreseeable. If the second stage of the Anns test must be considered, and she does not agree that it is necessary to do so, Ms. Kimpton further contends that there are no policy considerations that should override the existence of the duty of care.
[26] The Province and Canada did not contest the foreseeability issue, but focussed instead on the question of whether there was a sufficient relationship of proximity. Their concession was appropriate. It is reasonably foreseeable that members of the public may suffer harm if a building code is negligently drafted. This is because the codes, in their various forms, are intended to set minimum standards respecting the safety of buildings. The proximity issue is much more problematic.
[27] Both the Province and Canada contended that the claims against them are novel and not analogous to any circumstance where a sufficient relationship of proximity has previously been found to exist. Both of those defendants maintained that important policy considerations militate against finding a new duty of care in the circumstances of this case.
[28] CMHC, on the other hand, conceded that the category of claim against it, namely negligent misrepresentation, is a recognized one, but focussed instead on the failure of Ms. Kimpton to allege the necessary elements of that tort. Ms. Kimpton responded to that submission, in part, by applying to amend the statement of claim. As it is not necessary that I address that issue now, I will return to it later in my reasons.
Analysis of proximity issues relating to the Province and Canada
[29] In her written argument, Ms. Kimpton described the causes of action as follows:
56. The causes of action in the Statement of Claim include that:
a) Her Majesty the Queen in Right of Canada ("Canada") is responsible for the creation of the NBC and owed a duty to ensure that the NBC was suitable for use in B.C., and that Canada was negligent in drafting the NBC and in failing to warn that it was unsuitable for use in B.C.;
b) Canada owed the plaintiff class a duty to warn if changes in the NBC necessitated changes in construction practices or to warn of problems if construction practices did not change;
c) Canada held out that that the minimum provisions of the NBC would ensure that buildings built in accordance with the NBC would have a reasonable lifetime and maintain the health and safety of occupants, that Canada owed a duty of care making the representation and that members of the plaintiff class bought buildings relying on the representation;
d) Canada was negligent in preparing the NBC, in failing to warn and in making representations;
e) British Columbia is responsible for the creation of the BCBC and owed a duty to ensure that the BCBC was suitable for use in British Columbia, and that British Columbia was negligent in drafting the BCBC and in failing to warn that it was unsuitable for use in B.C.;
f) British Columbia owed the plaintiff class a duty to warn if changes in the BCBC necessitated changes in construction practices or to warn of problems if construction practices did not change;
g) British Columbia held out that that the minimum provisions of the BCBC would ensure that buildings built in accordance with the BCBC would have a reasonable lifetime and maintain the health and safety of occupants, that British Columbia owed a duty of care making the representation and that members of the plaintiff class bought buildings relying on the representation;
h) British Columbia was negligent in preparing the BCBC, in failing to warn and in making representations; and
i) CMHC made negligent misrepresentations.
[30] Ms. Kimpton then set out in argument the causes of action, derived from the above allegations, that she says fall within previously recognized or analogous categories of negligence:
69. The causes of action pleaded in this proceeding fall within previously recognized categories of negligence. The claims include:
1. A claim that the defendant’s act caused foreseeable physical harm to the plaintiffs and the plaintiffs’ property;
2. A claim for negligent misstatement;
3. A claim for breach of duty to warn of risk or danger;
4. A claim that the defendants negligently produced and endorsed building codes; that is analogous to a claim for breach of a duty to inspect housing developments without negligence; and
5. A claim that authorities who undertake a policy of producing a building code must do so without negligence; that is analogous to a claim against authorities who have undertaken a policy of road maintenance owing a duty of care to execute the maintenance in a non-negligent manner.
[31] It is apparent that all the categories referred to require the existence of a duty of care owed to Ms. Kimpton.
[32] As in Cooper, the search for previously recognized categories or analogous claims requires a more detailed comparative analysis than the lists permit. I am not persuaded that the claims against the Province and Canada relating to the negligent enactment of the codes fit within any previously recognized category of claim.
[33] Dealing first with the claims against the Province, I am not aware of any previous case or analogous case in which a level of government has been found to owe a private duty of care arising out of the enactment of subordinate legislation like the BCBC. The closest to a parallel case identified by counsel for Ms. Kimpton was the decision of the certification judge in Campbell v. Flexwatt Corp. [partially upheld (1997), 44 B.C.L.R. (3d) 343 (C.A.)].
[34] As I set out below, the Province enacted the BCBC by regulation passed pursuant to s. 692 of the former Municipal Act, R.S.B.C. 1996, c. 323. There is a line of authority, commencing with Welbridge Holdings Ltd. v. Metropolitan Corporation of Greater Winnipeg (1970), 22 D.L.R. (3d) 470 (S.C.C.) and since followed, holding that the exercise of a legislative function does not give rise to any private law duty of care. While sometimes expressed as immunizing the Crown from suit in such cases, this line of authority has recently, and in my view appropriately, been relied on to identify and apply relevant policy considerations at the second stage of the Anns test.
[35] In Cooper (at para. 36), McLachlin C.J. reviewed generally the categories of claims, including those against government authorities, in which proximity has been recognized. In my view, none of the claims advanced against the Province or Canada fit within any of those categories. Accordingly, both stages of the Anns test must be applied here.
Is Campbell v. Flexwatt an analogous claim?
[36] At this point, I wish to address Ms. Kimpton’s contention that the present case is analogous to Campbell v. Flexwatt Corp., reported at (1996), 25 B.C.L.R. (3d) 329 (S.C.), where Hutchison J. certified the proceedings as a class proceeding. The Province was a defendant in that case, as was the Canadian Standards Association ("CSA").
[37] CSA set the applicable standards for radiant ceiling heating panels ("RCHPs"). One of the central issues was whether CSA was negligent in testing the product or in setting the applicable standards. According to the theory of the plaintiffs, the panels were not fit for their intended purpose. The plaintiffs also advanced a companion claim in negligent misrepresentation associated with the affixing of the CSA seal to the product, but arising out of the same circumstances.
[38] Hutchison J. described the cause of action alleged against the Province as follows at para. 38:
The Defendant Province and the Defendant Municipalities, [the plaintiffs] say, failed to prevent or stop the use of the defective RCHPs and while CSA and the Province initially approved the defective product, in the end, CSA decertified the RCHPs and the Province ordered them disconnected.
[39] Hutchison J. never separately addressed the issue of whether the Province owed a duty of care. It was unnecessary to do so as it was the theory of the plaintiffs that the Province was vicariously liable for the operational decisions of its Chief Electrical Inspector. Thus, the plaintiff’s claim fell within a recognised category of negligence. The Court of Appeal upheld the decision to certify in Campbell, but was not asked to address the question of whether the plaintiff had pleaded a cause of action against the Province.
[40] At various points in her argument, Ms. Kimpton attempted to draw parallels between the issues against CSA in Campbell and against the Province in the case at bar. In her written brief, Ms. Kimpton described the proposed primary and common issues respecting the fitness for purpose of buildings constructed in accordance with either code as, “very similar to the primary common issues certified in Campbell v. Flexwatt.” While those parallels would require closer examination for the purpose of other certification issues, they do not assist on the question of whether the Province owed a private law duty of care to Ms. Kimpton, as CSA was not a legislative body enacting legislation.
Duty of care analysis respecting the Province:
[41] The Municipal Act, or the Local Government Act as it is now titled, authorizes the responsible minister to make regulations establishing a provincial building code for British Columbia. Section 692(1) reads, in part:
692(1) The minister may make regulations as follows:
(a) establishing a Provincial building code for British Columbia governing standards for the construction and demolition of buildings;
...
(c) adopting by reference, with the changes the minister considers necessary, all or part of any building code or standards for the construction or demolition of buildings; ...
[42] In 1973, pursuant to subsection (c), the Province adopted the 1970 NBC as its building code. Since that time, the Province has adopted each subsequent edition of the NBC, with a few minor revisions and additions, by enacting a provincial regulation entitled the British Columbia Building Code.
[43] The dates of adoption by the Province of the last four editions of the NBC were December 9, 1981, September 28, 1987, December 1, 1992 and December 18, 1998. During the same broad time frame, the editions of the NBC were changed in 1980, 1985, 1990 and 1995.
[44] Unlike the BCBC, the NBC is not created by legislative enactment. Instead, it is a model code created through a participatory process that includes industry representatives from across the country.
[45] The principal objective of the NBC is to set out the criteria required to provide a minimum acceptable level of health and safety for occupants of buildings across Canada. Similarly, the BCBC is a set of minimum standards for building safety with respect to certain aspects of public health, fire protection and structural sufficiency, as well as access for people with disabilities. In short, it establishes a minimum standard for the construction of new buildings, additions, alterations and repairs as well as the rehabilitation of existing buildings undergoing a change of use.
[46] In spite of the similarities and connection between the two codes, the proximity analysis under the Anns test involves different policy considerations for the Province than for the Federal Crown. In considering the novelty of the cause of action alleged against the Province, I begin with an observation mirroring that found in Price v. British Columbia, [2001] B.C.J. No. 2284 (Q.L.) (S.C.).
[47] At the certification hearing in Price, the court struck out a claim alleging injury caused by the use of a glass-crushing machine mandated by the provincial Liquor Distribution Branch. Meiklem J. observed that even though the statement of claim pleaded an established cause of action, namely misfeasance in public office, it did so “in circumstances where it [was] inapplicable and [had] no chance of success.” He found that it could not be saved by amendment. My observation is similar.
[48] The plaintiff cannot avoid the necessary duty analysis simply by incorporating references to established causes of action such as negligence or negligent misrepresentation. Those words are not incantations that halt the analysis required by Anns, as approved in Cooper or, in the case of negligent misrepresentation, in Hercules Managements v. Ernst & Young, [1997] 2 S.C.R. 165.
[49] I have already set out the two questions that arise at the first stage of the Anns test and have answered the first affirmatively. Those questions are: (1) Was the harm that occurred the reasonably foreseeable consequence of the defendant’s act? and (2) Are there reasons, notwithstanding the proximity between the parties established in the first part of this test, that tort liability should not be recognized here? I now consider whether the policy issues arising from the relationship between the Province and Ms. Kimpton militate against recognizing tort liability.
[50] There is, of course, no direct relationship between the parties. It is not alleged that Ms. Kimpton contracted with the Province, that she sought or received any advice from the Province, or had any type of transaction or dealings with the Province. Instead, Ms. Kimpton owns and occupies a strata unit in a residential condominium built in British Columbia after 1985 and before 2000. She alleges that the BCBC applied to the construction of the building and that problems have developed attributable to the accumulation of water or vapour in the exterior walls. Ms. Kimpton alleges, in effect, that the building was bound to fail due to inadequacies in the BCBC.
[51] Is Ms. Kimpton a neighbour in the sense described in the authorities? Is she a person who is so closely and directly affected by the act of the Province in enacting the BCBC that the latter ought reasonably to have had her in contemplation when directing itself to the ramifications of negligently enacting the legislation? Or, paraphrasing Hercules, is the relationship of such a nature that the Province may be said to be under an obligation to be mindful of Ms. Kimpton’s legitimate interest in being safe and healthy in her home? In my view, the answer to each of those questions, based on a review of the Municipal Act and the BCBC, is no. Even though the BCBC is enacted to provide minimum standards for building safety, the Province owes its duty, as in Cooper, to the public as a whole.
[52] Turning to the residual broad policy considerations that apply to the second stage of the Anns test, there are also, in my view, significant and fundamental considerations that would negative any duty that might be imposed on the Province under the first branch of the test. I reach this conclusion partly on the basis of a line of decisions that may be traced back to Welbridge Holdings, a decision predating Anns, but that may now be understood as illustrating the policy considerations applicable to the second stage of the Anns test.
[53] In Welbridge, the defendant municipality enacted a rezoning bylaw in contravention of its own public notice procedures. The plaintiff began constructing an apartment building on the rezoned property, but was forced to abandon the project when the bylaw was subsequently declared invalid (Wiswell v. Metropolitan Corporation of Greater Winnipeg (1965), 51 D.L.R. (2d) 754 (S.C.C.)). The plaintiff framed its action against the municipality for damages in negligence.
[54] Laskin J., as he then was, held that the duty of care principle in Donoghue v. Stephenson did not extend to “a legislative body, or other statutory tribunal with quasi-judicial functions, which in the good faith exercise of its powers promulgates an enactment or makes a decision which turns out to be invalid because of anterior procedural defects” (p.476). He went on to draw the following distinction:
A municipality at what may be called the operating level is different in kind from the same municipality at the legislative or quasi-judicial level where it is exercising discretionary statutory authority. In exercising such authority, a municipality (no less than a provincial Legislature or the Parliament of Canada) may act beyond its powers in the ultimate view of a Court, albeit it acted on the advice of counsel. It would be incredible to say in such circumstances that it owed a duty of care giving rise to liability in damages for its breach. (p.478)
[55] Laskin J. held that the municipality’s concern was a public one and that it was not brought into any "private nexus" with the plaintiff through the exercise of its legislative power. The court concluded that the exercise of a legislative function could not give rise to a private duty of care:
... [T]he risk of loss from the exercise of legislative or adjudicative authority is a general public risk and not one for which compensation can be supported on the basis of a private duty of care. The situation is different where a claim for damages for negligence is based on acts done in pursuance or in implementation of legislation or of adjudicative decrees. (p.478-79)
Welbridge has been consistently followed on this point since.
[56] For example, in Birch Builders Ltd. v. Township of Esquimalt (1992), 90 D.L.R. (4th) 665 (B.C.C.A.), leave to appeal to S.C.C. refused [1992] 3 S.C.R. v, the plaintiffs proposed a development on certain properties in the Township of Esquimalt. To allow for the development, the town council passed a zoning bylaw and issued a development permit to the plaintiffs. A resident of Esquimalt commenced litigation and succeeded in having the permit declared invalid due to the failure of the council to pass a resolution specifically authorizing the permit. By that time, a change in the municipal government had occurred and the council was no longer willing to authorize the permit. The plaintiffs brought an action in negligence against the council, alleging that the resolution had not been passed due to the oversight of a particular civic official. The plaintiffs contended that the failure to pass the resolution was operational in nature.
[57] Hollinrake J.A. rejected this argument, finding that the passage or non-passage of a resolution was a legislative function. He dismissed the case on the ground that, “the principles enunciated by Laskin J. in Welbridge negate any duty of care where the function is a legislative one” (page 671).
[58] In F.G.M. Holdings Ltd. v. British Columbia (Workers’ Compensation Board) (2000), 79 B.C.L.R. (3d) 271 (S.C.), the Workers’ Compensation Board enacted a regulation requiring employers to minimize their employees’ exposure to second-hand smoke in the workplace. The regulation contained an exemption for entertainment facilities, but provided that it would expire on January 1, 2000. On March 22, 2000, a judge held that the expiration clause was invalid, as it had been enacted without the public consultation required by the Workers’ Compensation Act.
[59] The plaintiff brought a proposed class action proceeding for damages allegedly incurred between January 1, 2000 and March 22, 2000. The statement of claim alleged that the Board had acted negligently in enacting the regulation.
[60] Citing Welbridge and Birch Builders, Vickers J. held that a claim in negligence could not succeed as “no duty of care arises in respect of the exercise of legislative functions” (para 19). Vickers J. struck the statement of claim under Rule 19(24) on the grounds that it disclosed no cause of action.
[61] To similar effect are the following cases from other jurisdictions where courts have held that a governmental body cannot be held liable for negligence at the legislative decision-making level: Kwong v. The Queen in Right of Alberta (1978), 96 D.L.R. (3d) 214 (Alta. S.C.A.D.); aff’d [1979] 2 S.C.R. 1010; Swanson Estate v. Canada (1991), 80 D.L.R. (4th) 741 (F.C.A.); Ontario Association of Radiologists v. Ontario (Minister of Health), [1999] O.J. No. 3027 (Q.L.) (Div. Ct.); A.O. Farms Inc. v. Canada, [2000] F.C.J. No. 1771 (Q.L.) (T.D.); and Lucas v. Toronto Police Service Board, [2001] O.J. No. 2334 (Div. Ct.); leave to appeal to S.C.C. refused [2001] S.C.C.A. No. 649.
[62] Counsel for Ms. Kimpton tried valiantly to distinguish these cases on the basis that they all related to policy decisions rather than operative acts in fulfilment of a legislative or policy decision. While his characterization of the decisions in those cases appears correct, I am unable to see any substantive distinction between them and the case at bar.
[63] The legislative policy decision that led to the enactment of the BCBC was intended to benefit the public. It was an act of governing. To the extent that the Province negligently governs, the voting public may impose a political consequence at an election. As stated in A.O. Farms, however, "Government when it legislates, even wrongly, incompetently, stupidly or misguidedly is not liable in damages."
[64] There are two additional policy considerations that militate against a finding in favour of Ms. Kimpton: indeterminate liability, and the impact of such a finding on the taxpayers of the province who must ultimately fund any award of damages. As in both Cooper and Hercules, policy concerns regarding indeterminate liability negate the prima facie duty of care. I will discuss this issue more fully when I turn to the claim against Canada.
[65] With regard to the claim against the Province, I observe on this point that the Local Government Act does not set any limit on the type and amount of claims that might be advanced. The imposition of a private law duty of care would place the taxpayers of the province in the unenviable position of insuring losses of an indeterminate amount for an indeterminate number of claimants over an indeterminate time. I find nothing in the legislation to indicate that the