Ontario Building Officials Association

Leadership Day 2015

Avoiding LitigationApril 10,2015

Potential for Liability

Claims Brought By: Owners Developers Subsequent Purchasers Guests of Owners 3rd Party Insurance Companies

• Actions• Inactions

• A Significant Event• Owner as Contractor• Death of Principal During Construction

No one knows how far into the future a claim can surface.

Claims Can Occur From:

• Joint & Several – (Deep Pocket)

• Replacement Cost for an older home/building

Costs Impacted By

Significance

• Passage of time

• Bodily Injury to a Guest

• Landlord Underinsured

Mortimer v. Cameron et al

• 1963 - Building Permit obtained by the owner to build

• wooden staircase outside exterior brick wall.

• 1971 – Building Permit obtained to cover the

• staircase with roof. Never acted upon.

• 1972 – 3rd Building Permit obtained to enclose

• staircase.

Work carried out

Inspected and approved by City’s Building Inspector

Forms basis of claim against City

Mortimer v. Cameron et al

Mortimer v. Cameron et al

• On July 17, 1987 while at a party, Mortimer and his classmate Cameron engaged in good natured horseplay, stumbled against a plywood barrier on a stair landing about 10 ft above the ground, and fell through. Cameron was unhurt, but Mortimer’s spine was severed from the fall, rendering him a quadriplegic.

Case Study:Mortimer V. Cameron et al

• The Court awarded $5 million in damages to Mortimer, for which it found the owner of the building (Landlord) 20% liable and City of London 80% liable; no liability was assessed against Mortimer, Cameron, or the tenant who was hosting the party.

Mortimer V. Cameron et al

• Upon appeal, the Ontario Court of Appeal reduced the City of London’s liability to 40%, and increased the Landlord’s liability to 60%.

• This was appealed again to the Supreme Court of Canada, who refused to hear the case, and so the judgment became final.

Mortimer V. Cameron et al

• A Defendant who is held just 1% liable for a Plaintiff’s injuries or damages may also have to

pay the share of any other defendant who cannot afford to pay

Joint & Several Liability

• Fire• Collapse• Discovery of Mould• Bankruptcy of Contractor/Developer

Significant Event Can Lead to a Claim

FACTS

1. Tenant buys the barbecue

2. Tenant buys a refurbished propane gas cylinder

3. Connects the cylinder to the barbecue & notices that the regulator hose assembly is leaking

4. Removes the regulator assembly and returns it

FACTS

5. Retail staff open a new box for the same model barbecue and make the exchange

6. Same day, tenant lights the barbecue and goes into his apartment to find a can that can be used to catch the grease

7. Fire erupts

CAUSE OF FIRE

• Propane barbecue leaked gas, which likely ignited the burners and in turn ignited the structure.

OFFICE OF THE FIRE MARSHALL

• Propane cylinders shall not be used or stored on balconies because this creates a fire or explosion hazard

PROPANE STORAGE & HANDLING CODECAN/CSA-B149.2-00, section 5.7.1 states,

• “Each cylinder shall be set upon a firm level weatherproof base located on consolidated ground at grade level…

This section prohibits the use or storage of tanks above grade level.

MANUFACTURER OF BARBECUE

a) Use outdoors in a well ventilated area preferably 3 metres from

any outbuildings

b) Not to be operated under any overhead or unprotected

construction

c) Not to be left unattended while in operation

MARKETING BROCHURE FOR THE OWNER

1)Encourages residents to use barbecues on

their decks and balconies

2) Has photographs showing barbecues on the

front decks

BUILDING OWNER SUES THE TENANT

Tenant Third Parties the following:

• Manufacturer of the Barbecue

• Retailer that sold the Barbecue

• Supplier of Propane Tank Cylinders

• Recertification Centre for Propane Tanks that supplied the propane tanks to above supplier

• Municipality

Building Inspection Department

Fire Department

• Builder created a horizontal concealed space

across the fire separations. (Plan Change)

• This should have been apparent at the framing

inspection when the framing & fire separations

were being reviewed.

LIABILITY

a) Failing to properly inspect the apartment building to ensure

that it complied with all applicable by- laws, regulations,

codes, standards and policies with respect to new

construction;

b) Failing to ensure that the Building was built in accordance

with the building permit issued by the City;

LIABILITY

c) Failing to ensure that the Building was built in

accordance with the building plans approved by the

City;

d) Failing to enforce all applicable by-laws, codes,

regulations, standards and policies with respect to

the construction of the Building;

Owner as ContractorClaims Scenario

• No or limited construction experience• Asks you for advice• Limited budget• Inspector allows minor deficiencies• Something goes wrong – owner sues inspector

for allowing deficient construction

Home Built on High Water Table• Home constructed by a private person in a rural

area and was sold after completion• Water found in basement• Water infiltration caused house to shift • Footings were not inspected properly to ensure

they were not too low • Footings were also too narrow and provided

poor lateral support

Cont’d

• Municipality Brought into action• Damages claimed over $500K• Allegation against Municipality:

Site Drainage Plan not reviewed carefully Footings inadequate• Municipality exposed to liability• Builder had no insurance

House Chimney Fire

• House constructed in 1992, 15 years later it catches fire

• Fire consumes the entire house – total loss• Fire Marshall Report – Cause was build up of

creosote in the fire place chimney• Further inspection found there was inadequate

clearance to combustible framing around the fire place insert

Cont’d

• Municipality Brought into action• Damages claimed over $300K• During construction the builder was told by building

inspector to have the chimney inspected by a proper expert (WETT Certified)

• Building Inspector failed to follow up on that inspection and the inspection never happened

• Municipality exposed to liability

A Guest Falls from a Raised Deck

• A guest at a newly constructed house exited the kitchen door onto a raised deck, stepped through the caution tape and fell 12 feet fracturing both heel bones and had a compression fracture of his L1 vertebrae

• Boards that had covered the door had been removed by deck contractor and not put back on

• Deck was not completed at time of the fall

Cont’d• Plaintiff sued the Builder, Deck Contractor and the Municipality • Allegations against Municipality - issued Occupancy Permit when

it was not appropriate and failure to inspect• Building Inspector had inspected this house prior to deck being

built • Building Inspector remembered the patio doors boarded off

during final inspection and a deadbolt put in• Municipality was not notified of the deck being built– Building

Records did not mention the deck• Matter went to pretrial – Judge agreed Municipality did not have

exposure• Municipality’s Insurers were able to get out of this action without

any contribution to a settlement

Red Flags

• New Builder/Part-time Builder

• Incomplete building permit

• Builder is Owner – limited budget

• Builder/Owner asks for your advice

• Long construction delays

• Builder outside of usual expertise

• Work covered over when you arrive to inspect

Red Flags

• No calls for inspections• Owner calls building dept. to complain about builder• Deficiencies at framing inspection• Construction begins before permit issued• Lack of reports from architects & engineers• Developer goes bankrupt

Defence Challenges

• Allowing construction before permit issued• Poor documentation of inspections• Multiple inspectors – no communication• Construction doesn’t reflect drawings submitted• Records destroyed – Retention By-law• No record of corrected deficiencies• Taking the contractor’s word for it during inspection

Documentation is the key to a sound defence

Mitigating the Risk with Good Documentation Practices

Creating Your Documents

• Your inspection documents have to stand on their own and pass the “test of time”

• They may be called on at a later date

• Plaintiff’s lawyers spend a significant amount of time understanding and reconciling documentary evidence

Implementing Documentation Practices

• Completing documents should be part of staff training

• Instructions should be included in all manuals• Train Staff on:

The importance of these documents

How they are to be completed

When they are to be completed

Implementing Documentation Practices (contd.)

• Documentation should be considered part of the job.

• The job is completed when the records are completed.

• If it’s seen as a “chore” there’s a risk the documents will fall short.

Can Documentation Ever be a Bad Thing?

• NO!

• Claims are not like wine…they do NOT get better with age…

In the world of litigation:

It’s not what you did

It’s what you can PROVE you did

In Closing

• Documentation is crucial to the defence of the municipality

• Memories fade over time• Provides a basis to refresh memories to the

events of a particular day• Evidence often more credible if it is corroborated

by a documentary record

Frank Cowan Risk Management Services

• Who• Municipalities, medical care providers, service organizations, schools

• How• http://excellence.frankcowan.com• Anywhere 24/7, 365 days a year

• What• Risk management info on current topics and emerging trends • content provided by risk management, legal and claims professionals

• Why• One stop• Easy to use• interactive

The Risk Management Centre of Excellence

Thank You

Len Bennett, BA, FCIP, CRMRisk Analyst

len.bennett@frankcowan.com

excellence.frankcowan.com

frankcowan.com