By Sharon Vogel
Toronto currently leads North America in the number of high rises being built, with 140 towers under construction and another 140 in the works. Whether this increase in high rise construction will lead to a spike in construction deficiency claims and potential law suits is not yet known, but recent media coverage indicates that problems have already arisen in some new towers, particularly in glass-walled buildings.
Glass buildings generally require maintenance after 15 to 20 years, but serious issues requiring remediation may arise much earlier – within five to 15 years, if there are deficiencies arising from errors in design, faulty or improper workmanship, and/or faulty or improper materials.
Given that the boom in high-rise construction commenced within the last five to 10 years, claims have already started to surface related to deficiencies in the design, construction and/or materials of these new buildings.
What kinds of claims will we see? Based on anecdotal evidence, there are a range of possible problems that can arise, resulting in leakage. Remedial options range from applying caulking to the exterior of the building to the removal and replacement of the entire glass wall system.
With any remedial option selected, there will be variations in cost depending on:
* The extent of re-design required;
* The cost of materials, including using different materials if the original materials were faulty;
* Access issues, including the need for swing stages and scaffolding;
* Weather conditions, given the construction schedule for the remedial work;
* The extent of interior repairs required to address issues such as mould remediation;
* The possible need to re-locate occupants during the remedial work; and
* Legal and consulting fees.
Before embarking on a remedial program, an engineering investigation will be necessary to assess the extent of the deficiencies and the remediation work required to rectify those deficiencies. Once the nature and extent of the deficiencies is clarified, the issue of how the remedial program will be funded arises.
With respect to a condominium building where repairs are required at an earlier stage than that anticipated in the condominium’s reserve fund study, the reserve fund may not be adequate to cover the required repairs. A special assessment may be necessary in such circumstances.
Consideration will also have been given to pursuing those responsible if the engineering investigation reveals errors in design, shoddy workmanship or faulty materials. Those potentially responsible may include:
* The developer and/or builder;
* The architect;
* The engineers;
* Contractors, subcontractors, and suppliers;
* Manufacturers of materials; and
* Building inspectors.
In the case of a condominium building, Ontario’s Tarion warranty program may provide some redress. However, the Tarion warranty covers only those issues discovered within the first two years after occupancy for certain problems including water leakage, but these problems often do not arise until five years or more following occupancy.
If an action is commenced, managing the action and moving it forward can be a difficult task, given the unwieldy nature of the proceedings, which will usually involve many parties and voluminous documents. It is essential that the condominium unit owners be fully informed of legal proceedings and that proper notice is given to unit owners prior to the commencement of any proceedings, pursuant to the Condominium Act. As the action progresses, unit owners should be updated and appropriate authorizations should be obtained prior to embarking on any remedial program, pursuant to the condominium’s by-laws and the Condominium Act. The condominium board should be advised by counsel and engineering experts in respect of both proceeding with legal action and remedial work.
If a legal proceeding is commenced, it will undoubtedly be aggressively defended; however, opportunities to pursue settlement will likely arise. It may be possible to resolve the dispute through negotiations between the parties. Mediation may also prove to be a useful tool for efficiently resolving a dispute. In an action involving many parties and a myriad of construction deficiencies, the challenge of reaching an early and efficient resolution may be met by establishing a structured process leading to mediation, ensuring that relevant documents are disclosed and information is shared, such that the Gordian Knot of who is responsible for what damage can be untangled.
A critical aspect of assessing likely recovery is a determination of what insurance coverage is available from various sources. Individual unit owner policies may cover some costs of rectifying internal damage to units. The condominium or building owner’s coverage may exclude the cost of making good faulty or improper design, workmanship and materials. The commercial general liability policies of the contractors and subcontractors involved in the construction will likely contain similar exclusions, as well as other relevant exclusions related to that contractor’s work.
In short, the condominium board or building owner that is faced with this type of situation is in for a long, rough ride, as are the unit owners.
As Toronto’s skyline continues to be transformed by the explosion of new high-rise construction, observers will be watching to see if the glossy image of these new towers is maintained or whether cascading glass balconies and watery suites will give rise to a significant spike in litigation related to high-rise construction deficience
Sharon Vogel is a partner in the Construction,
Engineering, Surety and Fidelity Group of the law firm Borden Ladner Gervais LLP (BLG)
and regional leader of the firm’s International Construction Projects Group.
Phone 416-367-6148; Email firstname.lastname@example.org