Carfra Lawton LLP | Victoria BC

    Strata Legislation Makes Litigation More Complex

    The Homeowner Protection Act SBC 1998 c31 was passed to try to simplify litigation by owners of strata units.  The warranties are required for most new residential units. There are 2 year, 5 year and 10 year warranties for different aspects of the building.  It is the builder who warrants the construction, and the builder must be backed by an appropriate insurer.  There are significant limits to what is covered under a home warranty. For example, consequential damage is not covered.  Therefore, if plumbing fails and causes water damage to other parts of a new home, the plumbing is warranted but consequential water damage might not be.  The builder (and insurer) would have to fix the plumbing, but the homeowner might have to look elsewhere to be compensated for the water damage, which might be the biggest loss.

    This arrangement can become even more complicated when other legal issues arise.  Broken pipes might also result in negligence claims, or claims against homeowner insurance.  If home warranty insurance is also present, does that fit into the spirit of the Homeowner Protection Act and protect strata owners from lengthy and complicated litigation?

    This issue was brought up in The Owners, Strata Plan BCS 2854 v Travelers Guarantee 2013 BCSC 2428.  In that case some strata owners brought a negligence action against contractors who designed and built their building.  The strata owners also brought a different lawsuit against their homeowner warranty provider.  The homeowner warranty provider applied to court to have both lawsuits consolidated.  The strata owners opposed, saying the whole purpose of homeowner warranty protection was to help them get some relief without going through the procedural hurdles of a negligence lawsuit.  The strara owners wanted two lawsuits; a complicated negligent construction case and a simpler homeowner warranty case.

    The Court consolidated the actions.  Instead of providing quick and efficient relief to the homeowners, in this case the homeowner warranty just became one more complicated issue in a very complicated building negligence case.  In the words of the court:

    Overall it is clear that the events giving rise to the two actions here have set in train complicated and extensive damage to the plaintiff’s property. I am unable to find a way to make the adjudication and assessment of that damage a simple and short process. Complex litigation is the result.

    Homeowner warranties can be a good idea, but they also add new parties with different legal relationships to a case where something has gone wrong with a new home.  New parties and new legal issues inevitably make cases more complex.

    Case law update by: Christopher McDougall