Who Should Pay? Who Can Pay? The Impact of Joint and Several Liability on Leaky Condo Claims

2002

 

By Chris Rusnak

A Troubling Concept
Without a doubt, the most troubling concept that I, as a lawyer, discuss with my design professional clients involved in leaky condominium litigation (and in other construction cases which have more than one defendant) is the concept of joint and several liability. Quite reasonably, most design professionals expect that their legal liability will be based on the extent of any “fault” found against them. Unfortunately, in situations where the other parties are dissolved corporate entities, insolvent, or lack insurance coverage, this is not the case. Instead, the legal principle of joint and several liability changes your exposure as a design professional in a lawsuit from “fault” to “ability to pay.”

What is Joint and Several Liability?
Joint and several liability means that if a group of defendants are found guilty, and one of those people can't pay, the other defendants are responsible for that share. For example, an apartment owner sues the architect and the developer. Assume the owner is successful and the trial judge finds that the negligence of both the developer and the architect contributed to the plaintiff's loss, with the developer being 60% liable and the architect 40% liable. If the developer is insolvent or unable to pay their 60% portion, the owner is entitled to collect the entire judgment from the architect.

The rules for the apportionment of liability among defendants are set out in the Negligence Act , R.S.B.C. 1996, c.333. This Act establishes when the principle of joint and several liability can be applied. The principle doesn't apply where the plaintiff is contributorily negligent as, for example, in circumstances where the plaintiff's own lack of maintenance led to some of the damage being claimed. On the other hand, in circumstances where the plaintiff didn't contribute to any damage, the principle of joint and several liability comes into play. In essence, the legislature has decided that in cases between an innocent plaintiff and a negligent co-defendant, the negligent co-defendant should bear the burden when the other party can't pay.

A Leaky Condominium Claim
The most notable example of how the joint and several liability concept affects leaky condominium claims is the Riverwest decision (The Owners, Strata Plan NW 3341 et al v. Canlan Ice Sports Corp. et al (2000 B.C.S.C. 1214)). The Riverwest case is the first leaky condominium lawsuit to proceed to a full trial. However, it's important to note that this case is unique, and as such, doesn't necessarily point to how leaky condominium claims will be resolved by the courts in the future.

In Riverwest, the Supreme Court of British Columbia found the project developer, designer, general contractor and the municipality of Delta liable to the owners of the Riverwest Strata Corporation for over $3 million dollars in repair costs. The owners were found to have not contributed to any of the damage, and consequently, the liability against the defendants was joint and several. The proportionate liability of each of these defendants was found as follows:

	Project Developer:	30%
	Designer:	25%
	Contractor:	25%
	Municipality:	20%

In this case, the developer had settled with the plaintiff in advance of the trial, and the designer and general contractor had insufficient funds to pay their portion of the judgment. Accordingly, the Municipality of Delta, despite being found only 20% at fault, was responsible for payment of most of the $3 million dollar judgment.

Conclusion

The principle of joint and several liability may apply to cases with more than one co-defendant. It is difficult to protect yourself from the application of this principle once a lawsuit has begun. However, if care is taken at the start of a project with respect to contractual and insurance arrangements, exposure to the hardship of joint and several liability can be minimized. Consultation with a lawyer at the early stages of a project, before the contracts are signed and the insurance policies are issued, can help resolve these issues, and others.