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Case Study: Bell v. Olympia & York Development Ltd.
Bell Canada v. Olympia & York
Development Ltd.
Bell Canada sues Olympia & York Developments Limited for $15,760,144.23 as the cost of repairs carried out by Bell Canada to a 10-storey garage forming part of the Place Bell Canada office tower complex in Ottawa. Bell Canada (hereinafter Bell) also sues for an additional $4,064,684.00 for the cost of certain earthquake reinforcement it says is required in the office tower itself. I will frequently refer to this complex as "PBC". The claims are primarily based in contract, but there is a further claim in tort alleging breach by Olympia & York (hereinafter O & Y) of certain of its obligations as vendor of the property. The main dispute centres on damage caused by water containing salt which permeated into the concrete floor slabs in the garage. This, Bell claims, caused corrosion to the reinforcing steel bars and cables inside the slabs, and led to the rupture of some of the cables. The defendant, O & Y, has launched a third party claim against the City of Ottawa and against the Regional Municipality of Ottawa-Carleton, asking for contribution or indemnity or other relief over on the ground that, if salt caused any damage to the plaintiff's garage, that salt had been placed by the two municipalities on their roads for melting of ice and snow, and was then transported into the garage on the undercarriages of vehicles using the roads. The named defendant Jablonsky has been let out of the action, following a settlement with the plaintiff during trial. In the late 1960s, Bell desired to have built on land it owned in Ottawa a major office tower to meet its then and future needs. To this end, Bell entered into a contract to lease its land to O & Y under a long-term lease; and O & Y agreed to construct, on its own account and at its own expense, an office tower and garage meeting Bell's specifications and requirements. Further, O & Y agreed to lease back the majority of the space in the office tower to Bell, and the balance to others. O & Y would recoup its expenses and obtain its profits from the rents. O & Y would remain the owner of the buildings until the end of the 52 1/2 year lease term, when Bell would become the owner of the buildings without any payment in addition to the rent stipulated. As well, Bell obtained a first right of refusal in the event that during the term of the lease, O & Y should desire to sell the buildings. In 1969, two important contractual documents were executed; first a "Build-Lease Agreement", followed by a more formal "Ground Lease". Beginning in 1969, the tower and the garage were constructed by O & Y on the land. In 1972, the construction was completed and Bell, together with other tenants, entered into occupation of the building and began to pay rent to O & Y. The lease of space in the building to Bell, Exhibit 405, is dated as of April 28, 1972. I think it can safely be taken that Bell was in occupancy by 1 May 1972; and that date may be taken as an effective acceptance of the building by Bell. As owner, O & Y managed the buildings and was responsible contractually for their maintenance and repair.Much will turn upon the scope of that contractual responsibility. As well, both Bell and O & Y shared in any profits from the operation of the buildings. The ground rent to be paid by O & Y included an additional amount of rent depending upon the profitability of the operation of the complex including the garage. Further, the space leases which governed Bell's occupancy of a substantial number of floors in the office tower required it to pay its proportionate share of the increased operating costs of the buildings over and above the base year's operating costs. It will be necessary to examine some aspects of these contractual documents in more depth. After the completion of the buildings and their acceptance by Bell in 1972, matters remained relatively stable until 1979.Late in that year, O & Y decided to avail itself of its contractual right to sell the buildings and accordingly offered them first to Bell who decided to purchase them. An Offer to Purchase was drawn up and executed, followed by an assignment of the existing Ground Lease by O & Y to Bell the ("Ground Lease") on January 31, 1980. At that point the parties ended their contractual relationship, except that O & Y continued to manage the buildings under a management contract with Bell for a further 15 months until the end of April 1981, at which time their contractual relations ended. Thereafter, troubles began to manifest themselves in the garage, although their full history takes us back again to 1979 and even earlier. In any event, in 1983 Bell engaged an engineer to investigate the overall condition of the garage. No question arose at that time about the office tower. This investigation eventually led to substantial expenditures on Bell's part, and the writ in this action was issued in late 1984. The earthquake claim, relative to the tower only, was first raised sometime in 1986 and added to the action by amendment. Briefly, the garage claim centres on eruptions of certain post-tensioned tendons in the concrete slabs which make up the parking floors. In these slabs, there are conventional steel reinforcing bars, but the major part of the steel reinforcement consists of long steel cables extending from one side of the slab to the other. They run both in the northsouth and east-west directions. After the concrete hardens, these cables are stressed by means of a jack, and held in place under tension by wedges and anchors.The stress on them amounts to thousands of pounds each, and there are approximately 500 cables in each slab. Their purpose, broadly speaking, is to provide structural reinforcement for the concrete by putting it under pressure and thus preventing the slab from sagging and cracking, which will occur normally with the use of conventional reinforcing bars only. There is evidence that, beginning about 1975, although the dates are uncertain, tendon eruptions were noticed in the garage by several workmen, but they were considered unimportant at the time. In any event, in August 1979, or about seven or eight years after the completion of the garage, several tendons were again noticed to have erupted out of the surface of the slabs. The defendant O & Y engaged the Jablonsky firm of engineers to report on the matter. Since the tendons were inside the concrete slabs, it was not possible to examine them completely without pulling them out.After an examination of the garage, Jablonsky advised O & Y that no structural problem existed as the eruptions were likely a delayed reaction to some problems experienced at the time of construction. Besides, there were only a few eruptions out of approximately 4,000 tendons. At the trial, it was not seriously disputed that in fact these eruptions were caused by salty water which had permeated through the concrete and so corroded the tendons that they broke under the stress applied to them. In late 1980, another cable eruption was noticed and investigated again by Jablonsky under instructions from O & Y. Bell denies any contemporaneous knowledge of either the 1979 or the 1980 eruptions. The Jablonsky firm again advised that the 1980 eruption did not indicate a structural problem. However, in 1982 there was a further eruption which came to Bell's attention as the owner, and Bell requested Jablonsky to investigate.Subsequently Bell learned of the earlier eruptions. Jablonsky was now concerned about salt-induced corrosion of the stressed tendons and recommended a thorough investigation. In 1983, Bell commissioned a garage investigation which in turn led to a broad range of further investigations, to extensive work to meet the problems arising from the tendon conditions, and to other work in the garage, which showed signs of deterioration to ramps, pre-cast concrete wall cladding, delaminated slab surfaces, canopy roof repairs and so on. The course of this extensive work was largely finished by the spring of 1991. The claim in tort seeks the same sum in damages as does the claim in contract. The claim for earthquake strengthening for the office tower is based on the allegation that, when designed and built, the tower did not conform to the earthquake strengthening requirements of the applicable building codes. In very general terms, the major issues that are raised include the following:
So that the reader will not think that this lengthy trial was as dull as dishwater (or concrete?), I reproduce a comment made in a moment of plaintive eloquence by one of the witnesses during his cross-examination. It is as follows:
It is an apt description of this case, in which the trial commenced on September 26, 1988. While conflicting expert evidence is not a novelty in modern litigation, in this case the expert evidence was unusually voluminous. Each of the many experts was examined and cross-examined for lengthy periods of time – measured not in hours or days but often in weeks. It is fair to say that counsel left no stone unturned, and some stones were worn smooth by repeated turnings. A trial judge should proceed with extra caution in a lengthy case such as this where the subject is of enormous technical subtlety and complexity. I think it would be helpful to delineate the duties and obligations of a trial judge in these circumstances. An early case which dealt with the weighing of conflicting evidence is Clarke v. Edinburgh Tramways 1919, S.C. (H.L.) 35, which has been approved more than once by the Supreme Court of Canada. It is high authority that where there are no clear issues of credibility, and where matters between the parties are rather evenly balanced, the trial judge need not recite in detail every minute finding of fact. Lord Shaw of Dumfermline said at page 36:
Thus, it may not be possible to articulate with particularity why evidence has been accepted or rejected, or why a given conclusion or inference of fact has been reached. Another useful authority is Powell v. Streatham Manor Nursing Home [1935] A.C. 243 where Viscount Sankey observed at p. 251 that at the trial;
And, at page 267, Lord Wright said;
That is very like the present case. As presented at trial, this case does not depend upon the answer to a single technical question. Instead there is a myriad of technical issues, some of them exceedingly narrow, with a range of experts testifying on each of them. As a result, it is impossible to focus on a single issue, and to weigh the expert evidence on that alone. It is not a case where conclusions of fact can safely be based upon particular answers to particular questions; it is rather one where regard must be had to the weight on balance of the evidence of the various witnesses. It is useful to quote from Lieberman J.'s judgment in Tiesmaki v. Wilson [1974] 4 W.W.R. 19, at page 34 where he said;
That observation too, is directly applicable to this case where precision of language is essential. While many of the questions posed to the witnesses were imprecise, convoluted and lengthy, the expert witnesses strove to answer with precision. The expert is more cognizant of the dangers of failing to use the precisely appropriate technical language in an extremely difficult area of expertise. In this case, given the lengthy examinations of each witness, it is inevitable that a minute search may uncover apparent discrepancies between one answer and another in the evidence of the same witness. Equally, it is not always possible to find answers which are expressed with absolute clarity. The process of finding the facts sometimes depends upon answers, which on close examination, or in isolation, may appear to admit of more than one interpretation. It also depends upon situations where the transcript, despite the yeoman efforts of the court reporters, does not or cannot do justice to the ebb and flow of the oral expression of the witnesses as they attempt to deal with lengthy and ambiguously-worded questions about highly technical matters. Even the hardiest witness, after hours or days of questioning, may tire, and this affects the quality of the responses. It is inevitable that some passages in the 35000 odd pages of transcript (plus a roughly similar quantity of exhibits) may not appear to jibe entirely with the findings I will make based upon the evidence. This is unavoidable, for if I were to endeavour to scrutinize and parse every word, phrase, sentence, or answer of even one witness, and to attempt to reconcile and compare each of them with every other word, phrase, sentence or answer of the same witness, these reasons would be both unintelligible and unending. It is better to take a global view, and without ignoring such inconsistencies, attempt to arrive at the thrust of a witness's evidence on the important points in issue. Although I am obliged to make choices among the experts, and to make findings based upon the conflicting expert opinions I have heard, I do so as a trial judge, not as a super-expert. Our system of dispute resolution places upon a trial judge the initial responsibility of viewing expert opinions as matters of fact.It would be folly to assume that the judge possesses a superior expertise. The task of the judge is only to make factual choices from among the various opinions presented at trial, not to arrive at a better solution than any of the experts themselves. In endeavouring to discharge my responsibility as the trier of fact, I must weigh the opposing evidence upon a broad basis. This means I must consider the conflicting theories and opinions, and measure them against each other and against the other objective evidence and facts to arrive at conclusions which take into account the relevant evidence as a whole, the objective facts, the balance of probabilities, and the inherent reasonableness of the opinions.I can attempt to do no more; I hope to do no less. I will first deal with the claim in contract. It is by far the largest claim.Next should come a consideration of the damages claimed in contract; to be followed by the claims asserted and damages claimed in tort. When these claims related to the garage have been disposed of, I shall turn to the seismic claim, the only one which involves the office tower. Lastly, I will examine the claims for contribution, indemnity and other relief over brought by O & Y against the third parties, the City of Ottawa and the Regional Municipality of Ottawa-Carleton (hereinafter "Ottawa" and the "Region" respectively). I N D E X CHAPTER
VIDISPOSITION I.THE GARAGE CONTRACT CLAIM The initial Build-Lease Agreement was a rather rudimentary document or series of documents. Its date of execution is unclear, but it was probably not signed until after February 19, 1969. The various parts of the document seem to be cobbled together.It is simply addressed to Bell Canada and describes the transaction broadly in about a dozen lines. On the next page is a document headed "Agreement" which begins: "Bell Canada: 1. Will hold itself out as willing to purchase the one mortgage...etc."The next page begins: "Olympia & York: 1. Has a building concept which Bell approves, see Exhibit 2." This Exhibit is the "Outline Specifications". There was apparently no other contract between the parties, until the formal "Ground Lease" was entered into a year or two later. Obviously the parties were engaged in a transaction requiring a good deal of goodwill and cooperation between them, which qualities continued at least until 1980, if not until 1983. This agreement contains several important paragraphs, but I will defer reproducing them until later, when I reach the areas of dispute which spring from them. 1. Relevant Contractual Clauses in the Ground Lease and Later Contractual Documents The next agreement chronologically after the Build-Lease Agreement is the Ground Lease. This document, in which Bell is called the lessor and O & Y the lessee, is made as of November 1, 1969, and provides for the lease to O & Y of Bell's land in Ottawa for 37 1/2 years, with an option to O & Y to renew it for a further 15 years. It contains several articles which are relied upon by Bell. Article VI is central to the case. It places the sole responsibility for maintenance of the premises upon O & Y in these terms:
As already related, O & Y decided in 1979 to sell the buildings. It had the right to do so, provided only that Bell be given a right of first refusal on the same terms and conditions.The applicable clause in the Ground Lease reads as follows:
Accordingly, O & Y made a written offer to sell the buildings to Bell, who decided to buy them. The document employed was called an Offer to Purchase. It contained the following clause, giving Bell a right to inspect the buildings for compliance with all relevant codes, and the right to withdraw from the purchase if unsatisfied, or to waive the condition.
On January 31, 1980, O & Y formally assigned all its rights to Bell by an Assignment of Lease which contained the following term upon which Bell relies in this action:
The first six lines of the above clause contain the terms which are important to this case. The repair covenant is undoubtedly a broad one, encompassing repairs whether structural or non-structural, ordinary or extraordinary. Should the covenant be regarded as a tenant's obligation to repair, or a landlord's obligation? O & Y is described as "the Lessee" throughout the Ground Lease, but in fact it was the owner of both the tower and the garage, and it leased space in the tower to Bell, who occupied that space as a tenant of O & Y.O & Y operated the garage as its owner, and shared any profits with Bell in a manner set out in the Ground Lease. O & Y was the lessee of the land only. In spite of the terminology used, on the facts of this case, O & Y was indisputably in the position of lessor of the buildings, and Bell in the position of lessee. If anything turns on it, I am of the view that O & Y should accordingly be regarded as the lessor of the buildings and not as the lessee. The nomenclature must give way to reality. 2. Principal Issues The principal issues that arise in Bell's claim in contract may be expanded upon as follows:
Bell says that O & Y is liable to make all repairs which needed to be made as of or prior to the purchase by Bell, that is January 31, 1980, whether or not O & Y had any knowledge of the need for repair. O & Y says that its liability to repair is limited to those repairs of which it had knowledge on or before that date, and that its liability is further limited by the then state of the engineering and construction arts, both as to the need for repairs, and as to the type or extent of repairs which the state of the art would have dictated or permitted at that time. If O & Y's knowledge is relevant, it must be knowledge possessed by O & Y before the sale.Knowledge acquired by O & Y only after the sale cannot be pertinent. A further complication in this connection is that the relevant state of the art was undergoing rapid change in the early 1980's. Precisely when the changes began is difficult to determine. It is not at all easy to ascertain what engineers and construction people knew in late 1979,or ought to have known, about the kinds of problems that we now know plagued the Place Bell Canada garage in Ottawa. There is in the record much evidence of contemporary observations, and much opinion evidence from a later date, about what engineers and others knew or ought to have known and understood in 1979 about post-tensioned tendons, about concrete, about chlorides, and about their interactions. Here, as in other aspects of this case, the problem of "hindsight" intrudes. When those issues are resolved, it will then remain to assess the appropriate damages. To aid the reader in understanding what follows, it is useful to state now what my conclusions are:
The evidence on all of these matters is enormously voluminous and almost infinitely detailed.Many experts were called on both sides; their evidence and opinions conflict at every turn.It is impossible for me to refer to all of the evidence or even to all of the witnesses. I must of course mention some parts of the evidence for the sake of clarity, but in doing so I do not mean to suggest that I rely only on that evidence and disregard other evidence not mentioned. Frequently, I may be able to refer only to types or categories of evidence. Many of my conclusions are drawn from a global consideration of all of the evidence, having heard it during the trial, having received oral and written arguments about it, and having read a good deal of the transcript of the evidence, as well as the written arguments. 3. Absolute Liability vs. Knowledge The repair covenant quoted above is undeniably broad, extending to repairs both exterior and interior, ordinary and extraordinary, structural and non-structural. But is it in effect an insurance type of liability, which would operate even if the covenantor has no knowledge of the need for repair? Does paragraph 3 in the Assignment of Lease add anything to the repair covenant itself? In my opinion, it does not. It may bring the original repair covenant of 1969, up to date as of January 31, 1980, but this is really unnecessary, as the repair covenant is a continuing one, remaining effective until the transfer to Bell of all of O & Y's interests in 1980.I do not regard paragraph 3 of the Assignment of Lease as broadening in any way the provisions contained in the repair covenant itself. However, in my view, the liability imposed by the repair covenant depends very much on O & Y's state of knowledge and understanding of the need for repairs prior to February 1, 1980, when the sale was effected. The covenant is primarily aimed at requiring O & Y to make the repairs covered by the repair clause during the currency of the lease. That is, the covenant places on O & Y an obligation to act in order to effect the needed repairs. The covenant is not drawn merely to place upon O & Y an obligation to pay monetary damages in recompense for inaction on its part.Rather, the covenant is designed to have the repairs contemplated actually carried out by O & Y. Viewed from this angle, it is clear that such a covenant must mean that O & Y is required to make only those repairs of which it has knowledge, or at the most, of which it ought to have knowledge. How could it be said of O & Y during the lease currency, that, where it has no knowledge that certain repairs are needed, it is yet obliged to carry them out? That appears to me, with all respect for those who hold a contrary opinion, to be an unreasonable interpretation of the language used. In general, knowledge of the need for
repairs is a usual component of any liability to make repairs. Courts
have with great consistency interpreted repair clauses as requiring knowledge
on the part of the covenantor before an obligation to repair is enforced.For
example, regard may be had to O'Brien v. Robinson, [1973] 1 All E.R. 583, a
decision of the House of Lords.In that case the tenant sued the
landlord for damages suffered as a result of a ceiling falling down. The
fall of the ceiling was caused by a latent defect in the ceiling of which neither
the plaintiffs (tenants), nor the defendant (landlord), were aware until the
fall took place. The action was based on the contention of the plaintiff that
the landlord was liable for the damages in spite of having no knowledge of
the need for repair. The headnote summarizes the
decision compendiously as
Four of the five Law Lords hearing the appeal concurred expressly in the reasons delivered by Lord Diplock, who first reviewed the history of decisions relative to the point at issue. Then at page 593 he states:
Lord Diplock went on to say that the House would not be justified in altering the law as it appeared to have been well settled, and four of the five members of the court expressly agreed with him.I am comforted by the weight of authority of the O'Brien case and think the same principle ought to be applied in the present one, even if the facts are not identical. The plaintiff relies on the decision of the Supreme Court of Canada in Fraser-Reid v. Droumtsekas, [1980] 1 S.C.R. 720. That is, in my respectful view, quite a different case. There, the court held that the builder had knowingly breached a by-law in the construction of the house and had deliberately hidden the results of that breach from view, so that a prospective purchaser would not be able to discover it. It was not a case involving a repair covenant by a landlord, but was a claim by a purchaser of property against the vendor. I can see nothing in the wording of Article VI of the Ground Lease, previously quoted, which excludes knowledge. Thus when I come to consider a claim for monetary damages for an alleged failure to make the repairs called for by the clause, I conclude that damages can be claimed only for those repairs of which O & Y had knowledge at the relevant time, or of which it ought to have had knowledge. O & Y relies on the exceptions for "reasonable wear and tear" in the covenant, but in my opinion, this exception plays little or no role in the circumstances of this case. Similar reasoning applies, in my opinion, to the nature of the repairs required to be done at any given time. If we look at the matter as of January 31, 1980, it is clear that O & Y could only have been called upon under its repair covenant to make repairs which fell within the then existing state of the art; and it could not have been obliged to make further or other repairs.The claim in damages cannot be given a wider or larger ambit than the extent of the obligation to do the work. Thus in my respectful opinion, the broad obligation of repair under Article VI is subject to at least 3 limitations important to this case. They are:
From and after its purchase of the property, Bell as the new owner assumed all obligations of repair to the buildings, subject only to whatever claim for damages it might have against O & Y for its failure to comply with the repair clause before that date.Bell's obligation to repair its own buildings is of course not affected, nor to be measured, by the contractual repair obligation between it and O & Y. So long as O & Y was bound by the obligation to repair in Article VI, it was of course under a continuing obligation to repair.Thus if it made some repairs to the building in 1975; and in let us say, 1978, those repairs failed, O & Y nevertheless remained bound by the repair obligation and would be bound to carry out further repairs; and so on, so long as it remained bound by the repair covenant. This sort of thing indeed occurred with regard to an expansion joint which required repeated repairs during the 1970s because none of the repair efforts were entirely successful.The continuing nature of the repair covenant thus gave a corrective in any case of inadequate repair, although the corrective applied only so long as O & Y remained bound by the terms of Article VI. Although O & Y is responsible in damages for repairs it ought to have made before January 31, 1980, it is not responsible for types of repairs made possible only by an improving state of the art after that date.In other words, it would not be either just or reasonable now, in 1992, to hold O & Y responsible for an amount of damages commensurate only with a state of the art developed long after the repair responsibility came to an end. For this reason it was particularly important for Bell, when it proposed to become owner, and thus put an end to O & Y's repair obligation, to ensure by inspection that it was fully aware of the then condition of the buildings. Such an inspection was provided for by the Offer to Purchase that it accepted, in paragraph 5, already quoted at page 21.Bell, however, relying upon its familiarity with the buildings, failed to carry out any inspection at all. Further, nothing in the repair covenant required that any repair made by O & Y last effectively until the end of the lease.Such a requirement would mean that O & Y's repair obligation did not end when it sold the buildings, but continued. That would be an unreasonable interpretation. My conclusion is that the repair obligations of Article VI of the Ground Lease are not absolute in the sense argued for by the plaintiff. I do not believe that this interpretation adds any words to the clause. This conclusion will require me to examine the extent of O & Y's knowledge prior to January 31, 1980, when Bell became the owner of the buildings, and O & Y's further repair obligations ceased. 4. Components of the Garage Having determined that O & Y's knowledge limits its repair liability, what knowledge of the need for repairs did O & Y have, or ought it to have had, prior to January 31, 1980? This is the next question to be confronted. The plaintiff focuses on a number of specific garage components which I will now describe.
5. The Conflicting Evidence of Non-Repair and O & Y's Knowledge Thereof in 1979 With regard to O & Y's actual or constructive knowledge, there was much evidence of actual observations of the garage made in or before 1979 with respect to the condition of repair of the several components. First of all, O & Y had a staff of employees on site, responsible for both the office tower and the garage. Then there were inspections by other O & Y personnel; and there were inspections of the garage by members of the Jablonsky firm in August 1979, concerning some reported tendon eruptions.The defendant relies on this evidence. The plaintiff's chief reliance, apart from its argument that knowledge on the part of O & Y is quite unnecessary, is upon the evidence of engineers who, upon the basis of observations of the garage made in or after 1983, expressed opinions about the condition of the garage and its components in 1979. None of these persons saw the garage until at least four years later. The plaintiff also relies on the evidence of certain former employees of O & Y concerning tendon eruptions observed by them in the garage over a period of several years before 1979. I begin with a brief resumé of the observations of the garage condition made before Bell's purchase. (a)The Jablonsky Investigation in 1979 In August 1979, O & Y employees saw two tendons, which had been buried in the slabs, but were now protruding.They reported them to John Norris, a vice-president, who engaged the Jablonsky firm to investigate and report. Jablonsky was chosen because it had been the structural design engineer for the project at its inception ten years or so earlier. The plaintiff criticizes the choice of this firm, but in my view, it was the right choice. It was a leading structural engineering firm in Ontario; and its personnel knew more about the structural aspects of the garage than did any other engineers. A senior technician of that firm, Minski, made an inspection of the garage and of the two tendons, and discovered two more eruptions. He made a thorough inspection of the garage as well and made a detailed report to Garshon and Jablonsky, partners in the firm. Each of them also visited the garage that month. Garshon wrote the formal report: (see Exhibit 2, Tab 219). It is an important document. It described the four erupted tendons and concluded that they did not represent a structural problem. It recommended that they be cut off and the concrete patched. This was done. Although it is not in the letter, Garshon and his colleagues concluded that the erupted tendons resulted from some problems with the anchor wedges which had occurred during the construction of the garage about ten years earlier. In the course of his inspection, Minski also observed some other conditions in the garage which he felt called for repairs. There was a 30-foot crack in the soffit of one slab, near its edge, caused, it appeared, by some notches cut in the slab in order to make some of the pre-cast cladding panels fit. As well, Minski saw that the bearing connections of some of the panels were deteriorated, and needed repair.Bearing connections are the steel connections joining the pre-cast panels to the edges of the slabs. Minski, and the Jablonsky firm, recommended in writing to O & Y that these two conditions be repaired. They were not repaired, and unquestionably, the defendant O & Y is liable for the cost of making good these conditions. None of the Jablonsky personnel, two of them experienced structural engineers, who went to the garage for the express purpose of examining its condition, saw any other condition of non-repair, or any other condition needing repair. Minski's examination was the most thorough: although his original mandate was a limited one, he evidently inspected the entire garage, spending the greater part of a day there.Garshon had briefed him about what to look for in such situations. Garshon himself made a less thorough examination; but he too looked for specific signs of distress in a reinforced concrete garage, but saw no such signs. Jablonsky's own visit to the garage in August 1979 was also brief, and he looked at only a few floors.He too looked for signs of distress in the garage such as cracks and spalling, but did not see any. In 1979, as a leading structural engineer in Ontario, Jablonsky, like his peers, believed that a post-tensioned garage needed no maintenance. Although he understood that steel could corrode in concrete, he did not understand that salty water could penetrate uncracked concrete, and indeed, believed the contrary. In this he was not alone.A consideration of all of the evidence makes it clear, and I find, that at that time, structural engineers in the building field generally shared Jablonsky's beliefs. Regrettable though it may be, and though it may be a black mark upon the engineering profession, the state of the art in the relevant engineering fields in 1979 did not go further. After 1983, the picture began to change, but that cannot assist the plaintiff.Janney, an American engineer who testified for the plaintiff, may have had a better understanding than others in 1979; but even he had not at that time any experience of the type of situation which, after 1983, became clear at the PBC garage. The glimmerings of one American engineer alone do not constitute the state of the art by which Jablonsky and Garshon, and the defendant, are to be measured as of 1979. They must be measured by their peers, i.e., by other leading structural engineers, and by other constructors in Ontario. The Jablonsky people who saw the garage in 1979 were experienced, responsible and careful. I was impressed by their evidence. They observed the tendon eruptions, but, limited by the state of the art of the time, they did not understand the corrosive developments that may have been taking place within the concrete slabs; nor did other leading and experienced structural engineers, not only in Toronto and in Ontario, but widely throughout North America, at that time. (b) Other Garage Observations in 1979 Apart from the two items already mentioned, namely the one cracked slab and the panel connections, there is very little evidence of anything wrong with the slabs before the end of January 1980. For example, no one saw any delamination, which is a horizontal cracking of the concrete a short distance below the surface, caused by corrosion and consequent expansion of the top reinforcing bars. There are no visible signs of delamination on the surface of the concrete.Delamination was found in 1983, but no one saw it before then, and certainly not before January 31, 1980. The exterior edges of the slabs could not be readily seen in 1979, nor indeed until 1985, because of the pre-cast panels and louvres which effectively covered them. A small mirror might have enabled some observations of the slab edge, but no one used this method before the sale to Bell. On all of the evidence, there was no reason for anyone to do so in 1979, given the then state of the art, and the prevailing belief that post-tensioned slabs were immune to the permeation of salty water, and hence immune to corrosion. There is almost no evidence that anyone in or before 1979 observed any significant cracking or spalling of the slabs, nor any efflorescence, nor stains, nor stalactites. The evidence showed that the slabs were remarkably crack-free in 1979. There is no evidence of any problem with the interior slab edges, i.e., those which are adjacent to the spiral ramps, in 1979 or early 1980. No repairs were done to them until late in the 1980s. The only person who claimed to see any cracks in the slabs in 1979 was O'Neill, who wrote a letter in June 1979. There, he speaks of cracks in the slabs, and of salt penetration; and suggests injecting epoxy into the cracks to protect the steel.No one else, of the many who worked in or inspected the garage, saw any cracks, except the 30-foot soffit crack previously mentioned, whose origin was unique. O'Neill also mentions water penetrating right through the slabs, and forming stalactites. No one else reported any such thing. Viewed with the benefits of hindsight, his comments are surprisingly on target. The plaintiff relies heavily on his warnings and says that O & Y ought to have heeded them.Is that correct? Should O & Y have ignored the expertise of its own people, such as Norris, with many years of experience in construction, and the expertise of the Jablonsky firm, who were leading structural engineers in Ontario? I do not think so.Without the benefit of hindsight, I do not think that O & Y can be faulted for rejecting the observations of a subcontractor who, they believed, was merely attempting to drum-up business for himself, and who could naturally be expected to propose a more elaborate range of repairs than was necessary. O & Y's own observations, and those of its experts, did not support O'Neill's suggestions. As well, some other people who had examined the garage in 1979 with a view to doing some other repairs did not agree with O'Neill's observations. None of the engineers, Jablonsky, Garshon, or Minski, a skilled technician, saw any structural problems. Another subcontractor, Irving, who inspected the garage slabs late in 1978 or early 1979, reported them to be in good condition, with no spalling or cracking. Considering all of the evidence on the point, I conclude that the concrete slabs in the garage appeared in 1979 to be in good condition, with no need of repairs. There had been problems with the canopy for some time before 1979; O & Y had engaged contractors to do repairs on several occasions. These repairs were done, and were successful for a period of time, but none seemed to be entirely successful from a longer term point of view. However, following some repairs done in 1978, there did not appear to be any further problems; and this condition continued through the period of the purchase by Bell, and for some years afterwards. My conclusion is, on all of the evidence, that at the time of purchase, it was in a proper state of repair. Alexander, an engineer engaged by Bell in 1983 to investigate the garage, said that it was not until 1987 that he was aware of any problem with the canopy. The expansion joints also had been troublesome over a number of years before 1979, and had been repaired more than once. Each time it was felt that the problem was solved, but each time more leaking developed. My conclusion on all of the evidence is that at the time of the sale to Bell, it reasonably appeared that this problem had finally been solved, and O & Y had no knowledge or information to the contrary. There was accordingly no state of disrepair with respect to the expansion joints. There is no evidence that O & Y saw or was aware of any problem with the columns prior to the sale to Bell. In fact, even after Bell began extensive repairs to the garage in 1983, Bell itself did not look at the columns until 1985 or 1986, some six years after it had purchased the buildings. It is quite clear, and I so find, that in 1979, and prior to the sale to Bell, O & Y had no reason to suspect any lack of repair of the columns. Bell complains about the entrance ramps, which lead from the streets up to the first parking level. They had been built with embedded heating cables to prevent their icing in winter weather. However, these cables quickly became inoperative, and for quite a few years before the sale to Bell, the ramps were cleared of snow and ice by other means. Effectively, the cable system had been abandoned. Bell claims that the failure of the cable system shortly after 1972 was a non-repair item as of January 1980. I am unable to agree. Following the abandonment of the cable system early in the 1970s, no one viewed its demise as a condition of non-repair. The garage continued to be accessible to cars for entry and exit during winter conditions. Turning to the spiral ramps, there is no evidence of any need for repair to them at the date of purchase by Bell. Beginning in 1981 Bell commenced to make some repairs by way of fixing some pot-holes and spalling. It did the work on the Up ramp in that year, and on the Down ramp in the following year. The total cost was about $16,500.00.In any event, that type of repair is consonant with the type of repairs that O & Y had been making to the garage right up to the date of its purchase by Bell; and suggests strongly that the state of the art had not changed as late as 1981, or even 1982. At the time of doing this work, Bell did not take the position that it was the responsibility of O & Y; nor that there had been any condition of non-repair of these ramps at the date of purchase. Rather, it viewed the situation as being merely ongoing maintenance of the garage. After the opening of the garage in 1972, many Bell personnel, including senior people experienced in building operations, in engineering, in construction, and in architecture, used the garage daily for parking. They could not be expected to inspect it in a formal sense, but if there had been numbers of tendon eruptions, or major pot-holes in the slabs or the ramps, or other signs of deterioration and need of repair, it is likely that at least one of them would have spotted it and reported it in some way to O & Y. The Bell personnel and the O & Y personnel, at least until some time after the purchase, worked closely together and relations between them appear to have been good. In addition to the specific inspection in 1979 by the Jablonsky personnel, many employees of O & Y saw the garage in the period before its purchase by Bell. There was a maintenance staff in Ottawa, responsible for the O & Y buildings there, including the PBC complex. These people were in the garage on a regular basis. As related already, maintenance and repair work was an on-going function, especially concerning the expansion joints and exterior canopy of the garage. In addition, in 1979 a major repair job was done on the perimeter curbs of the garage slabs. These curbs simply reposed on the slabs, at the outer edge; they had and have no structural function.By 1979 large portions of them were seen to be deteriorating and they were replaced where needed. Further, an asphalt coating was placed over and around the curbs to protect them from water and to deflect any water on the slab surfaces back toward the floor drains. There were also tours of inspection by more senior O & Y personnel. In May 1979, Norris, a vice-president, and Koski made an inspection of the garage; and Norris wrote a memorandum about the need for curb repairs and asphalting. Gringorten, another senior man, inspected the office tower and the garage in August 1979; only items 1, 2 and 15 of his report relate to the garage. The carefulness of his observations is evident throughout this document. Some pictures taken by Spicer in 1979 deserve comment. He was the O & Y property manager in Ottawa. At first glance, they appear to tell a damaging tale; but we must try to look at them with 1979 eyes, not with 1992 eyes. One erupted tendon is shown; it and another led to the Jablonsky firm's inspection and report. There is one badly corroded anchor on one of the cladding panels. This was revealed by the curb repair work being done concurrently. The evidence is that the picture represents the only such panel, and it was repaired shortly after. The pictures also reveal other manifestations of an eight year old structure. The important thing, though, is that in 1979 neither these pictures nor the conditions they showed caused any alarm, except for the tendon eruptions. None of the many experienced people who saw or inspected the garage in or before 1979 saw any need for repairs, other than those already underway or completed prior to Bell's purchase. Garshon reported the garage to be in very good shape, subject only to the one or two problems expressly mentioned in his report. Both Jablonsky and Minski concurred in this assessment. I have no hesitation in accepting their observations and their conclusions.I was impressed by their evidence, which must be evaluated in the light of the state of the art of engineering knowledge and understanding of those matters at that time. (c) Pre-1979 Tendon Eruptions Another important area of evidence relates to erupted tendons observed in the garage even before 1979 by various former O & Y employees. Most of these men were employed in the group whose responsibility was the maintenance and operation of the PBC complex, including the garage. Some did the actual work, others like Stephanson, held supervisory positions. Based upon this evidence, the plaintiff argues that O & Y knew or ought to have known about earlier tendon eruptions in the garage, and ought to have passed this information on to the Jablonsky firm in connection with its 1979 investigation; and that with such knowledge, the Jablonsky firm would have made further investigations which would have revealed that the tendons were badly corroded inside the slabs. The evidence about the earlier tendon eruptions is very difficult to unravel and to analyze. The witnesses contradicted each other repeatedly. I have no doubt that the men were trying to be accurate, but there are many difficulties to consider. They were giving their evidence in the late 1980s and even into 1990, yet they were being asked about events dating back as far as 1977. There were no records of their observations to assist in identifying the locations or the dates of such occurrences. After ten years or more, memories of dates and locations quite understandably become unreliable. Because each level of the garage very much resembles every other level, it is very difficult to differentiate one from another, especially after such a lapse of time. Further, there is not much to distinguish one quadrant of a floor in the garage from another quadrant. None of the men involved had any responsibility for the garage slabs, nor for the tendons within them. The plaintiff argues that there were at least 10 known tendon eruptions before 1979. This view ignores the inherent difficulties in this evidence. Without going into elaborate detail, after a careful review of the evidence of all of these men, I conclude that there were only two eruptions before 1979, seen by Multari and Campeau. There were some others after 1979; but these occurred during Bell's ownership and cannot be used to mount an attack onO & Y. Multari claims to have seen another tendon projecting into Metcalfe Street before 1979, but I believe he is simply mistaken about the date.He must be referring to the similar occurrence in 1980 which was reported to and investigated by Minski. The evidence of other alleged occurrences is so imprecise, and so contradictory, that it is not reliable. I do not propose to canvass it in detail, but only to mention one or two other instances. Although Multari and Campeau say that they reported their observations to Stephanson, their supervisor, he denies this. I am confident that if Stephanson had been informed, he would have reported it in writing to head office; there is no evidence of any such report. Considering all the evidence, I am unable to conclude that any report of any pre-1979 tendon eruption was ever made to Stephanson. On all the evidence it is perfectly clear that no one had even the faintest idea of the significance of these early eruptions, nor of their causes, whatever they may have been. The tendons were simply cut off and the concrete patched over.
Irving, a subcontractor for O & Y, said he saw a tendon hanging from the ceiling of one of the slabs. This might have been in 1978, but he was very unsure of the date.In any event, he subsequently wrote a lengthy letter to O & Y regarding his observations in the garage, and although he mentioned a number of other items, he did not mention any erupted tendon. Irving was in the garage on a number of other occasions too. I am not persuaded on all of the evidence that his dating of the occurrence is correct. He could well be referring to one of the tendons examined by Minski in 1979, or even a later occurrence. The tendons seen by Spicer were reported to Norris and led to Minski's 1979 inspection. In conclusion, I find that the two eruptions which occurred before 1979 were not understood by anyone; they were not reported to anyone in authority; they were simply cut off, and patched over, and forgotten about for many years, with no record of them being made or kept. No information about them reached any responsible official of O & Y; and the corporate entity should not be fixed with knowledge of them. As to the other alleged incidents recounted in the confusing and contradictory evidence, I am satisfied that the witnesses are either mistaken in their memories; or are referring, as best they remember them, to those that I have already dealt with; or the incidents they refer to occurred after Bell became the owner. In 1979 when tendon eruptions were reported to Norris, and the Jablonsky firm was engaged, no one recalled any of the earlier incidents. Accordingly, in 1979, neither O & Y nor Jablonsky were aware of any previous tendon failures at PBC, nor can they, in the circumstances, be charged with any such knowledge. Further, neither O & Y nor the Jablonsky firm were aware at that time of any other garage where tendon failures were understood, or believed, to have resulted from corrosion inside the concrete slabs. Obviously the 1979 tendon eruptions put O & Y on enquiry about the tendons and the slabs.O & Y's response, to engage the design engineers to investigate and report, was an appropriate one. With the two exceptions I have noted, the engineer's report did not suggest any further action was needed. I will deal later with the two exceptions. (d) Expert Opinions in and after 1983 On the other side of the case the plaintiff relies very heavily upon opinions expressed by a large number of experts including such engineers as Alexander, Janney, Maryon, Halsall, Bickley and many others, some of them called by the defendant. None of these men saw the building in 1979, nor before 1983. None of them, it is clear from the evidence, was engaged in 1979 in investigating garages which displayed the sort of problems which PBC displayed in and after 1983. PBC was, for all but Janney, their first experience. Even Janney had not seen a garage which showed the problems which PBC eventually showed.It was, by all accounts, unprecedented. These engineers performed various kinds of extrapolations backwards, or argued backwards in time, from what they saw in 1983, 1984, 1985, 1986 and so on; and expressed opinions as to what they thought the condition of the PBC garage would have been in 1979. With the greatest respect to these men, I am unable to accept these opinions. They are little more than guesses, with no factual underpinning, except the advantage of seeing what in fact developed at PBC in the years following 1979. It is all too easy for an engineer who comes on the scene much later to criticize the examinations and conclusions of the Jablonsky people in 1979. The investigations made in 1983 and subsequently, and the information gained from them, gave a more graphic picture of what was taking place in the PBC garage by that time. It was natural for engineers who saw the building only in 1983 or later to believe that the picture they saw then must also have been clear four years earlier. But it was not. The state of the art had advanced between 1979 and 1983, and it made significant advances even later. The deteriorating conditions observable at the PBC garage also advanced between 1979 and 1983, as well as later. We must not be led astray by the advantages of hindsight. Upon all of the evidence, I am satisfied that the need for significant repairs to the PBC garage did not in fact become apparent until at least 1983, over three years after the sale to Bell. It may be useful here to quote again from the trial judgment in Tiesmaki v. Wilson [1974] 4 W.W.R. 19 at 21 as follows:
It is always easy to be wise after the fact and after the results are known. I am afraid this criticism applies to all those engineers who, in this case, from the vantage point of their 1983, 1988 or even 1991 knowledge and experience, expressed opinions about how much delamination there was on the slabs, or how much chloride was in them, or how many tendons were broken, or about a host of other factors, including what investigatory and other steps they themselves would have taken in 1979, if only they had seen the PBC garage then. Some of the experts were more circumspect in their evidence than others, but even their evidence requires a close reading. An example is seen in the evidence of Halsall, one of the plaintiff's experts. He said that if he had been asked for his opinion in January 1980 he would have then recommended the same repairs that he recommended in 1983; but it is clear that he would only have made that recommendation if he had known in 1980 what he in fact did not know until 1983. He prefaces his answer with these words: "Given my understanding of the condition of the garage as set out in this report...", which is his report of September 27, 1985. By then he had all the advantage to be derived from the information gained and developments occurring through 1981, 1982, 1983, 1984 and 1985. By that year, everyone knew the garage was in bad shape.Halsall does not say that in 1979 (or January 1980), with the knowledge and expertise he had at that time, he would have recommended anything. His opinions, as are the others, are based to a great extent entirely upon a knowledge of what happened after January 31, 1980. They are therefore based very much on the advantage of hindsight.In my opinion, his views, like those of the others, are not helpful. It is, in my opinion, far safer to base conclusions on contemporaneous 1979 observations and conclusions, than upon hindsight. Maryon too is relied upon by Bell for many opinions about the garage as of 1979. While I accept much of his evidence on another aspect of this case, on the present aspect he was far too quick to state grand and sweeping conclusions on little or no factual or experiential basis. A creative man he was, but his ideas were not always sound. I cannot accept his opinions on this aspect of the case. Bell also relies heavily upon Alexander.He did a lot of good work beginning in 1983 in investigating the garage condition at that time and throughout the subsequent repair work. But in 1979 he had not been doing garage investigation work, and like almost all other engineers, had no knowledge or experience then of tendon deterioration caused by salt incursion. He said that his experience with the kind of problem involved in this case "...developed... probably around 1980." In so saying, he was a bit generous to himself, for he did not investigate any garage until late 1981. His investigation of PBC, not begun until 1983, was evidently his first experience with the phenomenon of chlorides penetrating significantly into concrete and causing corrosion of interior tendons. Alexander's first contact with PBC was when he, along with others, was requested by Bell to make a proposal for an investigation of the garage condition.To do so, he visited the garage. During this preliminary period, before he had done any investigation of the garage, he did not even raise the possibility of tendon corrosion resulting from chloride contamination.It must be concluded that this possibility was not in his mind at all. He said that until July 1983, he was merely pursuing a routine investigation for the purpose of repairing delamination of the slab surfaces.It was only about that point in time that he began to consider more deeply the condition of the slabs and tendons. Thus, it is clear that even in 1983, neither his knowledge and understanding of the corrosion phenomenon nor the observations he had made during his inspection of the garage had brought to his mind the possibility of chloride-induced tendon corrosion at PBC. In addition, he admitted that in 1979, the need for major repairs to the PBC garage "...may not have been recognized," and that it may not have been recognized until 1983 and 1984. Indeed, such need was not recognized in 1979; and I find as a fact, on the basis of all of the evidence in the case, that any need for major repairs at the PBC garage was not recognized by anyone until at least mid-1983, if not later. The plaintiff called an American expert, Janney, from Chicago, who also first saw the garage in December 1983; and wrote a report in 1985. In another report in 1988, he agreed that most structural engineers would not have quickly recognized the problem of tendon corrosion in 1979 or 1980. He also agreed, at page 4 of that report, that it was not possible to ascertain the severity of corrosion actually existing at PBC in 1979.It appears however that his firm would have made a more extensive investigation in 1979 than was carried out by Jablonsky. It had done so on at least two previous occasions - in 1974 and in 1979. Probably, the Janney firm was in the forefront of the understanding of possible problems with post-tensioned garages.Yet it is significant that his firm was only doing selective replacement of tendons until some years after 1979. This does not suggest any clear understanding by 1979 of the cancerous nature of tendon corrosion. That understanding came only much, much later. In a report written in 1985, Janney criticized Jablonsky and others for not ascertaining in 1979 that corrosion was occurring.I believe this criticism is unjustified. It is all too easy to criticize from six years later, when much more information is available, and subsequent events are known. And Janney may have changed his opinion by 1988, in view of the content of his report of that year, already referred to in the previous paragraph. The plaintiff argues that O & Y ought to have hired Janney in 1979 and that Jablonsky ought to have done so as well. This argument however presupposes an understanding of the problem, while, on all of the evidence, including that of Janney himself, engineers generally did not in 1979 understand or anticipate the problems that were developing with posttensioned garages.In view of this evidence, neither O & Y nor Jablonsky can be faulted for neither understanding nor anticipating the problems that might be developing at PBC. The much clearer understanding of such problems which now exists did not exist then. Finally, the state of the art for our purposes should not be measured by one firm of engineers only, and that in another country, but by the peers of the Jablonsky firm in structural engineering in Ontario. These include such Canadian engineers as Halsall and Kaminker. In his evidence, Janney admitted that: "This problem was not that well developed at that time...", referring to the summer of 1979. Then he went on to say that a designer "... should have recognized that something had to be going on." In so saying, I believe Janney was putting too much emphasis on his own experience. He does not suggest any other person who had any experience at all in 1979 of the type of problems which at PBC became all too evidence four years later. In my opinion, Janney is here relying at least partly on hindsight; and I am unable to accept his criticism of Jablonsky's investigation in 1979. I have given the matter a great deal of anxious reflection; but I am unable to conclude on the basis of all of the evidence, including that of Janney, that Jablonsky can be faulted for his investigation and report in 1979. There could be no possible reason for either O & Y or Jablonsky to seek to hire Janney or any other engineer in 1979 unless O & Y or Jablonsky understood or believed that there was a potentially serious corrosion problem developing at PBC. That was simply not the case.Even if either of them had sought additional advice, I cannot accept the argument that they were required to find Janney out of all the engineers in North America. There is no evidence that Alexander understood these problems in 1979, or that any other Ontario engineer did so. Bickley is a recognized concrete materials expert in Toronto, but he too did not see the building until late 1983 or 1984. As in the case of the other experts, who were asked what they would have seen or done in 1979, his evidence was heavily tinged with hindsight, and I am unable to accept it as reliable in that regard. His report about the state of the art in 1979 was not written until 1989. It begins at page 1 with the following statement: "It is believed that very few unbonded posttensioned parking structures had been surveyed and repaired by the end of 1979...". Further on he says: "Prior to viewing Place Bell Canada, Trow staff (his own staff) had not seen a post-tensioned structure with significant deterioration." This report also says that in 1979, although there was some knowledge among engineers about corrosion due to salt in posttensioned bridges, there was little or none of that knowledge in the garage field; and the evidence was that there was very little cross-pollination between these two engineering fields. In his evidence at trial, Bickley claimed no expertise in repair of post-tensioned tendon corrosion, nor investigation of it in garages, before 1983. In these circumstances, his opinions of what he would or might have done, or of what another engineer should or should not have done, or what could or could not have been seen, at PBC in 1979 do not, in my opinion, carry much weight, and I discount his evidence on these matters. Many other engineers also gave evidence in a retrospective fashion and purported to give expert opinions about conditions in 1979.I do not list them all.For reasons which I hope are already clear, I am not persuaded that such opinions in which hindsight and wishful thinking clearly play a large part should be accepted and relied upon; and I do not do so. I am more impressed with the actual observations made in 1979, which although subject to the usual frailties, are in many instances recorded in one way or another, and are not subject to the baneful influence of hindsight. Generally speaking, I find the evidence of actual observations and of actual actions at the time to be more persuasive and reliable. I conclude, and find as a fact, that in 1979, in the engineering profession in Ontario and Toronto, neither structural engineers, nor materials and inspection engineers, and much less, construction people, had any understanding of the phenomenon of chloride-induced corrosion of pre-stressing tendons in concrete garages.Such knowledge and understanding was not within the then state of the art. I further conclude, upon all of the evidence, that O & Y can and should be charged with knowledge only of two items of non-repair: the 30-foot soffit crack, and the deterioration of bearing connections of the pre-cast cladding panels. 6. Some Additional Matters Although I believe that the foregoing deals with the essential issues in the contract claim, a myriad of other contractual issues were raised at the trial. I will deal with a few of them, which, judging from the time spent upon them, are considered by one or other of the parties to be important. (a) Mortar Pockets The plaintiff makes two complaints about the mortar pockets. Before discussing them, however, it is desirable to discuss several technical issues which concern both this complaint and any other complaint about the original construction of the garage. (1) Technical issues Any claim for poor construction or design must be based upon the Outline Specifications found in the Build-Lease Agreement which was probably signed in early 1969. This agreement, counsel informed me, was executed by an officer of each corporation with a signature and with the corporate seal. The documents filed are very unclear, but I accept this statement. The plaintiff argues that the corporate seals make the contract a specialty, attracting a 20-year limitation period, instead of the usual six-year period. At the very latest, the construction of the garage must have been completed sometime in the year 1972. The writ was issued in 1984. Unless the Build-Lease Agreement is a specialty, the failure to commence this action within the appropriate limitation period is a proper ground for rejecting any claim based upon a breach of the Outline Specifications. Is the Build-Lease Agreement a specialty? Section 45(1)(b) of the Limitations Act R.S.O. 1980, c. 240, extends the general limitation period to 20 years for specialties. The term "specialty" is not defined in the act. In support of its argument, Bell cites Foster v. Geddes (1856), 14 U.C.Q.B. 239 (C.A.).However, Foster does not say that the affixing of a corporate seal to a document will of itself create a specialty.Rather, Foster was a case which discussed the question of whether or not a mere impression upon paper constituted an adequate corporate seal. It was held that an impression was a sufficient seal without wax or other additional substance. So far as I can see, the case has nothing whatever to do with whether or not a corporate seal can create a specialty. I am not prepared to find that the mere affixing of a corporate seal to a document, which on its face appears to be a simple contract, automatically transforms that document into a specialty.Such a conclusion would have far-reaching effects. Corporations frequently affix their corporate seals to contracts, but this merely has the same effect as the signature of an individual. A specialty can be created by private persons where, in addition to signing and delivering the document, a seal is affixed or otherwise manifested. A private person can contract by signature alone, without a seal.For a specialty, however, a seal is required in addition to the signature.Where a corporate document has a seal affixed, the seal merely forms a part of the signature of the corporation. Whether such a document is a specialty will be determined "having regard to the intention of the parties as evidenced and the true construction of the document..." (Newfoundland and Labrador Housing Corp. v. Suburban Construction Ltd. (1987), 38 D.L.R. (4th) 150 at 152 (Newfld. C.A.) In the case of the Build-Lease Agreement, the parties' intention or lack of intention to create a specialty can be determined objectively from an examination of the language of the document itself. The agreement refers to itself as a letter; and has the appearance of a letter or a memorandum. There are no recitals, no attestation clause, and no testimonium clause. The absence of these formalities would not necessarily be fatal to a claim that a contract under the seal of an individual person was a specialty.Nonetheless, the absence of these formal requirements in a contract signed with a corporate seal points, in my opinion, to a lack of intention to create a specialty. Finally, there was no other documentary evidence, and no oral evidence whatever, of any party's intention that the document should be treated as a specialty. The 20-year limitation period for specialties
may in some respects be regarded as an anachronism.McKinlay J.
(as she then was) said in Koffman et al. v. Fischtein et al. (1984), 49 O.R.
(2d) 124 at 134; (appealed in part, on an unrelated issue (1986), 53 O.R. (2d)
671): "It is inevitable that any decision on this type of issue, except in
cases where the facts are crystal clear, will involve resort to an undesirable
element of legal fiction. "For all of these reasons, I find that
the Build-Lease Agreement is not a specialty, and that Bell is bound by the
six-year limitation period found in s. 45(1)(g) of the Limitations Act. I
turn next to deal with the consequences of that conclusion. Acceptance of buildings by Bell Bell must be taken to have agreed in 1972 at the latest that the complex, including tower and garage, was complete, and that it complied with the contract between the parties, and with the specifications applicable. In May and June, 1992, Bell's senior man on the site advised his superiors that the buildings were complete and occupied, except for some minor matters that are not significant for present purposes: (see Exhibit 2, Tabs 135 and 137). Then Bell occupied the buildings, and continued to do so, without making any complaint about compliance with the agreement of 1969. I do not think that Bell can now shelter behind any allegation that it did not see all the drawings or specifications at the time of construction. Clause 49 of the Build-Lease Agreement of 1969 provided as follows:
Under that clause, Bell itself surely had a significant contractual responsibility to see that the buildings were properly built in accordance with those plans and specifications. As called for in paragraph 49, at its own expense O & Y provided a construction office on the site for Bell. A team of Bell people headed by McGill were thus on site all through the construction period. Bell had ample resources and technical people on its own staff. I do not mean to relieve O & Y of its own responsibility for construction under the Build-Lease Agreement; but neither can Bell, by its inaction and failure to exercise its own rights under the contract, keep alive O & Y's contractual responsibility for an indefinite period of time. Nevertheless, Bell now argues that it did not see all of the drawings or specifications at the time of construction, 1969 to 1972. If it did not, it ought not to have accepted the buildings as complete. Not only do the documents establish its acceptance, but Bell's occupation of the buildings without complaint from 1972 until at least 1984 is strong evidence of a true acceptance. That acceptance ought to be given its appropriate legal effect in this case, and be held to have started the limitation period running. To do otherwise would put a premium on carelessness and inattention. Further, I think that acceptance is an all-encompassing concept. Bell's acceptance must be taken to have covered all aspects of the buildings, and not just one or some of them. Either the garage as a whole was accepted, and the office tower as well, or no part of them was. Bell cannot now say that its acceptance was limited only to matters of, e.g., appearance, or to the special facilities in Bell's own interior space. The acceptance must apply to all elements, including, as will be discussed later, the seismic elements, in the absence of any clearly expressed exception or reservation at the time. Of that, there is no evidence. The evidence shows that Bell personnel attended at least some of the site meetings and received at least some drawings. Whether it received all the drawings or not, there is clearly no evidence that Bell was refused the right to see any drawings or specifications, or refused any information it sought to obtain about the project. Bell's right to approve all drawings and specifications pursuant to paragraph 49, together with the provision of the office accommodation on site, strongly suggest that it was the intention of the parties at the time of contracting that Bell should be heavily involved in all phases of the construction and be fully conversant with everything that was going on.Due to a later accident, McGill was unable to testify, and no other site employee was called by Bell. Mr. Langley, Bell's chief architect, gave evidence that Bell eventually "signed off" for the office tower. Regarding the garage, he said: "...we really didn't get too involved when it got to the garage. The garage fell behind, the construction, for the obvious reason that it was necessary to get the office tower finished as -- as quickly as possible". Further on, he said: "...and we probably got a little bit careless, but we didn't anticipate that they would change their operation as far as the garage was concerned." Langley did not give any date for the acceptance of the buildings, but it could not have been later than 1972. For purposes of this case, that is precise enough. Bell then utilized the garage and occupied increasingly larger portions of the tower over the next 14 years before making any complaint about any aspect of it. Bell's acceptance of the buildings in 1972 should be given its normal effect, i.e., to start the limitation period running against it. My conclusion on all of the evidence is that Bell did not avail itself of its rights to ensure that all aspects of the construction were to its satisfaction; this includes not only the garage but also the tower seismic requirements. I find that it was indeed careless. But its failure to use the technical personnel and facilities at its disposal to check and verify each stage of the specifications, design and construction cannot be relied upon by it to improve its position with respect to O & Y, so as to stop the limitation period from commencing to run. This is not a case of an inexperienced first-home buyer who relies upon the expertise of an experienced builder to produce a satisfactory building. Accordingly, I hold that the limitation period of six years found in s. 45(1)(g) of the Limitations Act, R.S.O. 1980, began to run in 1972 at the latest, and that any claim under the Build-Lease Agreement of 1969 for poor construction or for failure to comply with the design or specifications with respect to the anchor pockets or any other aspect of the design and construction of the complex was long barred before this action was commenced. On this ground alone, the claims I am discussing must be dismissed. I observe in addition that no claim for inadequacies in the mortar plugs has been pleaded; the failure to do so is a second reason for rejecting this claim. Other defences of a technical nature Article VII of the Ground Lease Sometime shortly after 1969, the parties executed the Ground Lease, although it was to be effective as of the 1st of November, 1969.These contractual relations were to run for 37 1/2 years, with a 15 year renewal option to Bell, unless, as the agreement provided, O & Y should decide to sell the buildings earlier.Article VII, which I have not quoted, requires compliance generally with laws and ordinances, and with insurance policies. Bell bases some argument upon this article, but in my opinion it is simply not applicable to the construction of the buildings, and cannot serve to extend the limitation period for a complaint about non-compliance with the initial agreement of 1969. Paragraph 3 of the Assignment of Lease, 1980 Bell argues that paragraph 3 of the assignment of the ground lease to it in January 1980 extends the date for commencement of the limitation period for alleged construction defects.For convenience I repeat paragraph 3:
However, in my opinion, this assignment of the Ground Lease has nothing to do with the initial Build-Lease Agreement nor with the construction of the buildings, because the latter agreement was never any part of, nor continued by, the Ground Lease. I can see no merit in this argument, and any claim for a construction defect remains barred by expiration of time, as previously found. No collateral warranty or agreement: Paragraph 18 in the 1980 Offer to Purchase provides as follows:
In my opinion, that term of the agreement also prevents Bell from now relying upon any provision in the Build-Lease Agreement, insofar as the sale of the buildings and the assignment of lease from O & Y to Bell in early 1980 is concerned. Apart from anything else, in my opinion, clause 18 of the Offer to Purchase denies any further effect to anything contained in the Build-Lease Agreement. Nothing in the ensuing Assignment of Lease and conveyance changes that position. Thus, for these additional technical reasons, I conclude that any claim based upon alleged non-compliance with the Build-Lease Agreement is barred by the expiration of time, or on other grounds of a technical nature, and must be dismissed on these grounds alone. (2)Were the mortar pockets properly filled with mortar? The steel tendons inside the floor slabs were mechanically stretched at one end, and fastened with anchors and wedges in that position. The anchors were placed in a pocket recessed in the edge of the slab for that purpose. The tendon was then cut off just beyond the anchor, and the pocket filled with a mortar mix as a protection to the anchorage. Here, again, we must look at the matter from the viewpoint of the time of construction, which was about 1971. There was much evidence about a number of difficulties in the construction of the garage. Here I refer to a wide variety of things, including tie wires which pinched or broke the plastic sheaths surrounding the cables; other tears in the sheaths, and gaps in the sheaths at the tendon ends; insufficient concrete cover over the tendons at some points; and others. From today's vantage point, these matters sound like poor construction, but they must be judged by the standards of 1971 on the job-site, and not the standards of 1992 in a courtroom. I do not recall any evidence that the garage was built other than in accordance with the usual construction standards of that day. In any event, on all of the evidence, I am satisfied that the garage was indeed designed and built in accordance with the standards of the time. I do not think that even the plaintiff suggests that, in 1971, the then prevailing state of the art included any significant knowledge, understanding, or appreciation, of the real potential for corrosion of post-tensioned tendons inside a concrete slab. It was suggested that the filling of the mortar pockets allowed an interstice between the grout and the concrete of the slab, so that moisture could penetrate to the anchors; and that a non-expanding grout was used. These criticisms are based upon today's knowledge. Upon a review of the evidence, I am satisfied that the tendon pockets were filled properly and in accordance with the construction standards and knowledge of the time of construction. (3) Was there a chloride admixture in the mortar plugs? Chloride readings taken in and after 1983 by the Trow company (with which Bickley was associated), and by Construction Control Limited, (this is Alexander's company) showed that the chloride content in the mortar mix by that time was very high. However, the readings were not at all uniform. Even if there were chlorides in the mortar mix, some chlorides likely also came from salty water dripping over the slab edges, or from other sources. When some of the mortar plugs were removed by Construction Control Limited, and the tendon stub ends examined, quite a variety of rust effects was seen.Some stub ends had merely streaks of surface rust, while others showed conditions ranging up to severe corrosion. This was in 1985, or six years after Jablonsky had examined the garage in August 1979. At the time of the curb repairs, done in the latter part of 1979, an asphalt coating was placed over the curbs. This probably prevented any further salty water from dripping over the slab edges. However, if there had been chloride in the mortar mix from 1971 onwards, one would have expected more uniformly severe conditions of corrosion when they were examined in 1985, after the cladding panels on the garage were removed. Prior to that, and especially in 1979, it was impossible to remove the plugs and to examine the tendon ends and anchors, because of the positioning of the concrete cladding. It was also impossible to remove a single panel at that time, due to the method of construction of the cladding. A number of the experts suggested that there might have been a chloride additive in the mortar mix. But there is no concrete (sic!) evidence of this. Slater, another Toronto engineer, suspected some of the pre-mixes commonly in use in 1971 contained chlorides; but suspicion is not sufficient. There was no evidence of precisely what mortar mix was used, nor even whether or not a trade pre-mix was used at all. The plaintiff places very heavy reliance on Dr. Hope's opinion on this point. I will have more to say about Dr. Hope's evidence in dealing with the third party issues. For reasons more fully elaborated there, I am unable to place much confidence in his evidence and opinions. He did not see the garage until 1988, at which time, after 8 1/2 years of ownership by Bell, with extensive repairs already completed, he noted merely that the garage appeared neglected. He stressed the fact that more tendon failures occurred in the upper floors of the garage than in the lower ones, as an evidence that the tendon pockets contained a chloride admix. Here he is referring to tendons which were found, in 1985 and 1986, to have been already destressed without giving any visible signs thereof. With respect, I am unable to see how a chloride admixture in the tendon pockets, an admixture which would likely have been uniform throughout the building, can account for a higher incidence of failures on the upper floors. Considering all of the evidence bearing on this issue, I cannot accept Hope's theory and opinion about a chloride additive in the mortar plug mix; and on the same basis, I am not satisfied on a balance of probabilities that there was any such additive. The plaintiff argued, finally, that an adverse inference should be drawn against the defendant for its failure to call Mr. Holbrook who was said by counsel to have been the superintendent for O & Y responsible for the work of filling the mortar pockets. The plaintiff was well aware of Holbrooks's name and identity during the trial, and perhaps before the trial. Whether or not he is still employed by O & Y was not established. If Holbrook could have given evidence helpful to the plaintiff on this issue, an issue on which the onus of proof lay on the plaintiff, then the plaintiff ought to have called him as a witness. On all the evidence before me, I conclude that there was no chloride admixture in the tendon pocket grout. (b) The Jablonsky Letter of March 30, 1979 The plaintiff places great stress upon a letter written by Garshon of the Jablonsky firm to Olympia & York dated March 30, 1979. It conveys some information taken from an article published shortly before, and deals generally with the maintenance of pre-stressed concrete structures. Among other things, the article mentions the occurrence of damage to pre-stressed concrete structures as a result of corrosion of the pre-stressing steel. Garshon points out that "if the pre-stressing steel is not perfectly protected, spontaneous failure from corrosion may occur." No doubt this article was prophetic. It went on to say that attack from chlorides was a danger. Taken alone, and with hindsight, it is easy to say that both Garshon and the defendant ought to have connected these statements to the erupted tendons reported to and examined by the Jablonsky firm in August of the same year. On the other hand, the matter needs to be put in context.In 1979, the evidence is overwhelming that engineers generally, including leading engineers, did not believe that chlorides could get through pre-stressed concrete and cause corrosion of the tendons inside. They also believed that a plastic tube surrounding each tendon, instead of a mere paper wrapping which had formerly been used, gave further protection to the tendons. In short, it was thought that these tendons were "perfectly protected". Although later shown to be incorrect, these beliefs were, I find, prevalent in the engineering business in 1979 and indeed until quite sometime after that. Even in 1983, Alexander did not connect the observable conditions in the garage to chloride-induced corrosion of the tendons until after he had done considerable investigation of the garage, the very type of investigation that had been suggested by Jablonsky a year earlier. But in 1979, the state of knowledge and understandingamong engineers in the garage field was far less developed. Coming back to the Garshon letter of March 30, 1979, it concludes by saying that no problems are suspected at any of O & Y's pre-stressed garages. With hindsight, this can be seen as an unfortunate conclusion to the letter.But again, it must be looked at in context. In 1979 the engineering state of the art still saw post-tensioned concrete slabs as impervious to chloride attacks, and I conclude that there was no reason for the Jablonsky personnel, including Garshon himself, to have thought, in August of that year, that the tendon eruptions then evident were caused by chloride-induced corrosion of the tendons. (c) Was Jablonsky Negligent in 1979? Although the negligence claim against Jablonsky has long been removed from this litigation, it may be desirable at this point to deal with another argument by the plaintiff, namely, that the Jablonsky examination of the tendons in 1979 was performed negligently, and that the report given to the client was also negligent. I have already discussed some aspects of this topic when dealing with Jablonsky's 1979 investigation of the tendons. It is said that Jablonsky ought to have engaged materials experts, concrete experts, corrosion experts, and others, in order to find an explanation for the erupting tendons. In fact, Jablonsky's firm concluded that the tendons erupted because of problems with the wedges at the time of construction. Schupack, an American engineer with wide experience, said this was a rational conclusion at the time. On a review of all of the evidence I am satisfied that this opinion and conclusion was genuinely held by the Jablonsky personnel. Although it later was shown to be erroneous, it was a reasonable view at the time, and does not constitute negligence or any failure to perform their functions in an adequate and professional manner. I do not ignore the number of engineers who gave evidence that was critical of the Jablonsky firm with respect to its 1979 inspection of the tendons. These engineers had the benefit of hindsight; I am satisfied that they too, if called upon in August 1979, would not have attributed the tendon failures to chloride-induced corrosion. Janney, one of the plaintiff's leading experts, said that it was quite difficult to cast one's mind back from 1988 to say what should have been done in 1979. And Alexander, another leading expert for the plaintiff, acknowledged that his firm's first condition survey of a garage was done in late 1981, more than two years after the period we are interested in. Schupack said that in 1979, corrosion problems would not likely have been evident to an engineer who did not already have a broad background in evaluating problems of corrosion. He himself had had some experience of corrosion in bridge decks, and so had an advantage. Most structural engineers in the garage field did not also do bridges, and vice versa. Schupack's experience was uncommon, and should not be taken as the standard for assessing the Jablonsky firm's actions. Even so, Schupack said he was not sure that even he would have diagnosed corrosion at PBC in 1980, let alone a year earlier. I am not inclined to act upon the evidence of experts who criticized the actions of another at a period in time when they themselves had no experience in the kind of work under discussion. There is another way of looking at Bell's criticism of O & Y for choosing Jablonsky at all in 1979. I have already emphasized the differences between 1979 and 1983 in relation to the state of the art.Yet in 1982, when Bell observed a failed tendon in the garage, it did exactly what it criticizes O & Y for doing in 1979. It called on the design engineer, Jablonsky, to investigate the garage. In May 1982, however, Jablonsky's report was not at all the same as his report in 1979. This time he identified corrosion as the source of the tendon failure.Jablonsky's knowledge and understanding had obviously advanced in the three intervening years.Jablonsky also recommended a further investigation of the garage condition.To this report, Bell did not react until February 1983.In late May 1983, finally a survey was commenced. This is almost exactly one year after Jablonsky recommended it.Bell's reaction seems very slow, in the face of a report clearly identifying salt corrosion as the culprit. I am satisfied that it would not be sound to criticize either the actions of O & Y, or those of Jablonsky, in 1979 when the state of the art was far less advanced than it was in 1982. (d) Columns Although the columns were and are an essential part of the structure of the garage, supporting in turn each of the parking level slabs, Bell did no work on them until 1986. Until then they were largely ignored through the investigations and repair operations that had begun in 1983. Although the evidence contains some references to problems observed with the columns earlier than 1986, it is clear that, in spite of their important structural role, Bell did not see fit to turn its attention to them until much later. Although the exterior face of some of the columns could not be observed until the removal of the cladding panels in 1985 and 1986, this applied to only a small proportion of the total number of columns in the garage. On all of the evidence, I find that O & Y had no knowledge or information about any condition of disrepair of the columns prior to January 31, 1980, and that no grounds exist for concluding that O & Y ought to have known about any such condition that may have existed. Accordingly, the claim with respect to the columns is unfounded. (e) Finishes on the Garage Slabs Bell argues that the construction of the garage did not comply with paragraph 9 of the Outline Specifications which formed part of the 1969 Build-Lease Agreement. This paragraph is found under the heading of "Parking Areas", and provides that: "No special finishes are required other than those necessary to prevent damage to the structure from salt, grease, oil, water, etc....". The evidence shows that no finishes were put upon the eight post-tensioned garage parking slabs.Bell submits that a finish such as Thompson's Water Seal ought to have been used at the time of construction. Without repeating, it must be recalled that Bell had broad rights of overview of all of the construction, and had experienced personnel on site. The senior man, McGill, was however unable to give evidence because of his ill health. Whether McGill or someone else agreed to the deletion of a finish, or the Bell personnel simply did not do their job adequately, we will never know. In neither case is Bell on strong ground, although it is true that any failure by McGill or others to see that the requirement was followed, if that be the case, does not relieve O & Y of its obligations. O & Y says that when a post-tensioned design was adopted for the garage, it became unnecessary to have any finish on the slabs, and that Bell understood and agreed. Halsall, an expert called by Bell, said that in 1970 it was a common assumption among engineers that a post-tensioned slab had its own built-in protection, and needed no other protection by way of a finish or a membrane. I accept this evidence as establishing the state of the art at that time. Accordingly, no finishes were required when the garage was built. I also conclude that Bell knew and agreed that no finish was to be put on the slabs because they were to be post-tensioned, and that Bell also knew that the slabs were flat, and had no slope. In the record, there is no credible evidence that sealers would have done any good for the slabs. The evidence of Alexander is illustrative. When discussing his report on Thompson's Water Seal, he concluded that if the manufacturer's claims were justified, the product would have been a benefit to the slabs.In other words, ..."If it works, it works; if it doesn't work, it doesn't work." Such an opinion is worthless; it is evident that Alexander knew nothing about the subject or the product. Other engineers said they had on some occasions recommended it or used it, but none, I believe, knew whether it actually helped or not.Schupack, already referred to,who appeared to have some knowledge of and experience with sealers and membranes, said that, as late as 1976, he knew of no reliable membrane for garages; and that in 1971, there were no effective sealers. I accept this evidence. Thus, I reject the plaintiff's argument on the merits. Even if it were otherwise, this claim for a breach of the Build-Lease Agreement is also barred by the six-year limitation period, for the reasons which I have already expressed. (f) Was There a Chloride Admixture in the Panels? The plaintiff argues that the chloride readings taken from the pre-cast cladding panels on the garage indicate that chlorides must have been added to the concrete mix or mixes that were used in the manufacture of the panels at the premises of a company called Artex. There is no doubt the chloride readings in the panels were high, as they were in the mortar mix used to fill the anchor recesses in the slabs, and as they were in some parts of the slabs themselves. Artex had nothing to do with either the slabs or the mortar mix in the pockets. In addition to the chloride readings taken from the precast panels, there was evidence from Kafarowski, the owner of the Artex company, and of an employee named O'Neill, who is not the same O'Neill previously referred to as a subcontractor doing repair work. The O'Neill who worked for Artex was the foreman in charge of manufacturing the panels for the PBC job. Both Kafarowski and O'Neill said that no chloride admix was used in making the panels. O'Neill's connection with the job was of course much closer than that of Kafarowski. O'Neill said he remembered the job well, in spite of the fact that it was quite some time ago. It was a very large job, and occupied him for some time.His evidence was that there was no admixture of chloride used in manufacturing any of the pre-cast cladding panels used for the garage.Both witnesses were cross-examined vigorously on the point, but I am satisfied after hearing them, that they withstood the test. O'Neill especially struck me as a very credible and reliable witness, and I have no hesitation in accepting his evidence, and that of Kafarowski to the same effect. I prefer this evidence to evidence that was given based upon differences in colour of concrete, between white and grey. Some of this evidence was only based upon photographs, and appeared to me quite unreliable.As well, Alexander examined some discarded panels in 1991 in a field where they had been dumped some years before.After such a length of time, in all the circumstances, I am not prepared to accept such judgments about colour as a reliable basis for concluding that there was a chloride admixture in the panels. (g) Tendons Found Already Destressed in 1985 and 1986 A great deal of time was spent at the trial in wrestling with this topic. In 1985 Bell began the work of detensioning all of the remaining tendons in the garage, because they would henceforth play no structural role in it. The repair scheme adopted by Bell included the addition of heavy steel plates to the slabs in order to provide structural strength in place of that formerly provided by the tendons. This alteration was made because Maryon had doubts about the continuing viability of all of the tendons. A torch was employed to burn off the stubs and wedges at the tendon ends. When a wedge was sufficiently burned off, if the tendon was still under tension, it would retract violently into the slab, making a loud noise and causing some shaking of the slab. On the other hand, some of the tendons, after the anchor and wedges were burned off, did not provoke the noise or the shaking. It was concluded that such a tendon was already destressed, although it had given no visible sign of having been so, either by eruption from the slab or otherwise. An effort was made to keep track of how many tendons appeared, at the time of their deliberate detensioning, to be still under tension up to that point, and how many appeared to be already destressed. With these numbers in hand, experts for the plaintiff made various calculations in order to determine how many tendons they thought were already destressed as of 1979, albeit without having given any external sign of their destressing. I will refer to these tendons as those which had "quietly" destressed. For reasons I have already explained, the number of tendons that had become quietly destressed in or by 1979 or the beginning of 1980, is largely irrelevant, because the fact of their destressing was entirely unknown at that time to O & Y or to anyone else. In the course of the destressing operations, the workmen arrived at a figure of about 1340 as the number of tendons already destressed. Several engineers used this figure to extrapolate backwards to arrive at a number of around 200 - 300 tendons quietly destressed by the end of 1979. I am afraid I am unable to accept this theorizing. In my view, it is no more than mathematical play, not based upon any factual or scientific observations. None of these men had ever performed any similar destressing operation, nor had they any experience with any other garage which suffered from similar maladies. There is no factual data to support these theories. Even in 1983, of a sample of tendons examined by Alexander, only about 3% showed any severe rust, while most of the rest showed no more than pinhead or surface rust, which expert opinions at the trial viewed as of no significance whatever. What exactly was the reverse-extrapolation utilized by the experts? Maryon noted that of 4400 cables in the garage, about 1300 were found quietly detensioned in 1985. Assuming that the same ratio would apply in 1979, he deduced that since five to ten explosive failures had occurred by 1979, some 200 to 400 tendons would have been quietly destressed by that date. My problem is that I can see no connecting logic between the numbers he begins with, and his conclusion. For 1985-1986, his ratio is between the total number of tendons in the garage, and the number which had quietly detensioned. For 1979 on the other hand, he appears to use a ratio between explosive and quiet detensionings. No basis is given for any such a conclusion. Even if he had used apples and apples, instead of apples and oranges, no factual basis is given for using the same ratio between the two periods. There is no empirical evidence from any source whatever to suggest any constant correlation between the number of tendons visibly destressed, and the number of tendons invisibly or quietly destressed, at any given time. A host of questions comes to mind. When the first tendon visibly erupted, what was the situation with respect to quietly destressed tendons? Were there already 4, or 40, or 400?Or none? How long had these invisible detensionings existed? Did they all happen at once? There is the further difficulty that no explanation is offered about the cause of the quiet detensionings. No one explained how a tendon could fail due to corrosion, and release the enormous pent-up energy in the stressed cable, without giving some visible sign thereof. On the other hand, from 1983 to 1985, there were extensive repair operations going on in the garage involving removal of delaminated concrete from the slabs with jackhammers, there were drilling and coring operations, and many others. Is it not more likely that these operations may have caused destressing of some tendons, either without any visible sign thereof, or with signs that were unnoticed because of the noise from work operations, or unrecorded because they were considered to be of no importance at that time? Alexander's reverse extrapolation was done on a somewhat different basis. He used the number of 9 or 10 visible tendon failures by 1979, and compared that with the number of visible tendon failures that had been observed by 1985-1986. That number he took to be 44. He then applied the ratio between those two numbers, i.e., a ratio of approximately 4.4 to 1, to the number of tendons reported in 1985 and 1986 to be in a quietly destressed condition. The number here is said to be 1,344, a number derived from the evidence of persons involved in the destressing operation, and from records kept by them. Applying a ratio of 4.4 to 1 to that figure, one gets 305 tendons that would have been quietly failed as of 1979. Again, there is no empirical basis for this mathematical calculation; Alexander had no experience from any other garage or any other similar situation to go on. Remember that PBC was unique in its time. The same objections that I have detailed with respect to Maryon apply to Alexander. Although the workmen on the site had arrived at a figure of 1340 as the number of quietly destressed tendons in 1985 and 1986, there is reason to doubt the accuracy of the counting process carried out regarding failed and unfailed tendons. In view of the rather extensive repair activities that had already taken place with respect to the slabs, it is very difficult to be at all precise about any of the numbers. There was a great deal of contentious and conflicting evidence about how many tendons were destressed accidentally during the repairs. It is clear only that there were a great many tendons damaged and destressed in this fashion. For example, many drill bits were damaged by hitting tendons. There were some unmistakable instances of destressing by repair operations; but there must have been other instances which were not so clear. If tendons can quietly destress themselves, why may they not do so as a result of a repair operation, such as by contact with a drill bit or a jackhammer or whatever, without giving any perceptible evidence of so doing? It is impossible to be precise as to any of the numbers because the evidence itself is so contradictory and imprecise. The onus of proof is upon the plaintiff in this matter as in many others, and I am simply not persuaded on all of the evidence that the extrapolation backwards from 1985 and 1986 can give any reliable indication whatever of the number of tendons already quietly failed by 1979. All of these considerations prevent any reasonable conclusion of fact other than that it is impossible to make any finding on the evidence in this trial, about the number of tendons destressed in or by 1979 other than the few which I have already discussed under the heading "Pre-1979 Tendon Eruptions." 7. Conclusions The plaintiff argues that all of the evidence shows that the garage was not in good condition in 1979, and that I have no option but to so find. I do not however see the situation in quite the same manner as does the plaintiff. The real issue is twofold: what was the condition of the garage in 1979, and what knowledge and understanding of that condition did O & Y have in 1979? There is indeed very little, if any evidence, that O & Y had any knowledge of any need for repair in 1979. I have already reviewed the evidence of the garage condition, and what O & Y knew about it; and I have considered O & Y's appreciation of that evidence in light of the then existing state of the art. If I am wrong in my conclusion that the abstract condition of the garage in 1979 is not important in the absence of any knowledge by O & Y at that time of that condition, then I have also reviewed and considered the later opinion evidence about the garage condition. I have stated my conclusion that those opinions are unreliable, because they are based so largely on an entire lack of experience by those experts in the subject matter, and because their opinions are so infected with hindsight. As I have already said, they had no previous experience of any similar situation. In 1983 when the curtain began to rise at PBC, there was no precedent for it. Certainly, none of the experts in Toronto had any prior understanding of the type of problems which were developing at PBC. It was their learning experience. The other experts, mainly from the U.S., were not much further ahead. Janney and his firm were perhaps the only exceptions. They had some experience, although their earlier jobs were far less dramatic than PBC turned out to be.Repairs done by them prior to 1979 were all on a very modest scale and did not include any wholesale replacement or substitution of tendons. The Janney reports, especially Exhibit 149, do not suggest a mature understanding of the problem; that did not come until after 1983, with PBC itself. As between the experienced construction people and engineers who saw PBC in and before 1979, and the engineers who did not, I much prefer the former. Until very late in 1979, O & Y had no thought of selling PBC, and accordingly, was still looking at many more years of repair responsibility for the garage and the tower. I have already mentioned that Norris and Koski, both experienced, inspected the garage in May 1979. Spicer, the local man in charge, was on the site continually. Gringorten's careful examination is evident in his notes. None of them saw any of the conditions which other engineers later opined had existed in 1979. Repairs had been done by O & Y to the PBC garage from time to time since its construction. Extensive repairs were underway during 1979 on the perimeter curbs. A quotation was obtained from the Annett company to repair the pre-cast panels and their connections, although this work was not done before the Bell purchase. Thus, it appears that O & Y was continuing to fulfil its repair obligations right through the autumn of 1979. All of these considerations reinforce my conclusion from all of the evidence that it would be an error to hold O & Y liable for repairs of a nature and of a scope which were not understood at all in 1979. The matter of "understanding" is at least as important as the matter of "knowledge"; or perhaps knowledge must be enlightened by understanding.In the climate of engineering opinion and practice prevailing in 1979, engineering and construction people were not alive to the potentially harmful effects of salt on pre-stressed concrete structures. That is not to say that salt was seen as desirable; on the contrary, it was undesirable. Water-ponding on a floor slab was also seen as undesirable in a garage for several reasons, such as potential damage to the finish of parked cars. There was however no understanding then by Jablonsky and his peers in the engineering profession, nor by leading people in construction, that water might pick up salt and be able to percolate through uncracked concrete, attack the reinforcing steel inside, and thus eventually require substantial repairs to the slabs. My conclusion on all of the evidence, and I so find, is that in 1979, no one at O & Y, and no one in the Jablonsky firm, and indeed no other construction or structural engineering personnel, were aware of the possibility that corrosion was taking place inside the PBC slabs, corrosion which might in the end structurally weaken the garage. Prior to January 31, 1980, neither O & Y nor their expert advisers knew of, understood or appreciated that there was any condition of non-repair at the PBC garage, nor ought they to have done so. Thus, when all the evidence is considered, I conclude that O & Y was not in breach of its repair covenant except for the two items, namely the 30-foot soffit crack, and the deterioration of the panels, primarily at their connections. Of these, it had knowledge.In speaking of "knowledge", I use this word throughout as including not only "actual" knowledge, but as including anything of which O & Y ought to have known. Bell is entitled to an award of damages only for the two items listed above. I move now to the issues involved in the assessment of damages for the contract claims concerning the garage only. II. ASSESSMENT OF DAMAGES - GARAGE CONTRACT CLAIM 1. Award of Damages I shall deal first with the two items for which I have found the defendant liable. The repairs to the pre-cast cladding panels, particularly at their bearing connections, were in fact done after Bell became the owner of the complex. In the Autumn of 1979, O & Y asked the Annett Company to give a quotation, and it did so. The quotation was not received until after the sale to Bell was completed, but the work could not be done until warmer weather arrived.When that arrived, Bell who was now the owner, delayed having the work done until some time in 1981. By that time Annett's quotation of $14,800.00 had risen to $20,000.00. Bell had the work done by Annett, paid the $20,000.00, and includes this amount in its overall claim for damages. In this claim, it also includes nearly $1,000,000.00 for the complete replacement of the cladding in the late 1980s. The work done in 1981 or 1982 consisted, I believe, of epoxy injection of cracks, cleaning the connections, and some other similar procedures. I think this confirms the then existing view of the extent of the non-repair of the pre-cast, and it further confirms that the type of repairs then thought appropriate were more of a cosmetic nature, in accordance with the understanding of the problem and the state of the art at that time. These repairs clearly do not reflect any understanding of any internal danger to the pre-cast panels resulting from corrosion of their steel reinforcing caused by salt. In cross-examination Minski "guessed" that 40 - 50% of the panels were in need of some repair in 1979. Kafarowski of Artex estimated the cost of the work at $25,000.00 to $35,000.00.Norris said that Kafarowski's verbal estimate was $100,000.00, which he, Norris, thought was "a hell of a price". When he said this, it was clear to me how he intended it to be taken; that is, that it was a very favourable price for Kafarowski, rather than a favourable price from the point of view of O & Y. Finally, Kaminker estimated at trial that one half of the 800 panels needed repairs at a cost of $100.00 each. This would work out to $40,000.00. This was his estimate in 1991, based on 1980 prices. It is clear that all of these people were contemplating an essentially cosmetic type of repairs, similar to those contained in Annett's quote, and similar to the work actually done according to that quote by Bell a year or so later. Annett's quotation and description of the work, accepted as it was by Bell, establishes the actual understanding of the problem and of the appropriate method and scope of repairs, together with an appropriate price, in 1979 and the beginning of 1980. In my opinion, it is more reliable than guesses and estimates made 10 or more years later. Norris's version of the Kafarowski quote is far out of line with all the others, and his memory must be faulty on this point. The other figures range from $20,000.00 to $40,000.00. The work was actually done for $20,000.00. In my view, the price at which the work was actually done is the best evidence. I believe that Kafarowski was at the garage later and saw the repairs carried out by Annett, and made no unfavourable comment about them at the time. As to the 30-foot soffit crack, there is really no evidence about the cost to repair it at the relevant time. However, bearing in mind the actual cost of repair of the panels, dealt with above, I assess the cost of repairing the 30-foot soffit crack at $5,000.00, although this may be a rather generous figure. Accordingly, I assess the damages of the plaintiff at $25,000.00 and award this sum against the defendant. 2. Details of Bell's Claim Apart from these small items, and although I dismiss the balance of Bell's claim, I should assess the damages otherwise claimed by Bell. The total amount claimed has already been referred to, and I now provide more details. They are as follows: Repairs to the Garage
TOTAL 15,760,144.23 The above statement is based upon a summary provided during the trial by the plaintiff and forming part of Exhibit 156, as amended by Exhibit 156A, and as further revised by the plaintiff later. Amendments to the claim were also introduced by way of Exhibits 216, 228, 182, and 237. I have done my best to amalgamate all of these figures into the statement appearing above. With only a few exceptions, the defendant conceded that the sums claimed had in fact been spent by the plaintiff, and I concur. There are however some qualifications to my general acceptance of the plaintiff's figures. Throughout the details of the claim there are a number of items which were compendiously referred to as "Bell loading". These were assumed figures purporting to represent time which might be spent by certain Bell personnel in connection with the repair operations.For example, in Exhibit 156 itself, which contains details of the expenses forming the totals appearing in the summary, under the heading of "Investigative Costs", there are several amounts for Bell loading, as follows:
These are figures that I have been readily able to pick out of the documentation. I suspect there may be more, but the above items give an idea of their nature. In my view, all such items ought to be removed from any assessment of damages. If I am in error as to the above items in any way, or if there are others contained in the claim, I am sure I can rely upon the assiduity of counsel to ferret them out and arrive at an accurate total, which I will be quite content to adopt. These are not sums of money expended by Bell. They do not accurately reflect any costs actually incurred by Bell, but rather are based on arbitrary formulae. Similar items were rejected in New Brunswick Telephone v. John Maryon |
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