In a precedent-setting Canadian court decision, the City of Delta, B. C. may have to shell out more than $3 million to condominium owners for not enforcing provincial building codes. Taxpayers throughout the province, but particularly in the municipalities in the Greater Vancouver Area, now face millions of dollars in claims from other condominium owners who have had problems with water leakage.

It's the first major case in Canada in which a municipality has been found liable for not enforcing building codes.

In what's become known in Canada as the "leaky condo" crisis, an estimated 50,000 new condominiums in British Columbia had leakage problems in the mid-1990s. Since then, there has been lots of speculation about who is to blame for the crisis -- the developers of the condominiums, the architects, the builders, or the municipal building inspectors. A provincial inquiry into the crisis suggested that all of the above were partly responsible for the problems, and now the court has agreed with that assessment.

Justice William Grist, a B.C. Supreme Court judge, ruled that the city was 20 per cent responsible for the problems, and that the architect, developer and building contractor were responsible for the rest. But none of the others named in the judgement have the financial resources to pay the claim, and the municipality may have to foot the entire bill. Delta says it could afford the $3.2 million judgement, but this case represents only one condominium complex out of an estimated 1,100 throughout B.C.'s lower mainland that has similar problems.

Delta had argued that it acted no differently than other municipalities in the Greater Vancouver area in enforcing the building code, but Judge Grist ruled that the city had a clear obligation to enforce all parts of the code.

The provincial Commission of Inquiry into the leaky condo crisis was scathing in its critique of the British Columbia building industry. "Residential construction, during the past 15 years, has become an industry dependent more upon business finesse and marketing techniques, than on down-to-earth building basics," said the report. "The nature of the industry has changed, as have the relationships within it. Architects, builders, financial institutions, warrantors, and even media coverage reflect this trend by focusing more on the marketing and design issues of residential real estate than on the substantive issues of building quality, workmanship, long-term performance and technical merit."

The commission said that in reviewing the building industry, it was "presented with case after case of ineffective regulation regarding responsibility and accountability at each stage of the construction process" including "a lack of developer, building and general contractor responsibility – often facilitated through protective corporate structures" and "a loss of collective memory, and lack of conventional wisdom, among inspectors, architects, engineers, developers, and contractors regarding the requirements for effective building".

The Delta court case is just one of several that are slowly winding their way through the court system. Several condominium owners have launched lawsuits against builders and developers. There is also a class-action lawsuit that names Canada Mortgage and Housing Corp. (the federal government housing agency that insured high-ratio loans on the projects), the National Research Council Canada (a federal agency responsible for the national building code) and the province as defendants.

Since the magnitude of the problem became known, the province formed the Homeowner Protection Office, with the slogan "Restoring Confidence", to develop licensing and warranty regulations and provide consumer information. There have been government loan programs and sales tax rebates to help condominium owners in the repair of their homes, but the owners want compensation. In October, a lobby group called the Coalition of Leaky Condo Owners (myleakycondo.com) plans to visit the nation's capital, Ottawa, to ask the federal government for compensation.

In the meantime, Delta is appealing the recent court decision, as many condominiums in B.C. continue to have building envelope failures.

For more articles by Jim Adair, please press here.

Published: September 13, 2001

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Jim Adair is editor of REM: Canada's Real Estate Magazine, a business publication for real estate agents and brokers. He has been writing about Canadian real estate, home building and renovation issues for more than 30 years. You can contact Jim at .