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B.C. judge rules against condo corporation that took more than two years to accept claims adjuster’s settlement offer


March 28, 2013   by Greg Meckbach, Associate Editor


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The British Columbia Superior Court ruled earlier this week against a condominium corporation insured by The Dominion, which sued the owner of a neighbouring property in the Vancouver suburb of Surrey over water damage.

Legal

On March 25, Mr. Justice Gregory Fitch ruled that Siddoo Kashmir Holdings Ltd. does not have to pay the approximately $35,000 it offered Strata Plan NW 3174, and The Dominion General Insurance Company, in November 2006.

He ruled that although Strata accepted the offer nearly three years later, it did not accept it “within a reasonable time,” despite Strata’s argument that it could not act unilaterally and was unable to come to an agreement on cost sharing with The Dominion.

The Dominion, which in August 2006  had demanded about $77,000 from Siddoo Kashmir, was not a party to the lawsuit, which was filed in 2011. The Dominion’s demand was based on the amount it paid on a property damage claim to Strata plus the $25,000 deductible on that policy.

The Strata property consists of 14 residential units. Siddoo Kashmir undertook work on two adjacent lots in December 2005 when a backhoe operated by its demolition contractor ruptured a water main.

“As a result, the Strata’s lands were damaged by water escaping from Siddoo’s property,” Judge Fitch noted in background with his decision. “In 2006, Dominion paid the Strata for water-related damage it incurred as a result of this incident less the $25,000 deductible under the Strata’s policy.”

Then Dominion sent its demand, for $77,165.77, to Siddoo Kashmir. But Siddoo Kashmir’s adjuster, Brouwer Claims Canada & Co. Ltd., advised that the excavation was done “without Siddoo’s knowledge or permission.

“Further, Siddoo advanced the position that any losses suffered by the Strata were contributed to by the inadequacy of its own surface drainage system”

So Siddoo offered to settle for $35,531.04 but then in February 2007, The Dominion made a written counteroffer to settle for $71,062.07. Brouwer then reaffirmed Siddoo’s offer in a letter dated April 10, 2007.

The only issue in the lawsuit for which Judge Fitch issued his ruling March 25, 2013 was whether, by accepting Brouwer’s reaffirmed settlement offer on September 30, 2009, Dominion had accepted within a “reasonable time.”

Judge Fitch ruled the offer had not been accepted within a reasonable time.

Between 2007 and 2009, a new condo board was put in place and court records indicate that records over Strata’s claim were not kept by old board. Dominion had also advised a lawyer for Strata that the carrier “had no objection to the Strata pursuing Siddoo for its deductible and that it would provide the adjuster with a release of Dominion’s portion of the claim.”

In September 2009, The Dominion contacted the Strata’s lawyer again to discuss the limitation period for the commencement of proceedings and to advise it was closing the file on Strata’s claim. That’s when Strata’s lawyer advised The Dominion of his opinion that the April 2007 offer Brouwer made on behalf of Siddoo Kashmir (re-affirming Siddoo Kashmir’s initial settlement offer) could still be accepted, so The Dominion wrote its letter of acceptance to Brouwer.

But Brouwer, according to court records, did not respond on behalf of Siddoo Kashmir, and in 2011, Strata sued Siddoo Kashmir.

Strata argued that the 2007 offer “did not specify or imply a deadline for acceptance” but that Siddoo had written to Dominion that it was content to “await the decision” of Strata.

“With respect to the nature and character of the subject matter in issue, counsel for the Strata notes that unlike stock or perishable goods that may be subject to sudden changes or fluctuations in price and suggest the adoption of a shorter time for the acceptance of an offer not expressly stipulated to be time-limited, what is in issue in this case is a sum certain that all parties knew represented an insured loss,” Judge Fitch wrote.  “He submits that whether the Strata accepted Siddoo’s offer within a reasonable time must take account of these circumstances.”

But Siddoo Kashmir argued it “has been prejudiced by the delay as a consequence of losing the ability to defend the matter at trial and to seek contribution from a third party as the limitation period expired years before the Strata purported to accept the offer.”

The court noted: “With respect to the nature and character of the subject matter in issue, counsel for Siddoo notes that the loss concerned an unremarkable and straightforward property damage claim based in tort.”

Judge Fitch ruled that “it must have been apparent to Dominion and to the Strata that the Offer would not be increased,” adding that “no active settlement discussions and no correspondence or exchange of positions between the parties for 25 months between August, 2007 and September, 2009.”

In ruling that Siddoo Kashmir’s offer was not accepted within a reasonable time and that there “was no contract formed between the parties that the Strata can enforce,” Judge Fitch cited a 92-year-old decision by the Supreme Court of Canada, on a lawsuit filed by James Davidson, who was selling land on behalf of an estate. Davidson sued the buyer, James Norstrant.

In 1917, Norstrant had asked Davidson if he wanted to go in with him on the land purchase and Davidson said he would have to ask the sellers first. In December of that year, Norstrant then entered into an option agreement in which he assigned to Davidson a half-share interest in the land, for which the asking price was more than $84,000. Norstrant paid an installment of $10,000 to the owners and sold the land for a profit. Then, after obtaining consent from the sellers, Davidson paid Norstrant $5,000 plus interest in the spring of 1918, but Norstrant returned Davidson’s money without giving him his half share, so Davidson sued Norstrant.

The trial judge ruled in favour of Davidson, the Court of Appeal of Alberta overturned it but then in 1921, the highest court of the land restored the ruling of the trial judge, in part on the grounds that  “there was no unreasonable or undue delay on Davidson’s part in notifying Norstrant or in tendering to him the necessary money stipulated by the agreement … “

What was different in the Strata’s 2011 lawsuit against Siddoo Kashmir, Judge Fitch suggested in his decision Monday, was that there was an undue delay in the condo corporation’s response.

Court records indicate that Strata argued it took so long to accept Siddoo Kashmir’s settlement offer because the condo board and The Dominion “could not come to an agreement on a cost-sharing arrangement in the context of either arbitration or litigation and that the Strata was not at liberty to unilaterally take any steps, including accepting the Offer presented by Brouwer on behalf of Siddoo, without Dominion’s consent.”

But Fitch noted that the condo board “was dysfunctional and not actively pursuing the matter for a considerable portion of the 30 months that elapsed between Offer and acceptance.”

He added: “The reality is that the Strata and Dominion had considerable time in which to sort out their disagreements. They did not do so. The Strata Board was in disarray throughout much of this period and made only sporadic efforts to pursue the matter.”