Updated: This article has been updated with information from a pre-trial hearing that took place in BC Supreme Court on Sept. 22 and 23, 2022.
WestUrban Developments Ltd. is suing engineering firm Sorensen Trilogy in the BC Supreme Court over alleged structural deficiencies at apartment complexes in Nanaimo and Campbell River.
The Arbutus Apartments, located at 5085 Uplands Dr. in Nanaimo, is a 5-storey, 59-unit building. The Watermark Apartments, at 2036 South Island Hwy., Campbell River, boasts four storeys and 51 units.
WestUrban completed construction on both buildings in late 2019 and undertook structural upgrades on them between 2021 and 2022. WestUrban alleges the work was needed to remediate dangerous defects in the buildings’ foundations and structure and that Sorensen Trilogy is responsible for those defects. Sorensen Trilogy denies the allegations, and they have not been proven in court.
At least three WestUrban developments are now known to have required structural work within a few years of construction. Besides the two at issue in this lawsuit, the Magdalena apartment building in North Cowichan, built in 2019, is in need of major structural remediation. In late July 2022, WestUrban notified all tenants of its intention to evict them in order to do that work.
WestUrban has launched a separate lawsuit against a different company, Krahn Engineering, alleging its engineers are responsible for the structural issues at the Magdalena and the costs of repair. Krahn Engineering has not responded to those claims.
Housing Under Pressure: The Discourse investigates structural issues at the Magdalena
The nature of the alleged deficiencies at the Nanaimo and Campbell River buildings are much less significant than those at the Magdalena. Remediation work has been completed, without requiring evictions, at a small fraction of the anticipated cost of the Magdalena repairs.
“In the case of the buildings you referenced in Nanaimo and Campbell River, all structural deficiencies have been fully remediated,” an emailed statement from WestUrban to The Discourse reads.
In Nanaimo and Campbell River, the issues came to WestUrban’s attention in December 2020, after the buildings’ owners agreed to sell the properties to Starlight Investments — a major real estate investment trust (REIT) — according to the notice of civil claim. The owners agreed to cover the remediation costs as part of the purchase deal. WestUrban and the buildings’ former owners now seek to recoup those costs through the lawsuit against Sorensen Trilogy.
WestUrban filed the lawsuit in March, 2021. The matter is scheduled to go before a judge on Jan. 8, 2024. The hearing is expected to last up to 20 days.
Sorensen Trilogy also engineered Langford’s troubled Danbrook One
Sorensen Trilogy, which engineered the WestUrban Arbutus and Watermark apartments, faces graver allegations regarding its involvement in Danbrook One, an 11-storey residential building in Langford. The building, located at 2770 Claude Rd., has since been renamed RidgeView Place. (WestUrban did not build, and is not connected with, Danbook One.)
The City of Langford revoked the occupancy permit for that building in December 2019 due to urgent concern for residents’ safety, just months after tenants started moving in.
Brian McClure, who led the engineering of that project on Sorensen Trilogy’s behalf, faced fines and contributions totalling $57,000 and lost his licence to practice engineering for at least two years after Engineers and Geoscientists BC (EGBC) investigated his role in the development.
As part of the consent order, McClure agreed that he demonstrated “incompetence” and “unprofessional conduct.” Specifically, he wasn’t qualified to engineer a building like Danbrook One, his designs did not meet building code standards, he failed to seek a required independent review of the designs and he didn’t adequately inspect the building’s construction.
Ted Sorensen, the principal and senior structural engineer for Sorensen Trilogy, also faces possible disciplinary action regarding his role in designing Danbrook One. The allegations against Sorensen will be considered at an EGBC disciplinary hearing, scheduled to take place from May 8 to 17, 2023.
A lawsuit by the current owners of Danbrook One, Centurion Property Associates, against Sorensen Trilogy, McClure and others, is ongoing.
Alleged negligence in the engineering of the Arbutus and Watermark apartments
In its Notice of Civil Claim, WestUrban alleges that McClure and Sorensen Trilogy’s designs for the Arbutus and Watermark apartments were negligent and failed to meet the standards of the building code. Concrete footings were too small to support the building, in addition to other structural deficiencies.
Taken together, the designs resulted in dangerous structural defects that, if not rectified, present “a real and substantial danger to the life and safety of occupants and others,” according to the lawsuit.
The needed remediation work was extensive, according to the lawsuit. On Sept. 21, 2021, the City of Nanaimo issued a building permit to WestUrban for “seismic upgrades” at 5085 Uplands Dr., at a projected cost of $125,000. The work passed final inspection on Aug. 31, 2022.
The City of Campbell River issued a building permit for seismic upgrades at 2036 South Island Hwy., which passed final inspection on Sept. 27, 2021, according to an email from city staff.
WestUrban also alleges McClure and Sorensen Trilogy failed to seek independent reviews of the designs, contrary to EGBC bylaws. The defendants respond that their obligations to EGBC do not create a duty or obligation to WestUrban or the other plaintiffs, and therefore have no bearing on the case.
The lawsuit alleges Sorensen Trilogy had a duty to warn the plaintiffs of the defects. McClure and Sorensen Trilogy knew or ought to have known about the Arbutus and Watermark defects, in part because they had been notified of defects in other recent projects, including Danbrook One.
Sorensen Trilogy had additionally been notified of defects in recent projects that were built by or connected with WestUrban, the lawsuit alleges. WestUrban did not respond to The Discourse’s questions about which other projects these are.
McClure and Sorensen Trilogy declined The Discourse’s request for comment. In court documents, the defendants respond that “allegations or matters respecting other projects are legally irrelevant.”
Sorensen Trilogy denies allegations, claims limited liability
In its response to the lawsuit by WestUrban, Sorensen Trilogy denies its designs were negligent and resulted in structural defects in the Arbutus and Watermark buildings.
The design services provided by McClure and Sorensen Trilogy “were provided with the appropriate level of care, skill, diligence, and competence and in accordance with the appropriate standard of care,” according to the Response to Civil Claim.
The legal issues at play in this case are technical and complex. Part of this comes down to the corporate structure that WestUrban uses to facilitate its developments. WestUrban Developments Ltd., as a corporate entity, never technically owned the properties or projects in question. The projects were legally owned by two numbered companies, related to but separate from WestUrban. And groups of investors in each of the projects, brought together by WestUrban, formed limited liability partnerships (LLPs) with financial interest in the projects. These five related corporate entities — WestUrban, the two numbered companies and the two LLPs — are joint plaintiffs in the case.
A significant part of Sorensen Trilogy’s defense rests on the claim that WestUrban agreed, in signed contracts, to limit Sorensen Trilogy’s liability with respect to “negligent acts or omissions” to a maximum of the fees paid for its services, and would not be responsible in any way for loss of profits, however caused. WestUrban paid Sorensen Trilogy $40,955 to engineer the Arbutus Apartments and $53,380 to engineer the Watermark Apartments, according to another court document.
Sorensen Trilogy claims the company was led to believe that WestUrban knowingly assumed the risk of any financial losses related to the project, including those that might result from issues related to the structural designs, according to the response to the civil claim. And, Sorensen Trilogy was led to believe that, if it were held liable for any negligent acts or omissions related to the project, the most it could be liable for is $40,955 with respect to the Arbutus project and $53,380 with respect to the Campbell River project.
But the plaintiffs claim that Sorensen Trilogy is liable for all of the costs and losses related to the alleged defects. The project owners — the numbered companies and the investors making up the LLPs — suffered losses as a direct result of Sorensen Trilogy and McClure’s actions, according to the court documents. Sorensen Trilogy had no contract with the project owners and no reason to believe its liability against them would be limited, the plaintiffs allege. WestUrban did not breach any contract or duty, and have no responsibility for the defects and associated costs, court documents claim.
Further, it would be “unconscionable and contrary to public policy” for a structural engineering firm to contractually limit its liability in cases where it creates dangerous defects that pose serious risks to the public, according to a response filed by the plaintiffs.
But the plaintiff companies are all related, and are managed by the same people, the defendants claim in their response. As such, when WestUrban contractually agreed to limit Sorensen Trilogy’s liability, it did so on behalf of the project owners, too. If Sorensen Trilogy is held responsible for the owners’ losses, that would amount to a breach of WestUrban’s contractual duties to the engineering firm.
If Sorensen Trilogy is held liable for the owners’ losses, then WestUrban should be ordered to pay damages to Sorensen Trilogy for “unjust enrichment,” according to a counterclaim filed by the defendants. WestUrban led Sorensen Trilogy to believe it would be protected from such liability, and would therefore profit unfairly if the engineering firm is left on the hook for the owners’ claims.
At a pre-trial hearing on Sept. 22, Sorensen Trilogy asked a judge to dismiss the claims of the projects’ former owners ahead of the trial. Alternatively, the application asked that Sorensen Trilogy’s total liability with respect to the plaintiff’s claims be limited to a maximum of the fees it was paid for the engineering work.
On Sept. 23, Justice Michael J. Brundrett dismissed the application to decide these issues before the trial. He acknowledged “the force” of the defendants submissions, but ultimately found that “there’s enough layers of complexity here that I think it’s going to have to go to trial.”
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