| On April 6, the Court of Appeal of Québec rendered its decision in SNC-Lavalin inc. (Terratech inc. et SNC-Lavalin Environnement inc.) c. Deguise, 2020 QCCA 495.
Considering the importance of this decision for both the construction and insurance industries, RSS offers a series of newsletters discussing the main issues at stake. This is one segment of the complete series found here. |
June 30, 2020 — The Court of Appeal recently reviewed a decision issued by the Superior Court regarding the matter referred to as the “pyrrhotite case”. Essentially, several actions were filed by owners of residential or commercial buildings for damages to the foundations of their new constructions. The trial judge held the general contractors, the concrete companies, and a quarry to be jointly and severally liable for major construction defects affecting hundreds of buildings.
It is in this context that the Court of Appeal analyzed several litigated questions, including one regarding the cause of damages, brought by several defendants and their insurers (hereinafter “appellants”).
Superior Court conclusion
The Superior Court concluded that the only cause for the deterioration of the concrete was the oxidation of pyrrhotite in the aggregate. This conclusion was reached after a complete analysis of the expert’s evidence in the file. Consequently, any property containing 0.23% or more of pyrrhotite volume was affected by a defect:
| [1390] Thus, as soon as the proof allows concluding that the rate of pyrrhotite in volume is 0.23% and more, the defects are proved and the amplitude of the manifestation of the damages will be occurring in all probability, except for special cases discussed. [Deguise c. Montminy, 2014 QCCS 2672; Our translation] |
Appellants’ arguments
Appellants argued that only the mere evidence of 0.23% volume of pyrrhotite in the coarse aggregate could not allow plaintiffs to prove the presence of defects in their buildings if no apparent damage could be identified. It was also alleged that the damages claimed on 116 buildings were uncertain because concrete could resist deterioration despite the presence of 0.23% of pyrrhotite.
As an additional argument, appellants submitted that a depreciation factor should have been applied to account for the probable lifespan of the damaged buildings. Furthermore, they alleged that the trial judge did not always use his own analysis grid to determine if the buildings were affected by a hidden defect. In this regard, the Court established various factors such as the date of casting the concrete and a rating of the damages on a scale between the parties to get to a decision in the various litigation cases.
Court’s Decision
The Court of Appeal held that the notion that the damages to a building had to be corroborated by visible evidence was unfounded. According to the appellants, burying the concrete elements was considered as absolute natural protection against the adverse effects of pyrrhotite. The Court dismissed this argument, concurring instead with the Superior Court’s inferences. Indeed, the pyrrhotite volumetric rate of 0.23% established by the judge was the lowest rate at which signs of damage could be found and cause a building to require repairs. The Court claimed that even below this rate, a process of deterioration can exist without any apparent damages.
The evidence also demonstrated that there was a direct correlation between the level of pyrrhotite and the oxidation phenomenon in the concrete. Considering that the minimum rate of pyrrhotite volume was exceeded in the majority of buildings, certainty of damage in a foreseeable time was considerably increased. Regarding the determination of the 0.23% rate, the Court of Appeal emphasized that this value was supported by sufficient expert evidence.
Concerning the certainty of damages, the Court also rejected this argument stating that “the existence of the defect, its seriousness and the certainty of its manifestation are subsumed here in the 0.23% OPV rate accepted by the judge” [Our translation]. Based on the scientific evidence presented at trial, it was possible for the judge to establish with “relative certainty” [Bourassa c. Germain, [1997] R.R.A. 679, p. 682, 1997 CanLII 10708 (C.A.)] that the buildings affected by that pyrrhotite level were damaged and therefore that the defendants’ liability was triggered.
On the other hand, the appellants claimed that no reasonable depreciation factor based on the probable buildings’ lifetime had been applied. The Court showed deference on this issue considering that the trial judge’s conclusions were based on the preponderant evidence on file.
Lastly, the Court concluded that the analysis grid had been adequately followed by the judge and that there was no need to intervene, as the criteria are not cumulative and were applied with discernment according to their purpose. To require that each of the plaintiffs satisfy all factors in the grid would be excessive, but ignoring the criterion which founded the central point of the defendants’ liability, namely the pyrrhotite rate of 0.23%, would be an error.
