Globalnet Management Solutions Inc. v. Cornerstone CBS Building Solutions Ltd.

BC appellate court holds construction companies liable for damages
In the Court of Appeal of British Columbia’s decision in Globalnet Management Solutions Inc. v. Cornerstone CBS Building Solutions Ltd., 2018 BCCA 303, the Court held Cornerstone CBS Building Solutions Ltd. and Linwood Homes Ltd. liable for damages, and that the trial judge erred in ruling that the plaintiffs had suffered no loss due to the defendants’ breach of contract and negligence.

Background of dispute
In early 2005, Globalnet Management Solutions (“Globalnet”) purchased property in Barriere, British Columbia and entered into a contract with Cornerstone CBS Solutions Ltd. (“Cornerstone”) who in turn retained its parent company, Linwood Homes Ltd. (“Linwood”), for the construction and design of a house. This house was to be for use by Globalnet’s two principals and their families.
After the house was completed, Globalnet discovered water damage due to a leaking roof and cracks in the retaining walls. Globalnet retained third-party advice from an engineering firm to assess the damage and monitor these issues. Later, a construction firm was contracted to carry out suggested repairs to remediate the damage. 
In late 2008, Globalnet transferred the subject property to two trusts established for the benefit of the principals’ families, on a “roll-over” basis for “fair market value.” 
In 2009, Globalnet and the trusts commenced action against Cornerstone for breach of contract and negligence, and Linwood for negligence. In 2010, the suggested remedies for the property issues proved unsuccessful, and eventually, Globalnet retained a construction firm to carry out significant repairs, including having to replace the retaining wall at a considerable expense. 
In the proceeding, the trial judge found in favour of the plaintiffs that breach of contract and negligence were proven and that Globalnet took appropriate measures to replace the retaining walls, as they posed a danger to the health and safety of the home’s occupants. 
The defendants argued that Globalnet was under no obligation to arrange and pay for the remedial work after the property transfer and that “voluntary” payments are not recoverable. They held that since the property had been sold to the trustees for “fair market value,” Globalnet suffered no loss. The defendants also argued that the trusts suffered no loss as Globalnet had carried out the repairs at its own expense. In this instance, the trial judge denied recovery, as the plaintiffs were found to have suffered no loss.

On appeal, the Court held that the trial judge erred in ruling that the plaintiffs suffered no loss by reason of the defendants’ carelessness. The Court held that the repairs were required and Globalnet had a moral duty to remediate the damages. The Court emphasized at least the importance on holding wrongdoers responsible for their carelessness. 
The Court of Appeal allowed recovery by the plaintiffs in the amount of damages fixed by the trial judge. 
Counsel for the plaintiffs was Lawson Lundell LLP, with a team including Michael B. Morgan and Laura L. Bevan.
Counsel for the defendants was Borden Ladner Gervais LLP, with a team of D. Ross McGowan and Lindsey von Bloedau.