Prescriptive Regimes in Construction Disputes

By: Gabriel Di Genova

The Court of Appeal recently clarified the proper application of competing prescriptive delays in the context of constructions disputes. In Lacour c. Construction D.M. Turcotte T.R.O. Inc., 2019 QCCA 1023, the judgment rendered by the first instance Court was held, maintaining the matter should have been dismissed on the basis of prescription.

The facts concern the acquisition of a lot in 2000, after which the purchasers mandated a general contractor (“Turcotte”) to complete a residential build. Before the start of the work Turcotte mandated SNC-Lavalin GEM Québec Inc. (“SNC-Lavalin”) to complete an analysis of the lot’s soil bearing capacity and provide recommendations for the planned construction.

By January 2001 construction was completed and the residence delivered to the purchasers. As early as 2003 the owners identified fissures in the building and denounced the situation to the general contractor. The fissures were not initially identified as problematic, the parties believing they were a normal sign of settling in newly constructed buildings. However, additional fissures and other signs of structural instability developed gradually in subsequent years.

As early as 2012 the general contractor suspected the increasingly visible degradation of the property was more serious than initially believed. During discovery, it was established that in 2012 Turcotte went so far as inviting the owners to launch legal proceedings, such that as the contractor, it could in turn call SNC-Lavalin in warranty for its services as the expert having conducted the soil analysis for the construction. As early as June 2013, a third-party expert acting for the owners identified the problem and the substantial corrective work required. Proceedings were finally launched by the owners in August 2016 against Turcotte for damages issue from the corrective work. Turcotte called SNC-Lavalin in warranty shortly thereafter.

In June 2018, Turcotte and SNC-Lavalin presented an Application to Dismiss based on both a declinatory exception (168 C.C.P.) and on the basis of being unfounded at law (51 et seq. C.C.P.). The Superior Court dismissed the case in July 2018.

The Court of Appeal addresses two questions:

• Was the commencement of the prescriptive period sufficiently clear (as per the Originating Application) to justify dismissing the claim?
• In the case of a declinatory exception (168 C.C.P.), should the Superior Court have considered expert reports and depositions to justify dismissing the claim?

The Court of Appeal analyses the relationship of competing prescriptive regimes, namely, between the 5-year prescription identified at 2118 C.C.Q. (loss of the work occurring within five years after the work was completed) and the general 3-year regime of contractual liability (1458 and 2925 C.C.Q.). The Court of Appeal reiterates that the maximum prescriptive period for presumed liability of participants to the construction (2118, 2119 and 2121 C.C.Q.) is 8 years (5 + 3). In this case, the matter would be prescribed:

[42] Dans le dossier dont nous sommes saisis, la demande introductive d’instance des appelants énonce que les travaux de construction de leur résidence ont été terminés en janvier 2001 et que les préjudices affectant celle-ci se sont manifestés graduellement. La période maximale pour invoquer le régime particulier de responsabilité présumée de l’entrepreneur en vertu de l’article 2118 C.c.Q. expirait donc au plus tard dans les huit ans, soit en janvier 2009. Le délai de prescription pour invoquer la responsabilité de Turcotte conformément à l’article 2118 C.c.Q. était donc expiré lorsque les appelants ont introduit leur recours le 12 août 2016.

With the owners being prescribed from making a claim via the regime of presumed liability, the Court of Appeal considers whether the liability of the participants to the construction could be maintained strictly via the general 3-year regime of contractual liability (1458 C.C.Q.). In this case, again the claim failed, but this time due to the nature of the findings during discovery, namely that

• In 2012 the owners had been encouraged by the Turcotte to commence proceedings; and
• An expert report provided the owners with sufficient information about the problem as early as June 2013.

Finally, the Court of Appeal nuances that if the Application to Dismiss was considered strictly as a declinatory exception (168 C.C.P), the application would have failed, it being premature to dismiss the claim given the content of the Originating Application. Notwithstanding this, Court of Appeal affirms that given the discovery that had already been conducted in the file, and given the content of the expert report, the matter should have been dismissed as having been clearly unfounded and abusive, via 51 et seq. C.C.P.

This case highlights the importance of acting quickly in commencing proceedings in the context of construction defects (in design or execution), irrespective of the degree to which the damages have manifested themselves at a point in time. Furthermore, the Court of Appeal reiterates the value of conducting strong discovery, not only as a means to prepare for trial, but to possibly avoid a trial altogether.