Construction projects can be fraught with difficulties, particularly when development involves multiple stakeholders. Questions of liability for delays, negligent construction, or damage can be challenging even when all parties involved are identified. But what about when the party responsible for injury or damage is entirely unrelated to the construction project in question?

The Court of Queen’s Bench of Alberta recently had to consider this issue in a case where a deliberate fire was started at a property under construction, causing substantial damage to neighbouring properties.

Arson to defendants’ construction site caused damage to plaintiff’s property

In Condo Corp No. 1023525 v. Carlisle, the parties appearing before the Court were three corporations. The plaintiffs own a condominium complex adjacent to a site where the two defendant corporations were constructing their own set of four condominium buildings.

Sometime in the early morning of September 29, 2013, an unknown arsonist set one of the defendants’ buildings on fire. It eventually spread to the other two buildings under construction. All three buildings were destroyed. The plaintiff’s building, located across the street, also sustained damage.

Defendants relied on off-site security monitoring services, recordings destroyed by fire

The security at the defendants’ construction site primarily consisted of fencing and video surveillance, monitored remotely. The fence was made of 10-foot-high panels bound together with wire surrounding the entire perimeter of the site. Gates at each end of the area were locked at night. The Court heard that the type of fencing in place was typical of any other construction site. 

The video surveillance system was put in place as an alternative to having on-site security guards. There were enough cameras in place to cover the entire perimeter and the interior of the site, and a security company monitored the video feeds at an off-site location. 

Unfortunately, the computer server containing the surveillance recordings taken during the night of the arson was destroyed by the fire. Notes taken by the security team in the early evening stated that one gate had been open for moving building materials, but there was no mention of an open gate in later notes.

Plaintiff argued defendants liable for failing to employ sufficient security measures

The parties agreed on the monetary damages but were at an impasse concerning the question of liability. The plaintiff argued that it should have been within the “reasonable contemplation” of the defendants that arson could occur if precautions weren’t taken to prevent it, including better security of the construction site. The plaintiffs said the inadequate precautions taken by the defendants were insufficient, and thus they should be held liable for the damage caused to the plaintiff’s property.

In response, the defendants stated that no law imposes a duty on them to protect the plaintiff’s building from “tortious or criminal acts of a third party.” The defendants submitted that even if such a law existed, their conduct met any applicable standard of care.

Establishing a duty of care at law

The current framework for establishing whether a duty of care exists for torts or criminal actions was established by the Supreme Court of Canada in its 2001 decision of Cooper v. Hobart. To establish a duty of care, the plaintiff must prove the following three elements:

1. The harm complained of was a reasonably foreseeable consequence of the defendants’ alleged breach;
2. There is sufficient proximity between the parties so that it would not be unjust or unfair to impose a duty of care on the defendants;
   • “Proximity” describes the type of relationship expected to impose a duty of care to guard against foreseeable harm. Courts look at categories of relationships that have been previously recognized as creating a duty in tort to determine whether the particular relationship in question is analogous to them;
3. There are no policy reasons that would make the imposition of the duty of care unwise or unfair to negate or otherwise restrict that duty.

Plaintiff claimed defendants should have known of security, arson risk

The plaintiff’s position was that the harm they experienced was reasonably foreseeable by the defendants because the defendants took some security measures. As a result, the plaintiff said, it could be inferred that the defendants knew there was a threat of arson. The plaintiff also alleged that the defendants failed to detect that the fencing had been breached and a fire had been set.

Court: No “special relationship” to extend liability from unknown arsonist to defendants

The Court explained that “reasonable foreseeability” is only found when a defendant has negligently caused or permitted the creation of a danger and that the harm that comes from that danger is reasonably foreseeable. On the facts of the case, the Court found that the defendants were making normal and ordinary use of their property and acted in a “socially acceptable” manner. There was no evidence that an unusual danger had been apparent, particularly as there had not been a danger of fire on the defendants’ previous construction sites.

While the unknown arsonist was undoubtedly liable for the damage, the Court held that there must be a “special relationship” between the arsonist and the defendants for that liability to transfer to the defendants. As there was no evidence of such a relationship, the defendants could not be liable for the arsonist’s actions.

As a result, the Court found that the plaintiffs’ claim failed at the first step of the Cooper v. Hobart test and dismissed the action.

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