January 19, 2007

Legal Issues

Interior environment requires careful consideration

Concerns over mould cited in several suits

IAN HARVEY

correspondent

As the link between adverse health effects and mould exposure grows, liability for insurance and other industry groups – including those in the building sector – are likely to increase.

When it comes to the U.S. courts, the answer seems to be above and beyond most standards, says Marc McAree, a lawyer with Willms & Shier Environmental Lawyers LLP, specializing in environmental law.

“The big judgments out of the United States suggest that juries award huge sums when the insurer act in bad faith,” said McAree, citing a recent case in which the court ruled an insurance company didn’t go far enough in remedial repairs resulting from water damage after a pipe burst in a Texas home in 1997.

The water leak led to mould. In 2001 a Texas jury awarded $32 million US in damages, including $12 million in punitive damages and $5 million for emotional stress. The award was reduced to $4 million plus $8.9 million in legal fees on appeal in 2003 but it’s a clear warning the courts take environmental hazards inside a building just as seriously as they do external hazards.

“In Canada we tend to see that the courts are less reluctant to grant bad faith awards,” said McAree, who also sits on the Toronto Construction Association environmental committee which he says has worked hard to raise the awareness on environmental issues in the construction industry.

"The people in the indoor air quality testing business are very busy"

Marc McAree

lawyer

However, interest in the legal issues is gaining ground in Canada.

As a result, the focus is shifting from the outdoor environment to the indoors where people spend 70 to 90 per cent of their time.

“The people in the indoor air quality testing business are very busy,” he said, stressing prevention is always better than cure and that’s where architects, engineers and other construction industry professionals can make a difference.

Legal issues arising from environmental claims in a building run the gamut from breach of contract, to tort and negligence. Not only are insurance companies targets for lawsuits but just about anyone involved with the project may be named, including contractors, subs, manufacturers, suppliers, corporate directors and officers, vendors, architects and others, McAree said.

Mould is the biggest issue in indoor environmental quality, followed by asbestos and then a range of contaminants, from chemicals leaching from the foundation to spills and off-gassing from new materials or even regular office equipment such as printers.

The list of potential toxic hazards is long and complex and includes carbon monoxide, formaldehyde, lead, organic chemicals, outdoor air pollution, particulate matter, radon gas and even tobacco smoke.

Part of the problem is technology itself. As buildings leverage tighter and tighter envelopes, there’s less fresh air being exchanged while the list of chemicals used in the process are also growing.

Sometimes even the most earnest intent can backfire, notes McAree’s colleague Barry N. Spiegel, director of research at Willms & Shier and also a lawyer.

He cited a California case in which wet lumber had been brought inside to a residential construction site and used in interior walls without being properly dried out. Mould grew as a result.

The family sued the lumber company supplying the materials, claiming some of them became ill and a young son suffered brain damage. They argued primarily that the supplier had failed to meet industry standards to keep lumber dry to prevent mould. The case was settled out of court for $22 million US in Nov. 2005.

The classic Canadian cases are the so-called British Columbia “leaky condos” where an owner claimed the vendor failed to maintain and repair the exterior, leading to leaks and mould. The case was dismissed at appeal because the court said the condo corporation took reasonable steps to maintain and repair problems, but it was the first of many such cases.

“In Canada, personal injuries as a result of things like mould or sometimes other environmental factors are harder to provide, though there is an asbestos class action suit coming forward this month (December) against the Toronto Transit Commission by a group of employees,” Spiegel said. “Everyone reacts differently and sometimes only the people most sensitive are affected in environmental issues. And litigation is expensive.”

As a result of some big decisions in the U.S., insurance companies have tightened up their practices and are more willing to go further in fixing damage to prevent issues like mould, Spiegel said.

He said Canadian industry standards are there to protect not only the eventual tenants or workers in a building, but the designers and builders too if they adhere to them.

McAree stressed the unexpected can happen.

“For example, a chlorinated solvent in a subsurface can volatize (turn to a gaseous state) and breach through the concrete and contaminate the indoor air,” he said.

“It’s a prudent thing to document not only all the issues that might arise on a project but what the proper course of action would be too,” he said, noting issues cited in a suit may include faulty design, construction or maintenance, products liability, failure to fix a problem properly once identified, failure to disclose or warn occupants or workers.

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