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The Infectiousness of Mould: Toxic Mould Claims in Canada?1

FOOTNOTES

1. Tom Heintzman is a partner and Chris Hubbard is an associate in the McCarthy Tetrault litigation department in Toronto. Aurther Emay is an articling student in the Toronto office of McCarthy Tetrault.

2. Ballard v. Fire Ins. Exch. (Tex. Dist. Ct.) (No. 99-05252).

3. Chris Hill "US attorneys cash in on $12 billion mould claim" Insurance Day, April 30, 2002.

4. David E. Leiva, "Mould concerns sweep the real estate industry" The Times-Picayune (New Orleans) September 28, 2002.

5. Glenn Gibson & Davud Pym Sr. "Toxic Mould Claims in Canada" Crawford Adjusters Canada, August 2002 at 2.

6. Glenn Gibson & David Pym Sr. "Toxic Mould Claims in Canada" Crawford Adjusters Canada, August 2002 at 2.

7. Source: Insurance Bureau of Canada.

8. John P. Sweeney and Jennifer M. Schwartzott, "Toxic? Schmoxic! It's Just Good Old Mold" August 2002, For The Defense 23 at 25 and, R. Steven Rawls, "Mold, Another Four-Letter Word Every Coverage Attorney Needs to Know" A New World for Insurance Coverage Attorneys, 10th Annual Insurance Coverage Litigation Committee, February 21-23, 2002 at 2.

9. Glenn Gibson & David Pym Sr. "Toxic Mould Claims in Canada" Crawford Adjusters Canada, August 2002 at 2.

10. Russell Nassof, "Understanding Microbial Issues - The Industrial Hygiene Perspective" April 2002 DRI Mould Conference at 17.

11. R. Steven Rawls, "Mold: Another Four-Letter Word Every Coverage Attorney Needs to Know" A New World for Insurance Coverage Attorneys, 10th Annual Insurance Coverage Litigation Committee, February 21-23. 2002 at 1.

12. See New York City Department of Health, Office of Environmental and Occupational Epidemiology, Facts about Mould, March 2001.

13. Russell Nassof, "Understanding Microbial Issues - The Industrial Hygiene Perspective" April 2002 DRI Mould Conference at 17.

14. Frederick Fung, "What is Mould All About" April 2002 DRI Mould Conference at 153

15. Michelle Glass, "Toxic Mould", American Re-Insurance Company, September 2001

16. Michelle Glass, "Toxic Mould", American Re-Insurance Company, September 2001

17. Frederick Fung, "What is Mould All About" April 2002 DRI Mould Conference at 155

18. http://www.newswire.ca/
releases/November2001/
09/c59122.html

19. Hannelte Stockenstrom, "Legal Considerations Solving Water Intrusion and Mould Problems". Solving Water Intrusion and Mould Problems in British Columbia, January 23, 2002 at 3-4, and Frederico, Thomas "The Litigation Perspective - What is Mould All About" April 2002 DRI Mould Conference at 5-6.

20. Ballard v. Fire Ins. Exch. (Tex. Dist. Ct.) (No. 99-05252).

21. Brian J.E. Brock, Christopher R. Dunn, "Winning Strategies for Litigating Toxic Mould Claims" The Canadian Institute Insurance Litigation, June 13 & 14, 2002 at 9.

22. Peter R. Braund, "Litigating Toxic Mould  Claims. Is Mo(u)ld Gold?" The Canadian Institute: Insurance Litigation, June 13 & 14, 2002 at 12.

23. Frederico, Thomas "The Litigation Perspective - What is Mould All About" April 2002 DRI Mould Conference at 5 & 7, and Michelle Glass, "Toxic Mould", American Re-Insurance Company, September 2001.

24. Swan River Hospital District No. 1 v. MMP Architects (2001), 109 A.C.W.S. (3d) 334 (Man. QB), College Housing Cooperative Ltd. v. Baxter Student Housing, [1975] 1 W.W.R. 311 (Alta C.A). In U.S. see Centex-Rooney Construction Co. v. Martin County, 706 So. 2d 20 (Fla. Dist. Ct. App. 1997).

25. Fraser v. Knox, [1999] C.C.L. 12301 additional reasons January 25, 1999, Doc 97-CV2047 (Ont. Gen. Div.).

26. Derosa v. Horning (2001), 110 A.C. W.S. (3d) 213 (B.C. Supreme Court)

27. Taub v. Manufacturers Life Insurance (1998), 40 O.R. (3d) 379 (Ont. Ct. (Den Div.)), Trakala v. Hodges (1995), 59 A.C.W.S. 329 (B.C. Supreme Court); Derosa v. Horning (2001), 110 A.C.W.S. (3d) 213 (B.C. Supreme Court); Davis v. Kelly (2001), 110 A.C.W.S. (3d) 566 (P.E.I. Supreme Court). In U.S. see New Haverford Partnership v. Stroot, 722 A.2d 792 (Del. 2001).

28. Brian J.E. Brock. Christopher R. Dunn, "Winning Strategies for Litigating Toxic Mould Claims" The Canadian Institute: Insurance Litigation, June 13 & 14, 2002.

29. Principe v. Groupe Commerce Cie D'Assurances, [2000] J.Q. No. 1582 (Quebec Sp. Ct. Civil Division), Alexander v. Zurich, [2001] Man J. 487 (Q.B.), El-Merhbi v. Lloyd's of London, [1995] O.J. No. 1866 (Que S.C.). In U.S. see Ballard v. Fire Ins. Exch. (Tex. Dist. Ct.) (No. 99-05252).

30. Michelle Glass, "Toxic Mould", American Re-Insurance Company, September 2001.

31. Gillis, S.G. "Indoor Environmental Contamination and the Class Proceedings Act, 1992" A Lawyer's perspective: April 2002 Lorman Seminar - Managing the Risk of Mould in Buildings in Ontario at 2.

32. MacDonald v. Dufferin-Peel Catholic School Board, [2000] O.J. No. 5014 (Ont. Sup. Ct.)

33. Frederico, Thomas "The Litigation Perspective - What is Mould All About" April 2002 DRI Mould Conference at 5.

34. Michelle Glass, "Toxic Mould", American Re-Insurance Company, September 2001.

35. United States Environmental Protection Agency, "Mould Remediation in Schools and Commercial Buildings" EPA 402-K-01-001 (March 2001), p.2 and see Dr. Eckardt Johanning, "BioAerosols, Fungi and Mycotoxins: Health Effects, Assessment, Prevention and Control" (1999).

36. "Report of an Expert Panel on Fungal Contamination Indoors", Ontario Ministry of Health, July 1999. See also "Fungal Contamination in Public Buildings. A Guide to Recognition and Management (June 1995)" Health Canada See also "Mould in Workplace Buildings", Ministry of Labour, December 2000, Centers for Disease Control and Prevention, National Center for Environmental Health, "Question and Answers pm Stachybotrys chartarum and Other Moulds", and Page & Trout, "The Role of Stachybotrys Mycotoxins in Building-Related Illness" 62 AM. Inus. Hygiene Association Journal 644 (Sept.. - Oct. 2001).

37. See for example, New Haverford Partnership v. Stroot, (Del. Sup. Ct. 2001) 772 A.2d 792 at 796 and Miller v. Lakeside Condominium Assoc, (1991) 1 Cal. Pp. 4th 1611 at 1616.

38. 706 So. 2d 20 (Fla. Dist. Ct. App. 1997).

39. 722 A.2d 792 (Del. 2001).

40. (Tex. Dist. Ct.) (No. 99-05252).

41. No. 00AS04795 (Sup. Ct. Sacramento County, California, Nov. 7, 2001).

42. Guy Carpenter Seminar Report "Toxic Mould: A Growing Risk?" November 2001 citing www.toxlaw.com.

43. Club at the Wood Ranch v. Roberts Group Inc., No. SC 021522 (Sup Ct. Ventura County, California) (settled for $1.32 million), McCulloch Townhomes Association v. USC Real Estate Development, Corp., No. BC220405 (Sup. Ct., New York County, New York) (settled for $1.17 million). Three cases that recently settled in Sacramento also brought in relatively high settlement amounts based on allegations of personal injury and property damage due to mould: Lund v. Charles Slayer, No. 99A04912 (settled for $77,000); Bendzick v. FPI Management Inc., No. 99AS05719 (settled for $70,000); and Martinez v. Baywood Villas Homeowners Association, No. SC 055312 (settled for $150,000).

44. College Housing Co-operative Ltd. v. Baxter Student Housing, [1975] 1 W.W.R. 311 (Alta. C.A.), reversed [1976] S.C.R. 475. This case was principally concerned with priorities among creditors.

45. [1995] A.Q. No. 1866.

46. (1996), 20 B.C.L.R. (3d) 343, affirmed [1998] B.C.) No, 105 (C.A.).

47. [1997] O.J. No. 4131 (Gen. Div.).

48. [1997] A.Q. No. 4318 (Civil Division).

49. [1999] C.C.I. 12301, additional reasons January 25, 1999, Doc. 97-CV-2047 (Ont. Gen. Div.). affirmed February 21, 2000, Doc. Ottawa 98-DV-277 (Ont. Div. Ct.).

50. [2000] O.J. No. 1360 (S.C.J.) (N.D. This decision is currently under appeal).

51. 2000 CarswellOnt 5084 (S.C.J.).

52. 2000 CarswellMan 522 (Q.B.).

53. [2000] A.Q. No. 1582 (Civil Division).

54. (2001), 46 R.P.R. (3d) 111 (B.C.S.C.)

55. (2001), 109 A.C.W.S. (3d) 334 (Man.Q.B.), reversed 2002 CarswellMan 325.

56. (2001) M.J. No. 487 (Q.B.).

57. (2001), 110 A.C.W.S. (3d) 566 (P.E.I. S.C.).

58. 2002 CarswellOnt 1663 (S.C.J.)

59. 2002 CarswellNat 2687 (Fed. Ct. Trial Div.).

60. 2002 CarswellOnt 1695 (S.C.J.).

61. 2002 CarswellBC 2288 (S.C.).

62. (1998), 40 O.R. (3d) 379 (Ont. Ct. (Den Div.)).

63. Taub v. Manufacturers Life Insurance (1998), 40 O.R. (3d) 379 (Ont. Ct. (Den Div.)) at paras. 2 & 5.

64. [2000] O.J. No. 5014 (Ont. Sup. Ct.).

65. MacDonald v. Dufferin-Peel Catholic District School Board, [2000] O.J. No. 5014 (Ont. Sup. Ct.) at paras 16-17.

66. Taub v. Manufacturers Life Insurance (1998), 40 O.R. (3d) 379 (Ont. Ct. (Den Div.)) at para. 4.

67. Rumley v. British Columbia, 2001 SCC 69 at para. 30

68. Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46 at para. 39.

69. Hollick v. Metropolitan Toronto (Municipality), 2001 SCC 68 at para. 15.

70. [2002] O.J. No. 2764 (Ont. Sup. Ct.) at para. 137.

71. Re "Agent Orange" Prod. Liab. Litig. 818 F 2d 145 (2nd Cir. 1987).

72. Hannelie Stockenstrom "Legal Aspects of Indoor Air Quality and Mould in Buildings" Construction Law Letter, Vol. 19 # 1 (September/October 2002).

73. Hannelie Stockenstrom "Legal Aspects of Indoor Air Quality and Mould in Buildings" Construction Law Letter, Vol. 19 # 1 (September/October 2002).

 

 

 

1. Introduction

There is a surge of mould awareness. Mould in the media and mould litigation skyrocketed in the U.S. after a Texas jury awarded a family over $32 million following determination that their insurer did not fairly handle a water damage claim.2 Almost 300 media articles related to toxic mould litigation were published in the last six months alone. Large mould claims are now commonplace in the U.S. The New York Museum of Contemporary Art settled a class action lawsuit by its employees for $400 million following determination the Stachybotrys caused immune dysfunction.3 Thus far, insurance companies seem to be bearing the brunt of this trend. In Texas, five major insurance carriers have paid more than $1 billion in settlement of mould related claims over the past two years.4 In 2001, 50,000 new insurance claims involving mould were made in Texas alone.5 Inevitably, the cost of this trend is dispersed through increased insurance premiums.

Is the infectiousness of mould a uniquely American phenomenon> Admittedly, there is currently very little Canadian law case dealing with environmental mould in any significant way. However, this is very likely indicative of a slow migration rather than incompatibility with colder climated. Canadians are clearly becoming "mould aware", and for good reason:

In Year 2000, the Province of Ontario paid out $40 million in grants to school boards to correct "mould contamination problems" in schools.

In June 2000, the Courthouse in Newmarket Ontario was closed while they removed almost all of the walls and ceilings in this 165,000 square foot facility in order to remove "mould".

More recently, the Alberta 'Court of Appeal' building in Calgary was forced to temporarily relocate their premises to Edmonton as a result of "Toxic mould infestation." Early reports suggested that two thirds of the staff were experiencing "mould-related" health problems.6

Mould damage is often found in conjunction with water damage. The total number of insurance claims for water loss in Canada has climbed over 60% from 1997 to 2001, with a corresponding increase in amounts paid for related property loss. The average increase in amounts paid for related property loss. The average cost per claim has increased from $3,320 in 1997 to $4,079 in 2001.7

A variety of theories have been proffered for the recent increase in "mould awareness", including:

  1. As a means of energy efficiency, buildings have been tightened by reducing the introduction of outside air into the buildings and therefore increasing the opportunity for mould growth.8

  2. Increased use of, and/or defective internal ventilation and air conditioning systems and improper use of humidifiers, home spas, HVAC systems and ventilators.9

  3. A general weakening of the human species

  4. Increased world temperatures resulting in an increase in the pollen and mould ambient levels.10

  5. The rise in public awareness and national media attention;11

  6. Potentially large mould related claims and settlements.

2. What is Toxic Mould?

Moulds are simple, microscopic organisms that feed on organic materials such as wood, paper, carpet, food and insulation materials. They can exist in both indoor and outdoor environments; they are found almost everywhere. Mould require moisture and oxygen to grow. As a result, they are most commonly found in moist environments such as coastal regions.12 However, most mould related litigation involves mould found in indoor environments.

There are approximately 100,000 scientifically identified species of mould.13 Indoor mould can generally be divided into two categories. 1) low to moderate moisture requirement moulds such as Penicillium, Cladosporium and Alternaria; and 2) high moisture requirement moulds such as Stacybotrys, Chaetemiom, Trichoderma and Aspergillus Niger.14 Stachybotrys Aspergillus and Penicillium are most commonly the subject of litigation. Cladosporium is also note-worthy due to its prevalence in indoor environments.15

Despite the large number of mould species, most moulds are not harmful, only about 100 are suspected to cause infection in humans.16 Exposure to mould can have immediate health consequences. These are generally the result of mould by-products which disrupt protein and RNA/DNA synthesis.17 Toxic mould is alleged to cause internal bleeding, caner, respiratory ailments (including severe or fatal lung disease), adverse effects on the central nervous system, immune system suppression, eye and skin irritations, chronic fatigue and adverse effects on both the male and female reproductive systems.18

3. Theories of Liability

The following theories of liability may form the basis for mould related litigation:

  1. Breach of contract;

  2. Breach of express warranty can be claimed against the developer, contractor, vendor and realtor, if the condition of the property has been specifically warranted.

  3. Breach of implied warranty that a structure was designed and constructed in a reasonable manner can be claimed against the developer and vendor,

  4. Negligence in the construction of the building can be claimed against contractors, subcontractors, inspectors and design professionals,

  5. Negligence in maintaining property can be claimed against property owners and landlords,

  6. Negligence in the construction and supply of construction materials can be claimed against manufacturers, distributors and suppliers;

  7. Negligence in performing repairs to property can be claimed against the repair contractor and the professionals involved in the repair;19

  8. Claim for indemnity under first party contracts of insurance,

  9. Breach of insurer's duty to act in good faith,20

  10. Nuisance and misrepresentation regarding the safety/condition of property can be claimed against previous owners and landlords;

  11. Breach of consumer protection legislation, health legislation and the Occupiers' Liability Act can be claimed against the owners for failing to ensure that premises are reasonably safe for habitation;21

  12. Derivative damages claims can be made pursuant to the Family Law Act.22

4. The Usual Defendants

The following are examples of defendants in mould related litigation:

(a) Product Manufacturers:

Sued for negligence and/or breach of contract for supplying products which either allow moisture to penetrate into a home or building, or prevent it from escaping once there.23

(b) Architects, Engineers, Builders (including contractors and subcontractors):

Sued for breach of contract and/or negligently designing or constructing building which permit moisture penetration or retention and potentiate the development of mould.24

(c) Building Inspectors

Sued for breach of contract and/or negligence for failing to identify mould during property inspection.25

(d) Real Estate Agents

Sued for breach of contract and/or misrepresentation following sale of property with mould contamination.26

(e) Property Managers, Landlords, Owners, Prior Owners:

Sued by tenants or purchasers for negligence in failing to maintain the property or provide a safe living environment27

(f) Employers

Sued by employee or insurer (subrogated claim) for negligence for failing to maintain a safe working environment28

(g) Insurers

First party claim for indemnity for damage to own property,29 claim against insurer for indemnity for third party claims.

(h) Public Entities

Local governments may be defendants as building owners, and with respect to their responsibility to protect the public and to oversee environmental health risks in public buildings.30 Local governments can also be included in third party claims for negligence based on breach of statutory duty e.g. Ontario Technical Standards and Safety Act, 2000, and the Occupiers Liability Act.31

(i) Schools

Schools may be at added risk of exposure due to some evidence that children are more susceptible to mould related health problems because their lungs are not fully developed. Building maintenance is also a special challenge for schools due to budgetary constraints.32

(j) Health Care Facilities

Health Care Facilities may be sued for failing to properly maintain mould remediation and ventilation protocols to prevent the development and propagation of mould spores.33 Construction and renovation of health care facilities may also present problems if ventilation systems are not adequately maintained, and if construction within the facilities are not properly contained.34

5. Problems with Mould Litigation - Causation

The biggest obstacle facing claimants in mould cases is causation. Despite vast media reports to the contrary, a direct causal link has yet to be established between toxic mould exposure and serious illness.35 While there is strong evidence to support the relationship between exposure to mould and adverse health effects, more research is needed to establish a causal link between mould and toxicity in humans.36

Clearly, as far as litigants are concerned, the question is to ultimated whether causation can be established on a balance of probabilities. To date, Canadian claimants have bee largely unsuccessful in establishing a causal relationship between the presence of mould and adverse health effects (as opposed to property damage). However, this burden has been met in some U.S. courts.37

6. The U.S. Experience

In 1997, Centex-Rooney Construction Co. v. Martin County became the first major mould case heard by a U.S. appellate court.38 Martin County hired Centex-Rooney to build a courthouse. Martin County was subsequently forced to evacuate the building due to mould contamination. Martin County alleged negligence and breach of contract against Centex-Rooney and others. Martin County was awarded over $14 million at trial. Both the trial and appellate courts accepted expert evidence of a relationship between toxic mould exposure and adverse health effects.

In 2001, The Delaware Supreme Court gave toxic mould litigation another shot in the arm in New Haverford Partnership v. Stroot.39 The Supreme Court upheld a jury award of $815,000 to two tenants who suffered injuries as a result of toxic mould contamination in an apartment complex. The Ballard v. Fire Ins. Exch.40 case caused a sensation when the jury awarded $32 million in compensatory and punitive damages against the defendant insurer. The court found that the insurer acted in an unfair, deceptive and fraudulent manner by refusing to clean up a plumbing leak, which then led to toxic mould contamination. This award is even more remarkable given that the court did not accept expert evidence relating to the health effects of toxic mould. In Maza v. Shurtz,41 a jury awarded $2.7 million to a family for personal injuries caused by exposure to toxic mould.

Litigation in the U.S. has skyrocketed since. By the end of 2001, there were approximately 10,000 toxic mould suits in the U.S. Of these, 5,000 cases involved allegations of bad faith against insurers, 2,000 involved claims against homeowners' associations for improper maintenance, 2,000 involved allegations against builders for construction defects and 1,000 involved claims against vendors of homes or buildings following sale.42 Recently, there have also been a number of very large settlements paid in relation to toxic mould claims.43

7. Toxic Mould Litigation in Canada

The plethora of U.S. litigation is not currently reflected in the Canadian case law. As of the fall of 2003, there were fewer than twenty-five reported cases dealing with mould in any significant way. With few exceptions, these claims involve mould related property damage, not adverse health effects.

Although the first mould related litigation in Canada dates back to 1975,44 the first decision of note occurred twenty years later. El-Merhbi v. Lloyds of London45 was an action brought by a homeowner against its insurer for indemnity for damage to a Persian rug following exposure to water. The court found that the damage was caused by mould growth, not exposure to the water. The court also found that the mould growth was only possible due to the homeowner's delay in discovering the water infiltration. Damage due to mould was not covered by the policy. The action was dismissed.

El-Merhbi was followed a year later by the first "Leaky condo" case, Wright v. Strata Plan.46 This case involved allegations by a former condominium owner against the condominium corporation. The plaintiff alleged that the corporation was negligent in the performance of its obligation to maintain and repair the common property. The plaintiff complained of water damage to her unit due to leaks in the exterior walls, and claimed that she suffered health problems resulting from mould in her unit. Both the trial judge and the Court of Appeal found that the corporation did not breach its duty to repair the common property.

In a 1997 decision, Warren v. Pinecone Investments Inc.,47 a tenant was granted an abatement of rent due to significant moisture problems and extensive mould growth. The court found the landlord liable for failing to keep the premises in a good state of repair.

Also in 1997, Structures Metropolitane v. Raynault48 involved and action by a landlord for rent withheld to compensate the tenant for the inconvenience of excessive humidity and mould in the basement. The court found that the $90 per month reduction in rent was reasonable.

Frazer v. Knox49 involved an action by the purchaser of a home against the vendor, attorney, agent, real estate company, inspector and inspection company following discovery of water infiltration in the basement and the presence of mould. The plaintiff was successful against the inspector and inspection company for breach of contract and negligent misrepresentation.

There were four individual actions for mould related claims in 2000. In Alie v. Bertrand & Frere Construction Company50 a group of homeowners successfully sued a construction company, manufacturer, supplier and others involved in the construction of defective concrete foundations. Water infiltrated the basements and caused mould formation in the inside walls.

Silaschi and Deutchmann Ltd. v. Pereira51 was an application brought by a landlord against its tenant to recover the cost of repairs to an apartment following the growth of black mould due to excessive moisture. The court found that the mould was not caused by the willful or negligent conduct of the tenant, and concluded that it was ultimately the landlord's obligation to resolve the moisture problem.

In Marvin Investments Ltd. v. Manitoba52 a tenant was granted an abatement of rent to compensate for the value of unusable space due to mould. However, the tenant was not entitled under the lease to compensation for the cost of moving its employees and equipment to another location pending repairs.

Principe v. Group Commerce Cie D'Assurances53 was an action by a building owner against its insurer for indemnity following water infiltration and mould growth. The insurer previously compensated the building owner for the cost of repairs to the building. The court found that it was the owner's own negligence and delay which lead to the additional damage, and the action was dismissed.

Four mould related cases were also reported in 2001. Derosa v. Horning54 was an action by the purchaser of a condominium unit against the vendor, real estate agent, home inspector and strata corporation. The plaintiff allegedly became very ill after moving in as a result of the presence of mould due to a water leak in the basement. The action failed as the plaintiff was not able to establish the presence of mould in the unit at the time of the purchase, or a causal relationship between the defendants' conduct and the plaintiff's medical problems.

Swan River Hospital v. MMP Architects55 was a decision granting leave to a hospital under the Manitoba Limitation Act to bring an action against the architects, contractors and subcontractors involved in the design and construction of a personal care facility following the discovery of mould and water filtration problems. The decision was reversed on appeal.

Alexander v. Zurich56 involved an action by a homeowner against its insurer for indemnity for mould damage allegedly caused by a sewer backup which occurred six years earlier. The homeowner failed to establish that the mould resulted solely from the sewer backup. The court also found that the homeowner failed to follow instructions given by the insurer to prevent the formation of mould.

Davis v. Kelly57 was an action by a purchaser against the vendor of a home following the discovery of extensive water damage and mould under the basement floor. The purchaser failed to establish that the vendor knew of the continued presence of water in the basement or negligently misrepresented the condition of the home. The action was dismissed.

More recently, in Seed v. ING Halifax Insurance58 and insured sought indemnity from its insurer for damages arising out of a flood in her home. The insured alleged that the existence of mould was a result of the insurer;s refusal to pay for the necessary renovations in a timely manner.

In American Risk Management v. "Egale Strength"59 an importer sued the carrier for damage to goods to mould while in transit. The plaintiff failed to establish when the good were actually exposed to water. As a result, the court found that the carrier should be held responsible and the action was dismissed.

Also of note, in Boness v. Bishop60 the plaintiff's expert evidence was that significant defects arose in the construction of the crawl space and basement floor system in a building. The plaintiff alleged that these defects would contribute "negatively to the long term health prospect for the plaintiffs continuing to live in the house due [to] the potential and likely respiration of mould spores originating in the damp crawl space area." The merits of these allegations have yet to be determined.

Finally, the most recent "leaky condo" case, is Strata Plan LMS 1816 v. North Fraser Holdings Ltd.61 Condominium unit owners sued developers, architects, the main contractor and others involved in the design, construction and inspection of the condominiums. The unit owners alleged damages arising from a number of factors including mould contamination.

8. Mould Related Canadian Class Proceedings

As with individual actions, the U.S. experience with mould related cases litigation has yet to migrate north of the border. To date, there have been only two attempts to certify mould related class proceedings in Canada; neither have been successful.

The first Canadian attempt at mould related class litigation was Taub v. Manufacturers Life Insurance.62 Taub was brought on behalf of the tenants of an apartment building following the discovery of mould (stacybotrys atra). The only evidence before the court was the affidavit of the representative plaintiff. There was no evidence that anyone else in the proposed class had found mould, or that there was any complaint of harm or damage as a result of mould:

Indeed, it is admitted that she herself does not claim to have suffered illness, physical injury or harm from the mould nor does she allege any property damage from the mould.

Ms. Taub gives no indication of the nature of harm cause by the mould, no indication how it might spread to other parts of the building, and no indication that the mould has in fact been the subject of concern or complaint by anyone other than herself.63

Despite very low evidentiary burden on the plaintiff at the certification stage, the court concluded that there was simply no evidence to justify certification.

MacDonald v. Dufferin-Peel Catholic District School Board64 is the only other reported attempt to certify a mould related class proceeding in Canada. MacDonald was brought on behalf of all students assigned to a portable, port-a-pak or relocatable classroom module ("RCM") at Peel District Catholic School Board since 1995. The plaintiffs alleged that the portables, port-a-paks and RCMs were contaminated with mould that made students ill.

Unlike Taub, the court found that the plaintiffs met the very low evidentiary hurdle to support their contention that amplified mould could cause illness. The court was also satisfied that there were a number of common issues capable of determination on behalf of the class. These included whether the portable classrooms were contaminated, the level of contamination, the type of mould and whether the defendant was liable for the contamination. However, the court concluded that a class proceeding was not the preferable procedure due to the number of individual issues:

[A]t all relevant times, the school district covered 2,700 square kilometers in which there are variations in temperature, moisture, elevation and weather. The school board had approximately 80,000 students in 120 schools. Approximately 22,000 of those students were housed in 700 portables, 200 port-a-paks and 100 RCMs. Those portable classrooms are constructed of a different materials and have different configurations.

[T]here are many factors relating to the individual members of the class. Those factors include the health of the individual students prior to being housed in portable units, their allergies, the conditions in their homes and whether they were exposed to mould at other locations.65

Despite this lack of certification success, it should not be concluded that mould related litigation can not or should not be conducted on a class basis in Canada. The lack of success in Taub and MacDonald likely has more to do with case selection and tactics, than an inherent inconsistency between mould claims and class proceedings. Given the utter lack of evidence available during the certification motion in Taub, it may well have failed as an individual action. The decision to attempt to certify the entire school board in MacDonald may simply have been too ambitious.

Some of the individual factors alluded to in MacDonald such as the prior health and risk factors of class members will likely exist in any mould related litigation. However these factors are equally relevant to litigation involving contaminated water and tainted blood. As an environmental and potentially air-borne pollutant, mould is capable of causing mass harm. As noted by Sharpe J in Taub, "most class proceedings arise from situations where the fact of widespread harm or complaint is inherent in the claim itself."66 Ostensibly, plaintiffs may assert that mould related class litigation is based upon allegations of "systemic" negligence - "actions (or omissions) whose reasonability can be determined without reference to the circumstances of any individual class member.67 Pleaded as such, plaintiffs may assert that issues of duty of care and breach are common to the class and "necessary to the resolution of each class members claim."68

It is also noteworthy that mould litigation is expert driven. Expert evidence may be relevant from any number of sources including microbiologists, environmental engineers, chemists, mould experts, architects, engineers, construction experts, air quality specialists, ventilation experts, industrial hygienists, medical experts. As a result, mould litigation can be very costly. Class proceedings may provide the added benefit of "distributing fixed litigation costs amongst a large number of class members [thereby improving] access to justice by making economical the prosecution of claims that any one class member would find too costly to prosecute on his or her own."69

On the other hand, there has been judicial notice in Canada of the difficulty of using class proceeding when a mass tort is involved. In Pearson v. Inco Ltd.70, Nordheimer J. seemed to empathize with the skepticism of some U.S. courts "over the usefulness of class actions in so-called mass tort cases and, in particular, claims for injuries resulting from toxic exposure".71

It is likely that the first successful Canadian class litigation will derive from something asking to "sick-building syndrome" or "building related illness". "Sick-building syndrome" is a term used to describe situations in which building occupants experience acute health and comfort problems that appear to be linked to time spent in the building, because all other probable cause have been ruled out.72 "Building related illness" refers to clinically diagnosed disease(s) in building occupants that result from exposure to indoor air pollutants.73

9. Conclusion

Despite the apparent 'epidemic' of toxic mould litigation in the U.S. and a growing Canadian preoccupation with mould, mould litigation in Canada is still relatively uncommon. Thus far, the majority of claims involve property damaged as a result of mould, rather than personal injury dur to exposure to toxic mould. The trend however, is certainly growing "mould awareness". Plaintiff's counsel are increasingly aware of mould related damages issues, and the scientific community continues to study the impact of mould on human health. Whether the number of mould related claims will continue to grow will likely and ultimately depend upon whether the scientific link between mould and adverse health effects is strengthened.

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