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Fire Distinguisher: Court Clarifies Liability for Third-Party Arsonists

A recent decision determined that construction companies cannot be liable for the actions of third-party arsonists. So long as the property owner is making “normal and ordinary use of the property” in that there is “no unusual danger in the nature of a fire hazard”, they will not be liable for the tortious actions of a third-party arsonist. The decision also suggested that the standard of care is similar; while there were failings in the defendant corporation’s security measures, they did not need to be perfect.

Background

The corporations that acted as defendants in this action, Carlisle Inc., Carlisle GP Holdings Inc., POV (Encore) Inc., Carlisle Management Inc., and Carlisle Developments Inc. (“Carlisle”), owned and were developing a condominium complex in south Edmonton called Rutherford Landing. Rutherford landing consisted of three buildings, each in a different stage of construction. Condominium corporation No. 1023525 (“102”) operated a fully constructed and occupied condo complex across the street and across a field from Carlisle’s complex. 

On September 29, 2013, an arsonist set fire to one of the buildings in the Carlisle complex, which destroyed all three buildings and spread to damage 102’s property. The first building to ignite was at the wood-frame stage of construction, and there were three 1000-gallon propane tanks on the site which exploded in the fire. 

Carlisle had set up video monitoring of the site and protected the area with fencing. The night of the blaze, one of the gates was left open, and there was another space in fencing where a person could enter. The video monitoring was disabled when the power was cut; any footage to that point was destroyed in the fire. 

Issue at Trial

The parties agreed on the quantum of damage to 102’s property, so the issue at trial was liability. The question before the court was whether Carlisle should be “held liable in negligence for the deliberate and criminal actions (arson) of an unknown third party that resulted in damage to the Plaintiff’s property” (at para 1). 

Decision 

Justice Mah found that Carlisle was not liable in negligence because Carlisle owed no duty of care to 102 regarding the blaze. Justice Mah dismissed 102’s concerns that the standard of care had been breached through insufficient fencing or faulty or substandard video monitoring, noting that the case was decided instead on the issue of duty of care. 

Applying the test from Cooper v Hobart, and its interpretation (by primarily Alberta judges) in Fullowka v Royal Oak Ventures Inc, Justice Mah noted that the issue of proximity was obvious. 102’s condominiums were “literal neighbours” to Carlisle’s development. Consequently, the analysis hinged on the issue of foreseeability. 

Justice Mah drew on the analysis of foreseeability in Smith v Littlewoods Organisation Ltd, noting that liability when leaving property (and potentially hazardous materials on that property) unattended has a “limitation to [...] where the property owner is making normal and ordinary use of the property (that is, acting in a socially acceptable manner), and there is no unusual danger”. Considering the specific facts, such as the wood-frame construction (normal in Alberta) and the presence of propane tanks (standard on construction sites), and the then-theoretical but not concrete threat of an active arsonist in the area, Justice Mah concluded that “nothing unusual was going on at the Rutherford site” (at para 60). Consequently: 

[61] From this evidence, I conclude that Carlisle was making normal and ordinary use of its property and engaged in its usual business of developing entry-level apartment housing. It was acting in a socially acceptable manner, to use Lord Goff’s phrasing. There was no unusual danger in the nature of a fire hazard on the Rutherford site and the presence of the wood-frame structure was also normal and ordinary. 

As such, the blaze was not foreseeable, there was no duty of care established, and Carlisle consequently was not liable. 

Takeaways

This decision affirms property owners will not be liable for the tortious actions of third-party arsonists as long as they are "making normal and ordinary use of the property” in that there is “no unusual danger in the nature of a fire hazard”. 

Field Law’s insurance group has helped many insurers evaluate claims where questions regarding liability arise. If you have questions about how issues surrounding standard of care could impact you or any of your files please contact Peter Gibson or Jay Smith-Hayward in Edmonton, Dan Downe, QC in Calgary, or any member of Field Law's Insurance Practice Group.

 

Link to decision: Condo Corp No. 1023525 v Carlisle, 2022 ABQB 209