Court File and Parties
CITATION: Vieira v. Dawson, 2018 ONSC 413
DIVISIONAL COURT FILE NO.: DC-1047/16
DATE: 20180117
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Gordon, R.S.J.
BETWEEN:
RONALD VIEIRA Plaintiff (Respondent)
– and –
JUDY LOUISE DAWSON and STEPHEN RICHARD DAWSON Defendants (Appellants)
COUNSEL:
Self-represented.
John A. Annen, for the Defendants (Appellants).
HEARD: January 8, 2018
Overview
[1] The Respondent (Plaintiff) purchased a cottage from the Appellants (Defendants). After the transaction closed and he began renovation work, the Plaintiff found that part of the roof and roofing structure had previously been damaged by fire. He brought an action in Small Claims Court seeking damages on account of a latent defect and was awarded $25,000 plus costs. The Appellants appeal the decision of the Small Claims Court Judge.
Background
[2] On April 7, 2015 the Appellants entered into an agreement to sell to the Respondent a cottage located on Doe Lake in Katrine, Ontario. Prior to offering to buy the cottage the Respondent inspected the property and recalls noticing the smell of smoke in it.
[3] Closing of the transaction was made conditional upon the Respondent obtaining a satisfactory home inspection.
[4] The home inspection was completed on April 24, 2015 and a report prepared. The report was satisfactory to the Respondent and the condition waived. The deal closed on May 15, 2015.
[5] Not long after closing, the Respondent began renovations to the cottage. Part of the renovations involved the replacement of the drop ceilings. On removal of the existing ceilings he observed that four of the “trusses” and the ridge beam had been damaged by fire. The blackened “trusses” remained in place with repair done to them by “scabbing” newer 2 x 4’s to them. In addition, some of the fire-damaged roof sheathing had not been replaced.
[6] At trial, the Respondent called a professional engineer as a witness. His evidence was that although the repair to the trusses may be acceptable from a structural point of view, it must be structurally reviewed by a professional engineer to see that it meets the requirements of the Building Code with respect to structural loading. He indicated concern about the offsetting of the truss halves on the ridge beams and the connection of the truss repair across the bottom of the beam. He noted that because this was a structural repair there should have been a building permit and professional engineer’s assessment and recommendations completed for it, and he was uncertain if this had been done.
[7] The Respondent provided the court with an estimate for repair of the fire damage amounting to $29,700 plus HST.
The Decision of the Trial Judge
[8] The trial judge found that the fire damage had been repaired during the Appellant’s ownership of the cottage. He found that the damage was not visible to the Respondent on a normal inspection of the property and that it was not visible when the home inspection was done due to the physical constraints of the attic area. He concluded that the fire damage constituted a latent defect.
[9] The trial judge then found that the defendants had a duty to disclose the defect to the Respondent. Specifically, the finding was as follows:
I find further that the existence of the fire damage to the attic of the premises has resulted in a loss of enjoyment of the premises to the purchaser such that pursuant to the decision in Swayze v. Robertson, the latent defect meets the criteria set out by Justice Dubin in McGrath v. MacLean.
[10] Based on the quote filed by the Respondent for the repair of the fire damage, the trial judge awarded the Respondent the maximum allowed in the Small Claims Court, namely $25,000, plus fees of $3,750 and disbursements assessed by the Clerk.
The Standard of Review
[11] The standard of review of the decision of a trial judge was determined by the Supreme Court of Canada in Housen v. Nikolaisen, 2002 SCC 33 as follows:
On a question of law the standard of review is correctness.
On findings of fact (a conclusion of fact based on a set of facts), the standard of review requires deference unless the trial judge has made a palpable and overriding error.
On findings of mixed fact and law (where the trial judge has applied a legal standard to a set of facts) the legal standard applied by the judge and whether the judge applied all required elements of the legal test or made some other error in principal are reviewed on a standard of correctness. However, when the appeal involves the trial judge’s interpretation of the evidence as a whole, it should not be overturned absent palpable and overriding error.
Analysis
[12] The Appellant contends that the trial judge erred in the following respects: Firstly, by determining that the alleged fire damage was a latent defect. Secondly, by shifting the burden to the Respondent to prove that the fire damage was a patent defect. Lastly, by assessing and awarding damages without evidence to support the amount awarded.
The Issue of Latent vs. Patent Defect
[13] A defect which is readily apparent to someone exercising reasonable care in their inspection of a property is said to be patent. A defect which is not readily apparent on such an inspection is said to be latent.
[14] The decision of the trial judge that the fire damage was a latent defect was a finding of mixed fact and law. It involved the application of a legal test (whether the fire damage would be readily apparent to someone exercising reasonable care in their inspection of the cottage) to the facts presented to him.
[15] The trial judge accepted the evidence of the Respondent and his home inspector that they exercised reasonable care in their inspection of the property and the fire damage was not readily apparent to them.
[16] The Appellants contend that because the Respondent had noticed the smell of smoke it was incumbent upon him to have a WETT inspection completed and that such an inspection would have surely revealed the damaged areas. In my view, given that the cottage had a wood burning fireplace, the smell of smoke noted by the Respondent would quite reasonably have been attributed to it. It was not incumbent upon the Respondent to arrange any further or other inspection of the fireplace, as he was and remains content with it.
[17] The trial judge made no palpable and overriding error on this issue.
Did the Trial Judge Shift the Burden?
[18] Whether there is liability for a latent defect is a question of mixed fact and law.
[19] For a latent defect to attract damages, one of two things must be established by the purchaser: (1) That the vendor was aware of and concealed the defect so as to prevent discovery by the purchaser; or (2) Although he did not conceal the damage so as to prevent discovery by the purchaser, it was known to the vendor and was such that it rendered the property uninhabitable or dangerous or potentially dangerous. [See McGrath v. MacLean (1979) 1979 1691 (ON CA), 22 O.R. (2d) 784 (Ont. C.A.)].
[20] There was no suggestion in this case that the Appellant had deliberately concealed the defect for the purpose of preventing its discovery by the purchaser. The issue before the trial judge was whether the defect was known to the vendor and was such that it rendered the property uninhabitable or dangerous or potentially dangerous.
[21] The position of the Appellants on this issue is twofold. First, they argue that the evidence was not sufficient to establish on a balance of probabilities that the property was uninhabitable, dangerous or potentially dangerous. Indeed, they point to the evidence of the professional engineer called by the Respondents, who was asked the following:
Q: So in your opinion, sir, is there a potential for a structural breakdown in this system that you saw?
A: I’m going – I’m going to say that without a detailed analysis, I won’t answer that one yea or nay….
And later, on cross-examination:
Q: It could be that this property is structurally sound?
A: It could very well be…
[22] Secondly, they argue that there was no evidence to suggest that the Respondents knew that the fire damage rendered the property uninhabitable or dangerous or potentially dangerous. To the contrary, they argue that the evidence clearly established that the Appellants used the property without any safety concerns.
[23] In the absence of this evidence, they argue that once the trial judge found the defect to be latent, the burden was effectively shifted to them to establish that the defect did not render the property uninhabitable or dangerous or potentially dangerous.
[24] I do not give effect to this ground of appeal.
[25] The trial judge accepted and applied the definition of “habitability” prescribed by Laforme J. (as he then was), in Swayze v. Robertson [2001] O.J. 968:
I take the position that any decisions regarding habitability of the premises must be made on a common sense and reasoned approach based on the facts of each case. It seems to me that the correct approach must be to consider it in the context of whether the latent defect has caused any loss or use, occupation or enjoyment of any meaningful or material portion of the premises or residence that results in the loss of enjoyment of the premises or residence as a whole.
[26] The Respondent’s testimony was that because of the fire damage he cannot have anyone stay in the room below and is very uncomfortable staying there himself.
[27] The trial judge had vivid photographic evidence of the fire damage and determined that the fire damage resulted in a loss of enjoyment of the premises by the Respondent that met the definition of habitability contained in Swayze.
[28] The Appellants urge me to find that because they did not and do not consider the fire-damage to render any part of the property uninhabitable there can be no liability attach to them. In my view, whether or not the damage in question renders the property uninhabitable must be viewed on an objective standard. Certainly, the subjective views of the Vendors will be one factor for consideration, however it will not be determinative. The issue is whether the damage, known to them, would in the eyes of a reasonable person, render the property uninhabitable.
[29] In my view the trial judge identified the correct legal test. He applied the correct elements of the test. He made a finding that is entitled to deference. He did not transfer the burden of proof to the Appellants. He made no palpable and overriding error.
The Award of Damages
[30] The trial judge based his award of damages on two reports. The first was the report of PuroClean, a fire damage restoration company that provided an estimate to “remove fire damaged material and to dry ice and seal with shellac based primer for odour control” of $29,700 plus HST. The second was a fair market appraisal report indicating the fair market value of the cottage to be $235,000 provided there are no “hidden or unapparent conditions of the property”. The trial judge’s finding on damages was as follows:
The Plaintiff has produced the PuroClean Property Damage Appraisal in the sum of $29,700 plus HST and that is the only evidence of the damage before the Court. In addition, it is obvious, that in order to reach the valuation assessed by Nationwide Appraisal Services the repairs would have to be correctly and appropriately made. I, therefore, find that the damages sustained by the plaintiff well exceed the monetary limits of the Small Claims Court and award the plaintiff the sum of $25,000.00.
[31] In my view, the trial judge was in error in the manner in which he assessed damages.
[32] The damages sustained by the Respondent are the cost of repair or replacement of the defect in such a way that the Respondent receives what he contracted for.
[33] In this case, the Respondent’s damages would be the cost of replacement of the trusses in question along with the fire damaged roof sheathing. If those trusses are replaced with the same trusses as exist in the remainder of the cottage, and the burnt roof sheathing is replaced with the sheathing that exists in the remainder of the cottage, the Respondent will have received what he had initially bargained for.
[34] I note that the PuroClean damage appraisal provides for the following services:
- Tearing out and disposal of 1”x 3” framing for ceilings in all rooms of the cottage.
- Tearing out and bagging 4” insulation and vapour barrier in the ceilings in all rooms of the cottage.
- Removal and replacement of all roofing shingles, including ice and water shield.
- Removal and replacement of fire damaged trusses and sheathing.
- Dry ice blasting of underside of roof sheathing throughout and removal of smoke residue.
- Seal attic framing for odour control.
[35] It is clear to me that the repairs quoted by PuroClean go well beyond the repairs required to fulfill the bargain. The fire damaged trusses and sheathing are in the northerly one third of the cottage. There is no need to tear out the framing, vapour barrier and insulation for the other two thirds of the cottage to effect those repairs. Odour control and removal of smoke residue are not properly part of the Respondent’s damages as he purchased the cottage aware of and accepting of the odour of smoke that existed.
[36] Although I accept that the roofing shingles will have to be removed to replace the damaged sheathing and that it is appropriate for the Respondent to be left a roof with matching shingles, there will be not insignificant betterment to him of having the entire roof re-shingled.
[37] Having regard to these factors, it is my view that approximately one third of the costs quoted by PuroClean would be incurred to correct the latent defect and provide the Respondent with what he had bargained for.
Conclusion
[38] The liability finding of the trial judge is confirmed. Damages are reduced to $11,500.
[39] With respect to costs of trial, the judge awarded $3,750 plus disbursements. This is the maximum prescribed by Section 29 of the Courts of Justice Act. The trial judge gave no explanation for the amount awarded.
[40] Although the Appellants did not seek leave to appeal costs, there was no objection made by the Respondent to the argument of costs at the appeal hearing.
[41] The trial was conducted over two days. It is fair to infer that the amount of damages awarded played a role in the costs award made by the trial judge. Certainly, the degree of success of a litigant is an appropriate consideration when assessing costs, along with the other factors set out in in Rule 57.01 of the Rules of Civil Procedure. Given the reduced amount of damages it is appropriate to revise the award of costs at trial to $2,000 plus disbursements.
[42] With respect to the costs of this appeal, if the parties are unable to agree they may make written submissions to me, not to exceed four pages plus disbursements each, within 45 days.
R. D. GORDON, R.S.J.
Released: January 17, 2018
CITATION: Vieira v. Dawson, 2018 ONSC 413
DIVISIONAL COURT FILE NO.: DC-1047/16
DATE: 20180117
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
GORDON, R.S.J.
BETWEEN:
RONALD VIEIRA Plaintiff (Respondent)
– and –
JUDY LOUISE DAWSON and STEPHEN RICHARD DAWSON Defendants (Appellants)
REASONS on appeal
Released: January 17, 2018