COURT OF APPEAL FOR ONTARIO
CITATION: Halliwell v. Lazarus, 2012 ONCA 348
DATE: 20120524
DOCKET: C53309
Simmons, Armstrong and Pepall JJ.A.
BETWEEN
Glenda Halliwell and Jenifer Halliwell
Plaintiffs
(Appellants/Respondents by Cross-Appeal)
and
Joel Lazarus and Coldwell Banker Terrequity Realty
Defendants
(Respondents/Appellants by Cross-Appeal)
AND BETWEEN
Glenda Halliwell and Jenifer Halliwell
Plaintiffs (Appellants)
and
Westbrook Building Inspection Ltd.
Defendant (Respondent)
AND BETWEEN
Glenda Halliwell and Jenifer Halliwell
Plaintiffs
and
Westbrook Building Inspection Ltd.
aka Westbrook Building Inspections Service Ltd.
Defendants
and
Joel Lazarus and Coldwell Banker Terrequity Realty and Dung Ngoc Tran
Third Parties
AND BETWEEN
Glenda Halliwell and Jenifer Halliwell
Plaintiffs
and
Dung Ngoc Tran
Defendant
David A. Morin and Joyce M. Chun, for the appellants
Frank Csathy, for the respondent Westbrook
Sandy Robinson and Eric Sherkin, for the respondent Lazarus
Heard and released orally: May 4, 2012
On appeal from the judgment of Justice Margaret P. Eberhard of the Superior Court of Justice, dated January 18, 2011, with reasons reported at 2011 ONSC 390, 2 R.P.R (5th) 284.
ENDORSEMENT
[1] The issues on this appeal and cross-appeal arise out of the purchase of a home and a home inspection conducted in preparation for the purchase.
[2] The appellant purchaser made it clear to her real estate agent and to the home inspector, whom her agent recommended, that she was allergic to mould and wanted a dry house. The agent ensured that a condition was inserted in the offer to purchase allowing the appellant to abort the transaction if she was not satisfied with the report from the home inspector.
[3] The inspection was conducted on March 12, 2006. The purchase closed on May 1, 2006 and, by July 2006, the appellant was experiencing an allergic reaction to mould. The parties agreed on damages of $90,000 prior to trial.
[4] After a trial, the trial judge apportioned liability as follows: (i) the inspector at 50 percent; (ii) the real estate agent at 25 percent; and (iii) the appellant at 25 percent contributory negligence.
[5] The appellant appeals the finding of contributory negligence and submits that the agent should be found 50 percent responsible. Further, the appellant claims her costs award should not have been reduced. The agent cross-appeals, arguing that he is not liable.
[6] The trial judge found the appellant 25 percent contributorily negligent because the appellant failed to read the inspection report carefully and in its entirety. The appellant submits the trial judge erred in doing so because the trial judge also found that the appellant did not have the knowledge or experience to appreciate the warning signs for moisture problems that were contained in the inspection report.
[7] We accept this submission. At para. 83 of her reasons, the trial judge effectively concluded that the appellant did not have the knowledge or experience to be able to discern the existence of a moisture problem by reading the inspection report. This conclusion is fully supported by the evidence at trial. However, the decision to hold the appellant contributorily negligent cannot be reconciled with this finding.
[8] The inspector argues that the trial judge’s finding of contributory negligence was premised on the appellant’s failure to read the report and the appellant’s failure to recognize the need for major repairs disclosed by the report. The inspector submits that, in addition to potential moisture problems, the appellant was also concerned about obtaining a house that did not require repairs. Thus, he suggests, had she fully read the report, she would not have purchased the house.
[9] We do not accept this submission. If the appellant’s desire to avoid any repairs was the basis for the trial judge’s conclusions, she neither identified it as such nor explained how she reached that conclusion. Moreover, had the trial judge reached her conclusion on this basis, in our view, on the record before her, it would have been a speculative conclusion.
[10] Turning to the agent’s liability, we agree with the agent’s submission that the trial judge erred in finding the agent liable based on a failure to read the inspection report, review it with the appellant, and bring to the appellant’s attention the potential for moisture problems arising from the findings in the report.
[11] The appellant did not plead the agent’s failure to read and review the report. More importantly, however, the appellant did not call expert evidence concerning the standard of care expected of an agent in these circumstances.
[12] It was the inspector’s responsibility to discover the potential moisture problem. In the absence of expert evidence, it was an error in law to find the real estate agent liable for failing to read the report, and failing to pick up indicators of moisture problems from the report, when the inspector, himself, failed to pick up on them.
[13] In the result, the appeal is allowed and the finding of contributory negligence and the resulting reduction in the appellant’s costs award are set aside. Further, the cross-appeal is allowed and the finding of negligence against the agent is set aside. In the result, the inspector is 100 percent liable for the damages.
[14] Costs of the appeal are to the appellant on a partial indemnity scale, fixed in the amount of $20,000, inclusive of applicable taxes and disbursements of $5,000, payable by Westbrook. Costs of the cross-appeal are to the cross-appellants in the amount of $10,000, inclusive of disbursements and applicable taxes, payable $5,000 by Westbrook and $5,000 by the appellant.
Signed: “Janet Simmons J.A.”
“Robert P. Armstrong J.A.”
“S. E. Pepall J.A.”