COURT OF APPEAL FOR ONTARIO

CITATION: Iatomasi v. Conciatori, 2012 ONCA 913

DATE: 20121224

DOCKET: C54073

Doherty, Goudge and Hoy JJ.A.

BETWEEN

Giuseppe Iatomasi and Gabriella Iatomasi

Plaintiffs (Respondents)

and

John Conciatori and Angela Conciatori

Defendants (Appellants)

Marc Munro, for the appellants

Robert Whitmore, for the respondents

Heard: December 14, 2012

On appeal from the judgment of Justice Dale Parayeski of the Superior Court of Justice, dated June 6, 2011, with reasons reported at 2011 ONSC 3819.

ENDORSEMENT

[1] Mr. and Mrs. Iatomasi purchased a home from Mr. and Mrs. Conciatori. Within weeks of the closing, the basement leaked. The Iatomasis undertook what they considered to be the necessary repairs and sued the Conciatoris for the costs of those repairs. They alleged fraudulent and negligent misrepresentation as well as breach of contract.

[2] The Conciatoris took the position that there were no misrepresentations of any kind. They also relied on the “entire agreement” provision in the agreement of purchase and sale. In essence, the Conciatoris maintained they had made no misrepresentations and that the caveat emptor doctrine applied.

[3] The trial judge found that Mr. Conciatori had made certain false representations to Mr. Iatomasi and that the latter had relied on those representations (at paras. 21-23). He further found “that the misrepresentations were negligent, or fraudulent, or both” (at para. 29).

[4] On the issue of damages, the trial judge accepted that the Iatomasis were entitled to recover the amounts paid “to investigate and then remedy the water penetration and structural problems they encountered” (at para. 25). The trial judge went on to find that on the evidence the Iatomasis had overpaid for some of the work done. He reduced the damage claim accordingly.

[5] Counsel for the Conciatoris (“appellants”) raises several grounds of appeal. We find it necessary to deal only with the arguments that address the findings of fraudulent misrepresentation and the damage assessment.

liability

[6] The trial judge found that Mr. Conciatori made three misrepresentations to Mr. Iatomasi. Those three can be boiled down to two for the purposes of our analysis. First, the trial judge found that Mr. Conciatori had expressly represented that there had never been any problems concerning water leaking into the basement. In fact, Mr. Conciatori knew there was a history of that problem. Second, on the trial judge’s findings, Mr. Conciatori impliedly represented that the home (which he had built) had been constructed to the specifications shown in the plans he gave to Mr. Iatomasi during their negotiations and before offers were exchanged. The trial judge found that Mr. Conciatori knew that the basement walls were in reality not reinforced in the manner indicated in the plans.

[7] The trial judge’s conclusions that these misrepresentations were made and that they were relied on by the Iatomasis in entering into the contract of purchase and sale are factual findings. This court must defer to those findings absent clear and palpable error.

[8] On the first misrepresentation, Mr. Iatomasi gave evidence that in response to a direct question, Mr. Conciatori assured him that there had been no leakage problems in the basement. The trial judge was entitled to accept this evidence. In doing so, he observed, correctly we think, that there was some evidence confirming Mr. Iatomasi’s testimony. There is no basis upon which we could interfere with the finding of a fraudulent misrepresentation based on Mr. Conciatori’s representation concerning the absence of any history of leakage-related problems in the basement.

[9] The second basis upon which the trial judge found fraudulent misrepresentation is entitled to the same deference as the first. However, this finding was not based on any assessment of the evidence, but rather on the inference drawn from Mr. Conciatori’s silence when he gave Mr. Iatomasi the plans. On the evidence, there was nothing said about the plans when Mr. Conciatori gave them to Mr. Iatomasi.

[10] The trial judge ultimately concluded, at para. 22, that:

Mr. Conciatori’s silence on the point of his deviation from the plans would suggest to any reasonable listener that the plans had indeed been followed.

[11] Considering that the plans were provided to Mr. Iatomasi in the context of an arms-length negotiation between a putative vendor and purchaser, we think the trial judge’s finding of an implied representation as to the accuracy of those plans was unreasonable. Indeed, the trial judge seemed to treat this misrepresentation as different from the explicit misrepresentation concerning the history of any leaks in the basement. The trial judge noted immediately after making the findings: “I find all three representations were false, albeit to different degrees” (at para. 23). When liability is based on fraudulent misrepresentation, there can be no different degrees of falsity.

[12] Even though we would sustain only the finding of a misrepresentation with respect to the history of any leakage-related problems in the basement, that finding suffices to uphold the trial judge’s determination on liability based on fraudulent misrepresentations.

damages

[13] On the issue of damages, counsel for the appellants submits that the trial judge improperly used a contract measure of damages rather than a tort-based measure. The trial judge did not identify the measure of damages he used. His reasons are open to the interpretation put forward by counsel for the appellants. They are, however, also consistent with a loss of value approach appropriate to tort-based liability.

[14] The trial judge’s approach to damages is similar to that taken in Gumbmann v. Cornwall (1986), 4 A.C.W.S. (3d) 38 (Ont. H. Ct. J.), aff’d 1998 CanLII 1766 (ON CA), [1998] O.J. No. 2239 (C.A.). We think it was open to the trial judge to conclude that the difference between the price paid for the property and the actual value of the property at the time of the sale was equal to the amount needed to remedy the problems connected with the fraudulent misrepresentation concerning the ongoing leakage in the basement. In other words, the difference between the actual value of a house with a leaking basement and the price paid was equal to the costs of the repairs needed to fix the existing leakage-related problems.

[15] Even accepting that the trial judge used a loss of value measure of damages, those damages must be reassessed in light of our finding that the fraudulent misrepresentation was limited to misrepresentation concerning the history of any leakage-related problems. In his assessment, the trial judge did not distinguish between repair costs associated with correcting the existing leakage-related problems and the costs associated with the correction of structural problems in the basement not related to the past history of leakage, but necessary to prevent future potential leaks. This latter category was not related to the only fraudulent misrepresentation established on the evidence. That misrepresentation was directed at the history of leakage-related problems in the basement and not the overall integrity of the structure of the basement.

[16] Using the figures accepted by the trial judge, we would reduce the damages by removing the amounts paid to “install angle iron and grout” and to “do radar screening of the basement walls” (at paras. 25, 28). These costs were not related to repairs needed to correct existing leakage-related problems. Bearing in mind the deductions in these amounts made by the trial judge, our removal of these amounts from the award reduces the damages by $22,157.58, leaving an award of $48,040.62.

[17] We allow the appeal to the extent of varying the damages awarded to accord with these reasons. The appellants were partially successful on the appeal. Counsel agreed that if the appellants were entirely successful, they should have costs of the appeal in the amount of $15,500. In all the circumstances, costs in the amount of $10,000, inclusive of disbursements and relevant taxes, are awarded to the appellants.

[18] As we have varied the trial judgment, the costs of the trial must be reassessed. Hopefully, counsel can agree on those costs without the expense associated with further appearances before the trial judge. We would, however, order the matter of costs of the trial remitted to the trial judge.

“Doherty J.A.”

“S.T. Goudge J.A.”

“Alexandra Hoy J.A.”