Court of Appeal for Ontario

CITATION: Barbieri v. Mastronardi, 2014 ONCA 416

DATE: 20140521

DOCKET: C58126

Weiler, Hourigan and Pardu JJ.A.

BETWEEN

Nicolina Barbieri

Plaintiff

(Respondent)

and

Fernando Mastronardi, Joseph Leonardis Real Estate Ltd. and Canada First American Title Insurance Company o/a First Canadian Title Insurance Company

Defendants

(Appellant)

Alistair Riswick, for the appellant

Alex Flesias, for the respondent

Heard: May 12, 2014

On appeal from the order of Justice P. Theodore Matlow of the Superior Court of Justice, dated December 2, 2013.

ENDORSEMENT

[1] This appeal arises out of the purchase of a residential property in the City of Toronto (the “Property”) by the respondent, Nicolina Barbieri, pursuant to an agreement of purchase and sale (“APS”) executed on September 5, 2007.

[2] The respondent commenced this action against the appellant, Fernando Mastronardi, in breach of contract and negligence on March 19, 2009. She alleged that the appellant failed to disclose that a marijuana grow-op had previously been operated at the Property and that the Property has an extensive mould problem that renders it uninhabitable.

[3] The parties agreed that the issue of liability could be severed from the issue of damages. The respondent successfully bought a motion for partial summary judgment on the question of liability only.

[4] For the reasons that follow, we would allow the appeal on the basis that the reasons of the motion judge fail to provide any insight into how his legal conclusion was reached and what facts were relied upon in reaching his conclusion. Accordingly, meaningful appellate review is impossible.

Facts

[5] The Property is a single family residential home. In March of 2006, the appellant entered into a lease agreement with a third party for the rental of the home for a one year period commencing April 1, 2006.

[6] On or about August 9, 2006, the Toronto Police conducted a raid at the Property and discovered a marijuana grow-op in the basement. The City of Toronto issued work orders on September 22, 2006. Those work orders made reference to the marijuana grow-op and stated that the Property was potentially in an unsafe condition and that the air quality, electrical installation and structural integrity of the premises were “suspect”. Pursuant to those work orders, no person could use, occupy or permit the use or occupation of the Property until the work orders were lifted.

[7] The appellant commissioned a building inspection report from King Inspection and Environmental (the “King Report”). That report identified problems, including mould in the basement, and recommended that remedial work be undertaken. The appellant hired his son’s company, Dimension Homes and Renovations (“Dimension”), to do the remediation work. It is unclear on the record the nature and extent of the remedial work done by Dimension. However, it is not disputed that, on February 13, 2007, the City of Toronto rescinded the work orders.

[8] After the work orders were rescinded, the appellant’s daughter resided at the Property with her two young children for a period of approximately six months. When she moved out, the appellant listed the Property for sale.

[9] The parties entered into the APS on September 5, 2007. The respondent’s nephew, Domenic Manno, made the purchase under a power of attorney. Mr. Manno swore an affidavit wherein he indicated that the respondent asked a series of specific questions through her real estate agent about the condition and maintenance of the Property. He further stated that he was advised that favourable responses were made by the appellant to these enquiries and that the respondent proceeded to make the offer to purchase in reliance on those favourable answers. Mr. Manno swore that the use of the Property as a marijuana grow-op was not revealed and, had it been, it “would have materially impacted the [respondent’s] decision to purchase the property or would have been a factor in determining the purchase price of the property.”

[10] The appellant denied that he was asked the questions alleged to have been asked regarding the condition and maintenance of the Property prior to or at the time of signing the APS. The appellant’s wife swore an affidavit wherein she stated that in her discussion with the respondent’s real estate agent it was suggested that the respondent was acquiring the Property for its land value and planned to build a new house.

[11] It is not disputed that the APS contained an entire agreement clause and that the respondent waived her right to request an inspection. No Seller Property Information Statement was requested or provided. The transaction closed on November 20, 2007.

[12] It is not clear from the evidence if the respondent ever lived at the Property. In or about September of 2008, Mr. Manno was approached by neighbours who informed him that the Property had been used as a marijuana grow-op.

[13] In March of 2010, the respondent retained Fisher Environmental Limited (“Fisher”) to undertake an investigation of the indoor air quality in the Property (the “Fisher Report”). Fisher concluded that there was mould in the Property and that a number of remedial measures were required to be undertaken in order to make it safe for human occupancy.

Decision of the Motion Judge

[14] The motion judge granted partial summary judgment in the respondent’s favour on the issue of liability. The entirety of the motion judge’s reasons is as follows:

Pursuant to rule 20.04(4), partial summary judgment is to issue in favour of the Plaintiff against the Defendant, Mastronardi on the issue of liability (a declaration) and that the action proceed to trial solely on the issue of damages.

I am persuaded that the defendant failed in his duty to the Plaintiff, to advise her or her representative that the house had been used for a substantial period of time by a tenant as a “grow up”, that the structure had suffered damage as a result of the activity carried out, and that his son had made repairs to the structure to remedy the damage caused.

It is my view that, even if the repairs had reversed all of the damage done to the structure, the Plaintiff would have a valid claim for the stigma that had attached to the subject property.

The evidence before me is sufficient to enable me to reach a just result on the issue of liability. It is not sufficient to enable me to reach a just assessment of damages. That would require consideration of further evidence relative to the extent to which the structure was repaired, the likely cost of future further repairs, the diminution of the value of the property and any other loss or damage that flows from the Defendant’s default.

I give no special directions with respect to the further conduct of the action.

Having regard to the outcome of this motion. I refer the costs of the motion, including any costs already referred to me, to the judge presiding at the trial on the issues of damages.

Positions of the Parties

[15] The appellant admits that the existence of the grow-op was not disclosed. However, he asserts that as of the time of the sale, the problems with the Property were remediated. He submits that is why the City of Toronto lifted the work orders and that is why he allowed his daughter to reside there with her two children. It is the appellant’s position, therefore, that he owed no duty to disclose because there was no defect in the Property. Further, he relies upon the APS, which expressly excludes the operation of unwritten representations regarding the Property.

[16] The respondent submits that the appellant had a duty to disclose the grow-op and that the failure to do so was a breach of contract and a misrepresentation. He relies on the King Report and the Fisher Report to establish that there was mould in the Property in 2006 and 2010, respectively. Counsel invites the court to infer that there was mould in the home throughout and that the remediation efforts did not solve the mould issue.

Analysis

[17] In Ontario a vendor may be liable to the purchaser of a property which is not new if he knows of a latent defect which renders the premises unfit for habitation or dangerous in itself and does not disclose it to the purchaser: McGrath v. MacLean (1979), 1979 CanLII 1691 (ON CA), 22 O.R. (2d) 784 (C.A.); and Dennis v. Gray, 2011 ONSC 1567, 105 O.R. (3d) 546.

[18] The motion judge concludes that the appellant is liable to the respondent, but his endorsement offers no legal analysis and contains no findings of fact. He declares that the appellant “failed in his duty” to the respondent, without explaining how he reached that conclusion. The nature of the duty, whether in negligence or contract, is not identified.

[19] More importantly, the motion judge reaches no conclusion with regard to the critical factual issue, namely whether there was mould in the Property at the time of closing. There was conflicting evidence on the point and the determination of that issue was vital in the analysis of whether the appellant was liable to the respondent for any damages. Similarly, there is no consideration of whether the appellant was aware of the existence of mould as at closing.

[20] Having failed to reach any conclusion on the critical issue of the existence of mould in the Property at the time of closing, the motion judge goes on to find that, even if the problems in the house had been completely remediated, the respondent would still “have a valid claim for the stigma that had attached to the subject property.”

[21] Again the motion judge provides no analysis as to how he reached this conclusion. There was no expert or other evidence before him that the fact that the Property was used as a grow-op meant that it had been stigmatized. The evidence at its highest was the bald statement of Mr. Manno that, had the plaintiff known about the grow-op, she would have either not purchased the Property or purchased it at a reduced price.

[22] In order to allow for meaningful appellate review, the decision of the court must, at a minimum, provide some insight into how the legal conclusion was reached and what facts were relied upon in reaching that conclusion: R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869, at paras. 24, 55; and Crudo Creative Inc. v. Marin (2007), 2007 CanLII 60834 (ON SCDC), 90 O.R. (3d) 213 (Div. Ct.).

[23] The motion judge’s endorsement does not contain necessary findings of fact and is so lacking in analysis that it impedes meaningful appellate review. While decisions of motion judges on summary judgment motions attract significant deference (see Hryniak v. Mauldin, 2014 SCC 7, at para. 81), there cannot be deference in circumstances where the appellate court cannot understand the legal basis for the decision or the factual finding made in support thereof.

Disposition

[24] Given the inadequacy of the endorsement of the motion judge, we cannot conduct a meaningful review of his decision.

[25] In these circumstances, we have no alternative but to grant the appeal and set aside the declaration of the motion judge that the appellant is liable to the respondent.

[26] As agreed between the parties, the appellant is entitled to costs in the amount of $8,000, inclusive of disbursements and H.S.T.

“K.M. Weiler J.A.”

“C.W. Hourigan J.A.”

“G. Pardu J.A.”