Citation: Meaghan v. Bolahood, 2021 ONSC 4469
DIVISIONAL COURT FILE NO.: 503/19
DATE: 20210623
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
D.L. Corbett J.
B E T W E E N:
DIANE ELEANOR MEAGHAN
Plaintiff / Respondent
- and -
BARRY WAYNE BOLAHOOD and EWA PEREIRA
Defendants / Appellants
Counsel:
Sukanta Saha, for the Respondent
Ian A. Johncox, for the Appellants
Heard by Videoconference: Dec. 9, 2020
AMENDED REASONS FOR DECISION[^1]
D.L. Corbett J.:
[1] The respondent entered into an agreement of purchase and sale for the purchase of a house from the appellants on June 24, 2016. The purchase closed on July 12, 2016.
[2] Before closing the transaction, the respondent, an experienced real estate agent, attended at the property and inspected it with two contractors. She saw nothing amiss.
[3] Two weeks after closing, the respondent noticed mould and dampness along the floorboards in a section of the basement. The area had been freshly painted, with new baseboards and carpet. Further inspection confirmed the presence of mould. When the baseboard was removed, the mould problem was obviously serious. When drywall was removed, it was clear that the mould was a big problem and included the drywall and foundation.
[4] The respondent hired a contractor to remedy the mould. The work cost her more than $25,000. Then she sued the appellants for concealing a defect in the house and not disclosing it to her.
[5] The principle of caveat emptor applies to the purchase of a house. The buyer must satisfy herself of the condition of the house before the sale closes. A problem she discovers after closing is her problem. There are exceptions to this principle, however. One exception is where there is a known material defect. This the vendor may have to disclose. The vendor may not conceal a material defect and hope that it remains undiscovered until after the sale closes.
[6] The case proceeded to trial in Oshawa before Deputy Judge Kowalishin of the Small Claims Court, who accurately stated the issues before the court: it was not enough for the respondent to show that there was a defect in the house at the time she bought it. She had to show that the vendors knew about the defect and concealed it from her.
[7] The Deputy Judge was satisfied that the mould was a longstanding problem and that the defendants had concealed it:
… the renovations to the property, particularly the basement apartment, more probably than not coincided with the work undertaken by Mr Bolahood and Mr Pereira at a time when the mould problem had been in existence for years. It was known by Mr Pereira’s family and was simply covered up with new baseboard installed by Mr Bolahood and Mr Pereira. (Transcript, p. 124)
Then Mr Bolahood and Mr Periera put the house up for sale. Based on these findings, the Deputy Judge found for the respondent / plaintiff and awarded damages of $25,000 plus costs.
[8] The appellants appeal to this court on the basis that the trial judge erred in factual findings, relied on inadmissible evidence, and erroneously drew a key inference against them without a sufficient basis in the evidence. They also argue that the trial judge “entered the fray” during the trial and thereby deprived them of a fair hearing.
Summary and Disposition
[9] I would dismiss the appeal. The Deputy Judge may have made one error of law but it did not affect the result.
[10] The Small Claims Court is a court of law and good conscience, where judges are expected to use their common sense to get to the bottom of everyday disputes. That is what the Deputy Judge did in this case, and the judgment is well-supported by admissible evidence, logic and common sense. I agree that the Deputy Judge was brusque with the appellants at times. This was understandable in the circumstances: the appellants did something dishonourable, provided an account of events that was not credible, and pressed a position that was not reasonably available, with some indignation. Deputy Judges are expected to be patient and to approach the cases before them with an open mind, but this does not mean that they must conceal all frustration and disappointment when a parties are brazen in their dishonesty.
Analysis
[11] The appellants argue that the trial judge erred in the following respects:
(a) Permitting the respondent to rely on inadmissible evidence;
(b) Imputing knowledge to the appellants without an adequate or any foundation;
(c) Permitting the respondent to lead evidence in violation of the principle in Browne v. Dunn;
(d) Interfering with and preventing the appellants from giving their evidence in chief;
(e) Permitting the respondent’s representative to give opinion evidence about mould in final argument;
(f) Permitting the respondent’s representative to argue collusion and improper purposes and motives without a proper evidentiary foundation for the arguments;
(g) Descending into the arena in closing submissions to assist the representative of the respondent in final argument;
(h) Descending into the arena in closing submissions during the closing arguments on behalf of the appellants, denying them the opportunity of making their closing arguments.
The appellants argue that, but for the errors at trial, the claim would have had to be dismissed for lack of evidence, and that in any event the cumulative effect of the errors was to deny them a fair trial.
The Inadmissible Evidence
[12] The respondent attached to her claim papers she received from her contractor, including his accounts on which was written a statement that it was evident that the mould problem had existed for a long time. The contractor was not called as a witness at trial.
[13] The Deputy Judge noted that the contractor did not give evidence, and that it was not permissible for the respondent (or other witnesses) to tell her what the contractor said to them. That would be hearsay and inadmissible. The Deputy Judge was correct about that. The Deputy Judge did find, however, that the papers attached to the claim were admissible because they formed part of the claim.
[14] In most respects the Deputy Judge was correct in this ruling. The respondent testified that she retained the contractor. She testified as to the work the contractor did, the bills he rendered for his work, and the fact that she paid him for his work. The respondent was, herself, a witness to these events and was entitled to testify to them. She was entitled, for example, to show the judge the bill she received, to testify that she received it and that she paid it. That is not hearsay: she was a direct witness to those events.
[15] The opinion of the contractor about how long the mould problem had existed was, however, in a different category. The respondent could not, herself, attest to the truth of the contractor’s statement of this opinion: the fact that she heard him give an opinion is not relevant: it is the opinion itself that matters. And this statement does not change – from being hearsay – because it is contained in a document attached to the claim. This is a common evidentiary mistake: documents can and often do contain hearsay, and the hearsay evidence does not become admissible just because it has been set out in a document.
[16] The trial judge did not, however, make this common mistake. The trial judge did not find that the opinion was not hearsay because it was in writing on the statement of account, but rather, that it was admissible because it was attached to the claim. Attaching the document to the claim does not make it admissible if it is not otherwise admissible. But the fact that the document was attached to the claim is a point that may be taken into account in exercising the court’s discretion to admit hearsay evidence. The trial judge erred in admitting the statement just because it was attached to the claim, but there was a path available to admit this evidence, as follows:
(a) In the Small Claims Court, it is in the trial judge’s discretion to admit hearsay evidence at the trial (Courts of Justice Act, RSO 1990, c. C.34, s.27);
(b) The exercise of this discretion must be done fairly and practically on the basis of the totality of circumstances;
(c) There were reasons both for and against admitting this evidence. The reasons for include:
I. The statement is reliable. It is made in the contractor’s handwriting on a contemporaneous document. There is no reason to believe that the statement does not set out the contractor’s sincere opinion.
II. The contractor would almost certainly be a qualified expert entitled to opine on mould in residential buildings. This is the sort of trade knowledge an experienced contractor would be expected to know, just as an experienced mechanic would be expected to know about routine problems that can arise in respect to cars.
III. The statement was disclosed to the appellants at the outset of the case, long before trial. If the contractor had attended the trial and testified that the mould was longstanding, the defendants would not have been caught by surprise. Indeed, they should have expected that this might happen.
IV. The appellants did not adduce any independent evidence to cast doubt on the opinion: it seems evident that the mould had been a longstanding problem and the real issue in dispute was whether the appellants concealed it when they sold the house to the respondent.
V. There is independent corroboration that the mould was longstanding. A neighbour testified that he had seen mould in this location in the basement as early as 2013.
VI. The respondent, herself, saw mould in the foundation and walls, which by itself is evidence of longstanding water ingress that causes mould.
VII. The trial judge was shown pictures of the mould taken by the respondent and was entitled to exercise her own common sense and experience to conclude that the mould problem must have existed at the time that the respondents replaced the baseboards, and that having done that work, they must have seen the mould problem.
VIII. There was a good explanation for the contractor’s absence at the trial. The trial had been scheduled on three prior occasions but had been adjourned because the assigned judges considered that they had a conflict. On the fourth date, the contractor was away working in Orillia and could not be available to attend court.
[17] On the other hand, there was no good explanation for why the contractor was not called to testify. Perhaps if the Deputy Judge had put it to the respondent that she would need to provide this explanation for the court to consider before ruling on the issue of admissibility, the respondent would have provided more information on this point. But we are left with the record as it stands, and there is no good reason given for not issuing a summons to the contractor. Second, the longevity of the mould problem was a contested factual issue. While I conclude that the evidence on this point was overwhelming, it was still a contested issue and not a tertiary point.
[18] It would have been open to the Deputy Judge to refuse to admit this evidence on the basis that the issue was contested and there was no good reason for not calling the contractor. But in my view, in all the circumstances, it was also open to the trial judge to admit the evidence and then to consider what weight to place upon it once she had heard all of the evidence in the case from both sides. At the end of the trial the only evidence to challenge this opinion was the incredible versions of events offered by the appellants. No independent expert testified that the mould could have arisen suddenly after the sale.
[19] If I am wrong about this point, and if it is thought that hearsay expert evidence should not be admitted in Small Claims Court in all but exceptional cases, this would still not assist the appellants in this appeal. The evidence that the mould was a longstanding problem includes:
(a) The extent of the mould that was found (attested to by the respondent and shown in the photographs);
(b) The alacrity with which the mould appeared after the sale closed;
(c) The absence of any explanation for sudden onset of so much mould (for example, there was no evidence of recent heavy rains or flooding);
(d) Independent evidence (from a neighbour) that the mould problem dated back at least to 2013;
(e) The fact that the property was purchased from Mr Pereira’s uncle for fast resale (how likely is it that the appellants did not know the condition of Mr Pereira’s uncle’s home when they bought it); and
(f) Renovation work was done in the very location of the mould and this work was done by the appellants themselves. How likely is it that they would have failed to see such evident mould after removing the baseboards.
[20] With or without the impugned hearsay opinion evidence, the case against the appellants was established on a balance of probabilities on any reasonable view of the evidence.
Imputing Knowledge
[21] The Deputy Judge had a very strong basis to impute knowledge to the appellants:
(a) The appellants purchased the property from Mr Pereira’s uncle;
(b) The appellant’s purchased the property to renovate and re-sell it;
(c) The appellants are experienced in dealing in residential properties;
(d) The appellants are licensed contractors and did the renovation work themselves;
(e) Renovation work was done in the precise area of the mould;
(f) If there had been mould evident, the work done by the appellants is the kind of work that could hide the mould in the short term;
(g) The mould reappeared very quickly after the sale closed with no intervening event to explain its sudden onset;
(h) When the drywall was removed it was evident that the mould was a serious problem that had existed for some time;
(i) A neighbour confirmed that the mould had been present in the same location in 2013.
[22] Weighed against this evidence were the naked denials of the appellants. These denials failed to address the significant improbabilities in their evidence. Stating evidence sincerely and vehemently does not make it true. The Deputy Judge was entitled to reject it and to infer that the appellants knew about the mould and concealed it.
Procedural Fairness
[23] I see nothing unfair in the way the trial was conducted. The respondent’s representative was entitled to argue that the mould was longstanding as a matter of the evidence and common sense. This does not amount to the representative “giving opinion evidence” in argument. It was open to the representative to argue “collusion and improper motive” on the evidence in this case. There was an argument available that both appellants knew about the mould and tried to hide it.
[24] I agree that the Deputy Judge was exasperated with the appellants during their evidence and during their final argument. No wonder. They were insisting on an unbelievable rendition of events and they purported to be indignant when their word was challenged. I conclude that the Deputy Judge showed appropriate patience and solicitude and gave the appellants a full and fair chance to explain their case.
[25] I see no violation of the principle in Browne v. Dunn. The essential allegations against the appellants, and the plaintiff’s evidence in support of these allegations, were all known to them when they testified, and they had a full opportunity to address those allegations in their evidence-in-chief. There was no obligation to put to the defendants each detail of contrary evidence so long as the witness has had a fair opportunity to provide his contrary version of the facts to the court.
Summary and Conclusion
[26] This case turned on the facts. The facts, as found by the Deputy Judge, were available on the evidence. There is no palpable and overriding error of fact. I conclude that the Deputy Judge did not err admitting the hearsay opinion evidence of the contractor (though she did err in the basis on which she concluded the evidence was admissible). However, even if this evidence should not have been admitted, this was a very strong case against the appellants and the result would have been the same.
[27] The appeal is dismissed with costs to the respondent from the appellants, jointly and severally, in the requested amount of $2,500, inclusive.
D.L. Corbett J.
Amended Decision Released: August 5, 2021
CITATION: Meaghan v. Bolahood and Periera, 2021 ONSC 4469
DIVISIONAL COURT FILE NO.: 11/21
DATE: 20210623
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
D.L. Corbett J.
BETWEEN:
Diane Eleanor Meaghan
Plaintiff / Respondent
- and –
Barry Wayne Bolahood and Ewa Pereira
Defendants / Appellants
REASONS FOR DECISION
D.L. Corbett J.
[^1]: The Decision was amended August 5, 2021 to correct the names of counsel and the name of the trial judge and to address an issue respecting costs.