SUPERIOR COURT OF JUSTICE

THUNDER BAY SMALL CLAIMS COURT

SC-11-0379-0000

GREGORY PUTNEY and HAJNAL PUTNEY,

Plaintiffs,

-and-

DONALD ROBERT HEWER and ALLINE RATH-HEWER,

Defendants.

REASONS FOR JUDGMENT

of Deputy Judge K. Cleghorn, delivered

March 26th, 2012 at Thunder Bay, Ontario

APPEARANCES

N.A. MELCHIORRE, For the Plaintiffs.

W.C. WIECKOWSKI, For the Defendants.

R E A S O N S F O R J U D G M E N T

CLEGHORN (Dep. Judge-SCC)

This matter was heard on January 11, 25, 26 and 27, 2012. The decision was reserved on the final day.

The plaintiffs, Gregory Paul Putney (hereinafter “Mr. Putney”) and Hajnal Putney (hereinafter “Mrs. Putney”) reside in the City of Thunder Bay, in the Province of Ontario. They are the owners of the lands and premises described municipally as 210 McComber Crescent in the City of Thunder Bay, in the Province of Ontario (hereinafter “the subject property”).

The defendant, Daniel Robert Hewer (hereinafter “Mr. Hewer”) also resides in the City of Thunder Bay, in the Province of Ontario. The defendant, Alline Mae Rath-Hewer (hereinafter “Mrs. Hewer”) is now deceased. Mr. and Mrs. Hewer were, at all material times, the former owners of the subject property.

THE ISSUE

The issue in this case is whether or not the defendants are liable for damages and costs sustained by the plaintiffs to rectify a water seepage problem in the basement of the subject property.

There is no dispute with respect to the essential details of this matter. The plaintiffs maintain that they were sold a house after oral assurances were given that there were no water seepage issues in the basement. Mr. Hewer acknowledges giving such assurances. Both defendants confirmed their oral statements with a written Property Condition Disclosure Statement. The plaintiffs have expended considerable sums of money to date for remedial work on the subject property, with considerably more to be spent. Mr. Hewer maintains that the plaintiffs must bear the cost of the remedial work and improvements to the subject property as there was no misrepresentation, fraudulent, negligent or innocent, made by either defendant.

The plaintiffs claim the sum of $25,000.00, post-judgment interest and costs. The plaintiffs argue that the defendants are liable for all costs and expenses required to rectify the condition of the subject property on the basis that they would not have purchased same but for the oral and written assurances given by the defendants.

THE EVIDENCE

I do not propose to review all of the evidence given in the course of the trial. Suffice it to say that I do not consider the differences in the evidence provided at trial by the various witnesses to be significant or material enough to require an assessment of the credibility of anyone. In fact, I find specifically that the evidence offered by all witnesses was given to the best of his or her ability in an appropriate and straightforward manner. There are, however, specific instances which I will highlight where I prefer the evidence of one witness over another, or others.

I find as follows in relation to the evidence:

( 1 ) Mr. Hewer was observed by his former neighbor Jyrki Elo to do work on his driveway, exterior walls and eves troughs over the years, which could be categorized as regular maintenance on the subject property;

( 2 ) the plaintiffs were interested in purchasing a “low maintenance” house in Thunder Bay;

( 3 ) the plaintiffs and defendants arranged a private sale of the subject property and were amicable and co-operative with each other;

( 4 ) the defendants had an orderly and well kept home;

( 5 ) the plaintiffs expressed concerns prior to the actual sale about potential water seepage or moisture problems in the subject property and mentioned those concerns more than once;

( 6 ) the defendants advised that there were no concerns about water seepage or moisture in the basement;

( 7 ) the Agreement of Purchase and Sale (exhibit 4) as between the parties was signed by the plaintiffs on April 9, 2009 and by the defendants on April 13, 2009. A Property Condition Disclosure Statement (exhibit 3) was completed and executed by Mr. Hewer on April 14, 2009 which disclosed no issues of concern about the subject property;

( 8 ) the Agreement of Purchase and Sale provided for the sale of the subject property for $200,000.00;

( 9 ) the Agreement of Purchase and Sale was subject to a condition that the plaintiffs could obtain a home inspection and be satisfied with the report obtained;

( 10 )the defendants provided complete and unfettered access to the subject property at all times to the plaintiffs and/or their representatives, including the home inspector;

( 11 )the home inspection was conducted by Gord MacDonald on or about April 20, 2009. His report was filed as exhibit 2. The report details concerns, inter alia , about the yard grade sloping toward the foundation, some leaking eaves troughs, the age and condition of the roof and, most significantly, “water seepage around foundation” (at page 2 of the report);

( 12 )Mr. Hewer re-assured the plaintiffs subsequent to the home inspection report being received that there were “no water issues” relating to the subject property;

( 13 )the plaintiffs sought, and were denied, an abatement on the purchase price to compensate them for the anticipated repair or restoration costs of the driveway;

( 14 )the plaintiffs waived conditions on April 24, 2009. The sale of the subject property closed on May 28, 2009;

( 15 )the parties continued to co-operate with each other and made some necessary adjustments to the closing date, mainly to assist the defendants;

( 16 )the plaintiffs discovered some marks on the hardwood floors once all of the defendants’ belongings were removed from the subject property;

( 17 )the plaintiffs discovered water in the house within days following their move into the subject property. They eventually discovered water along finished walls, signs of moisture in the basement, water marks below the china cabinet and hutch near the back door, wet drywall, mould growth, wet carpet, damp insulation, rotting wood frame and general water marks in areas that had been covered by carpet, furniture or boxes prior to the purchase;

( 18 )the plaintiffs had declined to buy other homes where there were moisture or water concerns, and would have ”walked away” from the sale of the subject property but for the assurances of the defendants that there were no moisture or water issues in the home;

( 19 )no insurance coverage existed to cover the damages sustained by the plaintiffs from the moisture and water issues in the subject property;

( 20 )the plaintiffs have retained contractors to regrade the back yard and have the driveway repaired. There have been no water issues in the basement of the subject property since that work was done in or about 2010;

( 21 )the subject property is equipped with an eaves defroster on the roof but the plaintiffs have never used it, fearing that the device might be a fire hazard;

( 22 )the plaintiffs have contacted several contractors and property restorers to deal with the water/moisture issues, including A-1 Contracting, Thunder Bay Paving and Contracting, Superior North Contracting, Servicemaster and Windmark;

( 23 )Mr. Putney observed signs that the walls and floor in the basement had been wet before;

( 24 )John Hughes, a former neighbor of the defendants’, confirmed that Mr. Hewer had advised him several years ago that he had “some moisture in his basement”;

( 25 )Michael Bragnalo, an employee of Servicemaster, attended at the subject property at the request of Crawford Adjusters. He saw what he claimed were visible signs of moisture evident on the perimeter of the basement but no seepage from pipes and drains. Mr. Bragnalo could also feel moisture on dry wall upstairs, as well as some “staining” on parts of the flooring;

( 26 )Dino Bruno of Thunder Bay Paving and Contracting repaired the driveway at the subject property on the request of the plaintiffs’ and observed the rotting condition of the deck. The driveway repair is incomplete until there has been some settling of the material;

( 27 )Mr. Hewer described having had some water problems in the basement in and around the northeast corner (resulting in a wet carpet). He stated that there was some seepage where the wall meets the floor of a relatively minor nature, which he had repaired personally with a chisel and some hydraulic cement in the early 2004. According to him, there had been no further problems experienced by the defendants from that time until the sale of the subject property to the plaintiffs;

( 28 )Mr. Hewer claims to have advised the plaintiffs of the water issue. Neither plaintiff has any recollection of that conversation, but it occurred after execution of the Agreement of Purchase and Sale;

( 29 )Mr. Hewer states that he answered truthfully when asked on the Property Condition Disclosure Statement if there “are” any problems with leakage or moisture, he responded “no”- he claims to have fixed any problems with leakage or moisture and so such problems did not exist at the time of the sale of the subject property; and

( 30 )Mr. Hewer also responded “no” to the question on the Property Condition Disclosure Statement “Are there any disclosures not covered above?”

DISCUSSION/THE LAW

I do not find, necessarily, that there was a fraudulent misrepresentation made in this case. As Wright, J. described it in Usenick v. Sidorowicz et al , 2008 11373 (Ontario SCJ) , a vendor can be liable for a negligent misrepresentation, one which is “untrue, inaccurate or misleading” (at page 10). The learned judge also stated that a person may be misled as much by “a failure to divulge as much as by a statement that is inaccurate or misleading” (at page 10). The plaintiffs sue in tort based upon that misrepresentation, as opposed to bringing a suit in contract. A suit in contract would have failed based upon the plain language of the Agreement of Purchase and Sale which did not contain the representations complained about.

The plaintiffs received oral assurances, confirmed by the Property Condition Disclosure Statement, that there was no moisture or water seepage issues relating to the subject property. It is difficult to comprehend that the plaintiffs would not have further investigated concerns raised in overt and specific terms by the property inspector that were apparent prior to the waiving of conditions. This was an older home and some of the issues were apparent. There was, to say the least, reasonable suspicion that there were seepage or water issues. It is inconceivable that those issues arose coincidentally and immediately after the sale of the subject property. Indeed, later discoveries in the home are highly suggestive of one problem or another with moisture in various parts of the home. The actions of, and considerable distress exhibited by, the plaintiffs are indicative of serious, ongoing and pressing concerns over moisture and water-related issues in and about the subject property.

The defendants, for their part, had to be aware of the deficiencies of the home. It is apparent that any reasonable person would have disclosed the water seepage issue from 2004, remedied or not. I prefer the evidence of Mr. and Mrs. Putney that there was no conversation with either defendant about the historical water seepage issue. The water seepage issue from 2004, the disclosure of same and the potential sources of trouble raised by the property inspector may have combined to cause the plaintiffs, seeking a maintenance-free home, to not purchase the subject property. I suspect that based upon their deep-seated concerns about moisture or water problems that they would have sought to rescind the Agreement of Purchase and Sale if that conversation had indeed occurred. Whether the defendants fraudulently or negligently failed to disclose relevant information is ultimately irrelevant to the legal consequences of this situation: it results in liability resting on them because one of them happened in this instance. The plaintiffs must pay heavily to rectify a situation that they would not be in but for the fraudulent or negligent representation of the defendants, or either of them. In all likelihood, the subject property could have been sold despite the deficiencies, but for a significantly reduced price.

The plaintiffs, in the ordinary course, would not have succeeded on their claim in the face of the old adage “caveat emptor” or “let the buyer beware”. Their concerns about moisture or water problems in the house resulted in repeated requests for assurances, the obtaining of the Property Condition Disclosure Statement (albeit after the execution of the Agreement of Purchase and Sale) and the property inspection itself. In the absence of the oral assurances, their claim would have been dismissed outright, albeit with some sympathy. With the oral assurances given so freely and categorically, their claim succeeds, at least in part, because it rendered the information obtained from the property inspector less concerning, and certainly less urgent. To that end, the context of the information contained in the home inspection report, based upon the oral assurances, amounted to warnings about work and expense to be incurred in the future on an older home.

The parties can be placed in the appropriate position by having the home repaired in accordance with some of their estimates and costs incurred to date. The plaintiffs are not entitled to a new home, new roof, new cupboards, new carpet and a perfect basement. They purchased an older home in need of repairs and renovations, some of which were apparent to them and some of which they were made aware of by virtue of the home inspection report.

In short, some statements made by the defendants were false, misleading or incomplete. The plaintiffs acted upon those statements, to their detriment. The statements were of great importance to the plaintiffs, and were absolutely critical to their decision to purchase the subject property.

DAMAGES

The question then arises: what are the appropriate damages in these circumstances? The plaintiffs are entitled to reasonable compensation for the situation that they find themselves in. They are entitled to rectification of the problems which have arisen, but not to receive a demonstrably better or superior house to that which was purchased.

To that end, I borrow a phrase from Gordon, J. in the case of Riley and Riley v. Langfield and Langfield , 2008 23957 (Ontario SCJ) that is particularly apt in these circumstances: “corrective measures”(at page 14). To grant the plaintiffs a sum of money for corrective measures will ensure that there is minimal betterment allowed in this matter. By that I acknowledge that whatever is done in this instance amounts to some form of betterment by virtue of replacing, renovating or upgrading an older premises. The corrective measures must, inherently, improve a situation that is unhealthy or may do additional damage to the subject property. The money awarded in this instance has to correct problems that the plaintiffs would not have faced but for the misrepresentation or lack of disclosure that induced them to purchase the subject property in the beginning.

The plaintiffs claim $25,000.00 from the defendants, although indicate that the true cost of repairs for water damage amount to $51,572.49. I am concerned solely with, and focus on, the elimination of the problems faced by the plaintiffs, not with providing them with new carpets, hardwood flooring or cabinets to replace that which were present in the house at the time of purchase. I also do not consider it appropriate to award any amount for a new roof when the condition of same was readily apparent at the time of purchase and was flagged by the home inspector specifically. I also do not think it is necessary or fair for the plaintiffs to be awarded the cost of a new deck when the condition and state of the existing deck was there for them and the home inspector to see in plain sight.

The damages awarded in this instance shall be confined to one specific heading: weeping tile repair. The estimates in this regard (as recorded in exhibit 15) amount to $18,151.00 for digging around the foundation to repair the weeping tile, $3,500.00 to repair the grading once complete and $1,250.00 for new fill. I accept that this is an appropriate amount to award in this instance to rectify the problem which the plaintiffs would not have had but for the misrepresentations of the defendants. This is not betterment. It is the cost to rectify a situation that the plaintiffs should not have been in but for the misrepresentations of the defendants, or one of them.

DECISION

The Court finds that the defendants are liable for the misrepresentations made to the plaintiffs about the state of the subject property. As such, the plaintiffs shall have judgment against the defendants for the total amount of $22,901.00.

The plaintiffs made no claim for pre-judgment interest. Since these costs have not been incurred as yet, this may not have been an amount that would have been awarded in any event.

In relation to costs, as in most cases, the successful party shall be awarded costs. The plaintiffs are entitled to their costs, being all disbursements, which include, but are not limited to, the court filing fees, costs of service, witness fees, etc. This ruling on costs is subject to the parties advising the clerk of the court within ten days hereof of any claim for a counsel fee and/or written offers to settle made prior to trial which may impact on a costs award. If there are written offers or a request for a counsel fee, the parties are invited to make written submissions on costs within fifteen days of being notified by the clerk of the court that such submissions are required.

No arguments were advanced before me of the impact of the death of Mrs. Hewer on this decision, or its legal implications. As such, I decline to make any comment on that issue.

I thank all parties for their presentation of this interesting case and for their most helpful submissions.

Judgment accordingly.

K. CLEGHORN, Deputy Judge-SCC

Dated at Thunder Bay, Ontario this 26th day of March, 2012.