COURT FILE NO.: CV-11-424181 DATE: 20170725 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
SUZANNE AND JOYCE POWELL Plaintiffs
– and –
TADEUSZ LOJKO, STEPHEN SQUIBB, PROPERTIES PLUS REALTY SERVICES INC. CARRYING ON BUSINESS AS PRUDENTIAL PROPERTIES PLUS, BROKERAGE, BARBARA KIRBY, ROYAL LEPAGE REAL ESTATE SERVICES LTD. AND CITY OF TORONTO Defendants
COUNSEL:
Frank J. E. Zechner, for the Plaintiffs Hans P. Engell, for the Defendant, Barbara Kirby, Royal Lepage Real Estate Services Ltd.
HEARD: February 13, 14, 15 and 16, 2017
LEDERER, J:
INTRODUCTION
1This is a case concerning responsibility for action taken.
2The plaintiffs bought a house. Some months thereafter it became apparent that there was leakage of water into the home and mould in the basement. This, particularly the presence of mould, was a surprise to the plaintiffs who say they were unaware of these problems. The plaintiff was put to the cost of removing the mould and repairing the damaged parts of the home, especially an apartment located in the basement. The plaintiffs say this was the fault of either or both of the real estate agent who assisted them in the purchase or the previous owner. Someone should have advised them of these difficulties. It is, of course, possible that the plaintiffs bear at least some of the blame. Were they too anxious to buy, not careful enough in considering the advice they were given? Did they fail to act on the opportunities available to ascertain with more certainty the condition of the house they wished to purchase?
3The court is asked to determine who is responsible and, if there is more than one person, in what measure.
THE ROLE OF THE PARTIES
4The trial played out as an action between the plaintiffs (the purchasers Suzanne Powell and Joyce Powell) and the real estate agent who acted on their behalf (Barbara Kirby). The previous owner, the person from whom the plaintiffs purchased the home, was Tadeusz Lojko. He was not represented. This was explained by counsel. The plaintiffs and Tadeusz Lojko had entered into a Pieringer Agreement; that is these parties had settled the matter as between them. The terms of the agreement were not revealed. At the outset it was suggested that Tadeusz Lojko might appear as a witness but, in the end, he did not. Even in his absence the decision made here will have the effect of determining his share of the responsibility, if any. Whatever remains after determining if, and to what extent, the real estate agent or the plaintiffs are each responsible, falls to Tadeusz Lojko.
5The agent (Barbara Kirby) was employed by, or associated with, the defendant Royal Lepage Real Estate, a real estate broker. It is vicariously responsible for the actions and any liability of its agent. They were both represented by the same counsel. Two of the remaining defendants are the agent (Stephen Squibb) and broker (Property Plus Realty Services Inc.) who acted for the vendor (Tadeusz Lojko). They were not represented and did not appear. The same is true of the final defendant the City of Toronto. It was not suggested that any of them was responsible or, in any sense, liable for the problems that occurred. I assume that the action as against them was either dismissed or discontinued.
BACKGROUND
6Suzanne Powell and her mother Joyce Powell wished to buy a house. They enlisted the assistance of a real estate agent, Barbara Kirby. Over the years, the plaintiffs had made enquiries of the agent as to the real estate market and various properties. As described by Barbara Kirby, she had befriended Suzanne Powell. She had invited Suzanne to her home to sit at the pool and to dinners she had given. The market was sufficiently expensive that Suzanne Powell, even with the participation of her mother, would find it difficult to take part. She did not have the necessary resources. Barbara Kirby tried to assist Suzanne by arranging a job with her father. This did not work out.
7Suzanne Powell and Joyce Powell became more interested in buying and more active in looking. The idea was to create some long-term security for Suzanne and some income for her. From the beginning Barbara Kirby says she was concerned with the limits on the resources that were available to the Suzanne Powell and Joyce Powell. As she understood it, they would not be approved for and would not be able to purchase anything valued at more than $600,000. This being so she showed them small homes in the Etobicoke that were priced accordingly. This was not what Suzanne Powell wanted. She wanted to live in the area of the city she thought of as home, being near or in the vicinity of High Park. Barbara Kirby continued to believe that the state of the market meant that such a purchase was out of the reach for the Powells. She was surprised to learn that the bank had approved loans allowing them to buy to a value of $750,000.
8With the assistance of Barbara Kirby, Suzanne Powell and Joyce Powell made offers on two homes. Both were unsuccessful. In both cases the properties offered the potential of the inclusion of a second apartment which would provide assistance in carrying the cost of the property and respond to Suzanne Powell’s need for income security. In the first case a home inspection was carried out. As Suzanne Powell recalled it, Barbara Kirby thought this unnecessary and a waste of time. The Powells made an offer. It was declined. There was a better one. In the second case the offer included a home inspection clause but, again Suzanne Powell and Joyce Powell were outbid. As reported by Barbara Kirby, in each of the two cases, she advised the Powells that the cost was too high given their limited resources.
9Sometime thereafter Barbara Kirby introduced the Powells to 205 Indian Grove. Suzanne Powell was familiar with the street. On either October 29, 2009, or October 30, 2009, (the evidence was unclear) the Powells visited the home with Barbara Kirby. 1 Suzanne Powell loved it. This was her neighbourhood. As perceived by Barbara Kirby, Suzanne Powell was determined to buy the house. She had to have it. As Barbara Kirby sees it, this coloured everything that followed. The visit took place in the hour before the time set aside for viewing by interested agents. In preparation for the sale the owner had a home inspection done and a report prepared. At the showing a summary of the report was available to any prospective purchaser. The Powells and Barbara Kirby reviewed it. The summary document pointed out, among other things, that there was some leakage of water around a skylight on the second floor and, at least a portion of the roof (the flat part) was nearing the end of its normal life expectancy. Suzanne Powell and Joyce Powell visited the basement. It included an apartment that at the time was leased. The tenants were away. The Powells did not notice anything unusual. Each of Barbara Kirby and Suzanne Powell testified that there was no evidence of mould and no signs of leakage in the apartment in the basement. Joyce Powell said there was nothing to make her think there was anything wrong.
10For her part Barbara Kirby remained concerned that the purchase of a house in this area, in particular the home at 205 Indian Grove, was beyond the means of the Suzanne Powell and Joyce Powell. She sent an email to Suzanne. It indicated just how tight the financing would be. In considering how much the monthly payments required to meet the acquired obligations would be and how they could be met, Barbara Kirby assumed a purchase price of $730,000 and an income of $1,600 per month from the rental of rooms to two students. This would leave Suzanne Powell having to pay $972. Barbara Kirby asked: “Does this make sense?” 2 The email concluded by advising that offers were to be made the following Monday.
11Suzanne Powell and Joyce Powell determined that they should make an offer for the house. They met with Barbara Kirby on the day set aside for that purpose. The Powells both signed an agreement appointing Barbara Kirby and Royal Lepage Real Estate Services Ltd. as representing them as the “Buyer” in a transaction for the purchase of 205 Indian Grove. 3 The agreement was said by Barry Lebow, called by the plaintiffs as an expert to opine on the duties and responsibilities of real estate agents, to deal primarily with commissions. With the agreement in place an offer was prepared. Barbara Kirby filled out the form. The initial offer was for $700,100. It included two conditions that reflect on the state of repair of the home. The first required the seller to fix “the leaking skylight” and the second “to install a new front panel on the dishwasher”. Both Suzanne Powell and Joyce Powell signed the offer. The document was filled out and signed as the three women sat in a car outside the home. Barbara Kirby took the offer, presented it to the agent acting for the seller and left. As described by Barbara Kirby, within a few moments of her return to the vehicle, the agent for the seller telephoned. The Powells were not going to be able to purchase the house for $700,000. They would have to raise their offer. There were three other offers. Barabara Kirby, applied what she testified was a general convention used in such circumstances and added $10,000 for each other offer. This would take the total to $730,000. She testified she told the Powells this was beyond their financial capability. It was consistent with the figure she had used to develop the costs Suzanne Powell would have to carry as summarized in the email that ended with the question “Does this make sense?” (see: para.[10] and fn. 2 above). Barbara Kirby acknowledges that this was a concern for Joyce Powell but that Suzanne Powell was determined. She wanted the house. Both Suzanne Powell and Joyce Powell signed an amended offer. The price offered was $730,000.
12The offer is found in a document entitled “Agreement of Purchase and Sale”. It becomes an agreement once accepted by the Seller. The principal form contains a clause dealing with the right to an inspection. It states:
INSPECTION: Buyer acknowledges having had the opportunity to inspect the property and understands that upon acceptance of this Offer there shall be a binding agreement of purchase and sale between Buyer and Seller. The Buyer acknowledges having the opportunity to include a requirement for a property inspection report in this Agreement and agrees that except as may be specifically provided for in this Agreement, the Buyer will not be obtaining a property inspection or property inspection report regarding the property.
13Accordingly, as written in the main form of the agreement, there is a predisposition against the buyer obtaining or having an inspection conducted on her, his or their behalf. In contradistinction to this, the Agreement of Purchase and Sale included in a schedule (Schedule A) the following term:
This Offer is conditional upon the inspection of the subject property by a home inspector at the Buyer’s own expense and the obtaining of a report satisfactory to the Buyer and, if not satisfactory to the Buyer, a report revealing deficiencies in the property which that Seller is willing and able to remedy. Unless that Buyer gives notice in writing delivered to the Seller not later than 6:00 p.m. TWO (2) banking days after acceptance that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. The Seller agrees to co-operate in providing access to the property for the purpose of this inspection. This condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to the Seller within the time period stated herein.
14Thus, despite the term found in the principal form of agreement, the printed form recognized the possibility that a buyer will seek to have an inspection carried out. As submitted to the agent for the seller this clause and one dealing with the Buyer obtaining financing to complete the purchase, were struck out. There was some disagreement as to when this took place. Was it before the first offer or only as part of the preparation of the amended offer? As Barbara Kirby recalled it was the former; as the Powells remembered, it was the latter. Nothing turns on this disagreement.
15The amended offer was accepted. By the terms of the agreement thus formed, Suzanne Powell and Joyce Powell agreed to purchase 205 Indian Grove for $730,000. Given that they were approved for the financing of a purchase up to $750,000, it must have been or should have been clear that they had a little room left if something went wrong and more money was required.
16A problem appeared. It was expensive.
17The purchase of the house by Suzanne Powell and Joyce Powell closed on March 12, 2010. At the time that the offer was made, through to the closing and beyond, the apartment in the basement was rented to two tenants. Over the years of their tenancy there had been problems with mould. It appeared from time to time. The tenants worked with the owner in attempts to clean it up, attempts that were never wholly successful. When, during October 2009, the Powells had visited the home in advance of making an offer, the tenants were in California. Some mould had been in evidence as they left but, upon their return it was clear that some effort had been made to clean it up. Nonetheless, they decided to move. This was partly in response to the damage to “memorabilia” from the music industry collected and kept by one of the tenants and damaged by the presence of mould. That tenant appeared as a witness at the trial. Mould had been visible when they left for California. You could see mould “…on the kick plates and in the cupboards.” When they got back “…it seemed that everything was nicely tidied up...” The owner “…had attempted to clean it and cover it up a bit…not 100%” There were indications of mould apparent to someone who looked closely even with the furniture in place. As they prepared to move it became apparent just how bad the presence of mould had become. They moved, in part, “because it was getting so bad.” They called the Suzanne Powell and Joyce Powell down to see the problem. “It needed to be cleaned up…” Once the furniture was moved to the side or removed, the significance of the problem became clear. Photographs taken by Suzanne Powell demonstrate just how serious this was. There was mould everywhere from the entrance to the apartment, to the kitchen (behind the stove), in the cupboards, the bedroom of one of the tenants and the living room. Mould was present throughout the apartment.
18In response the plaintiffs retained Frank Haverkate. He specializes in mould growth assessments of residential homes, commercial and industrial buildings. Frank Haverkate has extensive experience in inspection, assessment and remediation of water damaged buildings. As he explained, mould comes from building materials exposed to water. He undertook an inspection of the house. He concluded:
The house presents several areas of potential mould growth problems. The basement shows significant contamination in several areas due to water seeping into the basement through the foundation. This apparently has been going on for several years and has gone unabated, and has led to the degree of contamination presently found. In other areas of the house like the 2nd floor storage room and hallway bathroom leaks from skylights which apparently went unchecked for much time have potentially lead to significant contamination within the wall cavities and ceilings.
[Emphasis added]
19The over-arching concern was for the quality of the air in the building, especially in the basement apartment. Stachybotrys (described by Frank Haverkate as a toxigenic mould) was of particular concern. Although rare, where there are exposures in excess of those noted at 205 Indian Grove there have been reports of deaths from inhaling this mould. If it finds its way into food it can be dangerous.
20Frank Haverkate recommended an extensive program of mould remediation. This can be difficult and dangerous work. In this case the apartment had to be “gutted”.
21As the conclusion of the report prepared by Frank Haverkate noted, the issue or problem of mould at this home was not new (see the italicized phrases in the quotation above). This becomes apparent upon a consideration of the evidence of the tenant. In 2007 (two years before the inspection in 2009 or three years before the closing during March 2010) the tenants returned home after a vacation. There had been a “flood”; water was “everywhere”. At the trial the pictures taken at the time were produced. They show what was identified as mould and mildew found behind the stove. The tenants, with the landlord (the seller), worked to clean up. They used bleach to get the mould out. Evidently (at least as reported by the tenant in giving evidence) bleach does not kill mould it just changes or takes out the colour. Over time and from time to time the mould reappeared. The tenants complained to the landlord. In 2008 there was another flood. It was on this occasion that the music memorabilia was ruined. The tenant testified that the landlord did try to clean up the problem. The tenants painted the apartment twice. It was only when they moved out that they came to understand how serious the problem was. This was so despite the apparent effort of the landlord to clean up in preparation to sell while the tenants were away in California.
22It is not as if there were no hints or indications that something was amiss. The summary of the inspection undertaken, on behalf of the seller and available at the time of the inspection should have or, at least, could have raised concerns in the alert reader. It said that the skylight leaked and that parts of the roof needed to be replaced. As seen by Barry Lebow this was a wakeup call. It should have been apparent, particularly to Barbara Kirby as an experienced agent, that, at the least, this required an examination of the full report to be assured that there were no further or unforeseen problems. A second expert was called. This one on behalf of the defendants: the agent and the brokerage. Like Barry Lebow, William Johnston has had a long and varied career in the real estate industry. Unlike Barry Lebow he did not see the summary of the inspection report as raising any particular or relevant concerns. The summary had nothing to say about water intrusion in the basement.
23I point to two submissions made on behalf of the defendants.
24First it was observed that in respect of the two earlier offers made by the Powells, the first property had been the subject of an inspection and the offer for the second included a clause requiring one. As counsel for the defendants perceived it, this was enough for Suzanne Powell and Joyce Powell to have acquired the experience and expertise necessary to understand, for themselves, the benefits and the risk of taking the time to seek out the full report before being prepared to make an offer. It was said that they had the knowledge necessary to make this decision without the advice of Barbara Kirby, as their agent. This was supported by evidence of William Johnston. In the report he prepared he observed:
The plaintiff Suzanne Powell was familiar with property inspections and property inspection conditions, but chose to rely on the Carson and Dunlop report prepared as part of the marketing package.
25I do not accept this as reasonable basis for setting aside any responsibility held by the agent, Barbara Kirby. For one thing the Powells did not rely on the report that had been prepared for the seller (the Carson and Dunlop report). Rather they had only the summary. The issue was not simply whether they should have obtained a full copy of the report that had been done but also whether they should have insisted on an inspection conducted on their behalf.
26Barry Lebow reviewed what he understands to be the relevant sections of the Code of Ethics made a regulation under the Real Estate and Business Brokers Act, 2002. The Code directs the conduct and responsibilities of real estate agents. Among others there are sections which say:
A registrant shall promote and protect the best interests of the registrant’s clients.
(1) A registrant shall advise a client or customer to obtain services from another person if the registrant is not able to provide the services with reasonable knowledge, skill, judgment and confidence or is not authorized by law to provide the services.
(2) A registrant shall not discourage a client or customer from seeking a particular kind of service if the registrant is not able to provide the service with reasonable knowledge, skill, judgment and competence or is not authorized by law to provide service.
- (1) A broker or salesperson who has a client in respect of the acquisition or disposition of a particular interest in real estate shall take reasonable steps to determine the material facts relating to the acquisition or disposition and, at the earliest practicable opportunity, shall disclose the material facts to the client.
(2) A broker or salesperson who has a client in respect of the acquisition or disposition of a particular interest in real estate shall, at the earliest practicable opportunity, disclose to the customer the material facts relating to the acquisition or disposition that are known by or ought to be known by the broker or salesperson.
27Barry Lebow concluded that:
A reasonable selling salesperson (Kirby) should have cautioned her clients, Joyce Powell and Suzanne Powell, about reliance on a third party inspection contract, namely the October 2009 home inspection. That inspection was the property of the Seller and the Powells would not have had recourse against the home inspector. Further, only a summary of the inspection report was shown at the time of negotiation, not the complete report. A reasonable salesperson would have demanded a copy of the entire report.
28In referring to the general responsibility to provide “conscientious service” (section 5 of the Code of Ethics) Barry Lebow made note that advice given should be that which is necessary to protect the client, “especially one that was financially vulnerable”.
29For his part, William Johnston expressed the view that Barbara Kirby did what was required of a responsible agent. She had done:
“… everything that a prudent real estate sales person should have done in the circumstances to ensure that the plaintiffs had an opportunity to satisfy themselves as to the condition of the subject property prior to buying it. She gave them the option of including an inspection condition in their offer, and ensured that they had a copy of the inspection Summary, which the plaintiff Suzanne Powell stated in her discovery was sufficient.
30In his evidence, at trial, William Johnston outlined what an agent is obliged to do. He or she should go over the summary and advise the client that the full report is available to look at should he or she wished to do so. Where the summary does not point to any serious difficulties a responsible agent would not be required to advise the client obtain the full report. He pointed out that, in these circumstances, where there were multiple offers, insisting on inspection or obtaining the full report would have removed any opportunity they had of buying the property.
31William Johnston noted that the standard requires that the client be told the full report is available and be counseled on the pros and cons of obtaining the report in the circumstances. There is no suggestion that this took place. There is no evidence that Barbara Kirby sat down with her clients and made an effort to explain the risk of not obtaining an inspection report prepared for them rather than the seller or in failing to review the full report produced on the instruction of the seller. They were not told that while the report prepared could provide information as to the condition of the home this was not something they could rely on should any concerns it revealed turn out to be more serious than suggested. They had no recourse to those who prepared the assessment. The contract concerning the inspection was with the seller not with them as buyers.
32Moreover the idea that there was nothing serious noted in the summary is not an observation I am prepared to accept. As noted by Barry Lebow there was significant indications of the presence of and potential for water to leak into the home. The sloped roof included a dormer. It showed damage and wear. The “west main slope” was aging. The “flat roof” was “near [the] end of [its] normal life expectancy”. The “old built section of [the] flat roof [was] predictable… The condition of the membrane [was] not visible and [was] unpredictable.” The skylights had “no curb” and were “vulnerable to leakage. Past leak[age] at [the]skylight and skylights have been patched. Eventual replacement will be necessary.”
33Barbara Kirby understood her clients were financially vulnerable. Any substantial repairs would be beyond their means. The summary page did provide estimates as to the cost of the work that would have to be done. Taken as they are, they could be accepted as reasonable; however, the summary page included the following caution:
Any ballpark costs and time estimates provided are a courtesy and should not be relied on for budgeting or decision-making. Quotations from specialist should be obtained...
34Repairs to the skylight were the subject of a condition to the agreement of purchase and sale. This does not address the fact that the summary indicates that leakage had taken place in the past.
35There is no evidence that Barbara Kirby reviewed any of this with Suzanne Powell and Joyce Powell at any time but particularly in advance of removing the condition requiring an inspection. Rather this appears to have been motivated by the perceived need to put in a “clean offer”; that is one with few if any conditions. Otherwise, it was unlikely to be accepted. Both Powells quoted Barbara Kirby as having said that an inspection was “a waste of time”.
36It is not without significance that William Johnston acknowledged that, looking back, if Suzanne Powell and Joyce Powell had seen the complete report, it would have saved a lot of pain and suffering. In repeating this I wish to be careful. It is not that with the advice and counselling they were owed the Powells necessarily would have decided not to make an offer without seeing the full report that had prepared or insisting on having one of their own. I accept that Suzanne Powell demonstrated an overwhelming desire to buy the home. It is that in precisely these circumstances the objective advice of an experienced salesperson is required as a caution and a check on the subjective insistence of the client. This is not set aside because the clients have made other offers which included requests for inspections. In her evidence Barbara Kirby demonstrated and confirmed that she had become frustrated with the questions, attitude and actions of Suzanne Powell. It should go without saying this is not an appropriate motivation for an agent to fail to fulfill her professional responsibilities.
37I turn to the second submission to which I alluded earlier (see: para. [23] above).
38During January 2010, well after the offer had been accepted, the Powells obtained the full report which had been prepared upon the inspection of the home. Subsequently, it was discovered that there were building permits extant concerning work that had been undertaken on the house which had not been the subject of a final inspection by the City of Toronto and, thus, remained open. Suzanne Powell and Joyce Powell were counseled by their solicitor not to close the transaction until these permits were dealt with. The closing was delayed until the necessary inspections had been completed and the approval of the city officials provided.
39Counsel for the defendants submitted that with the full report in hand these open permits provided Suzanne Powell and Joyce Powell with an opportunity to walk away from the agreement. It was said that in not doing so they had failed to mitigate their damages and so absolved the defendants of any responsibility for the loss. This submission is without merit. It is not at all clear and I do not accept that the Powells could have resiled from this contract for reasons unassociated with the permits that remained of concern, particularly where the difficulties they caused were so easily overcome.
LIABILITY
40I make the following findings.
41Barbara Kirby owed a duty of care to Suzanne Powell and Joyce Powell as her clients.
42To avoid liability in negligence, a real estate agent must exercise the standard of care that would be expected of a reasonable and prudent agent in the same circumstances. 4
43The conduct of real estate agents and brokers in Ontario is governed by the Code of Ethics now published as a regulation. 5
44Barbara Kirby owed the Powells more than drawing up an offer that had the best chance of success. She was required to provide advice as to the risks of doing so in order that her clients could make an informed choice as to how best to proceed. Following from the evidence of William Johnston she did not counsel Suzanne Powell and Joyce Powell as she was obliged, to do.
45In this case, the summary provided sufficient evidence to raise a concern. Barbara Kirby did not have the expertise necessary to understand the nature of the risks it pointed to. She failed to direct her clients to obtain the advice of someone who did (s. 8 of the Code of Ethics) and she failed to act to obtain the material facts it pointed to (s. 21 of the Code of Ethics). I accept the evidence of Barry Lebow. A reasonable agent, confronted with the summary would have at least obtained and reviewed the full report. Although hindsight cannot inform the duty as it confronted the agent at the time, I also accept the observation of William Johnston that had Barbara Kirby done what the Code of Ethics required a great deal of the problems that ensued could have been avoided.
46Having said this I do not accept that Barbara Kirby should bear the full brunt of the responsibility of what took place.
47For one thing I also accept that Suzanne Powell demonstrated a blind determination to purchase the home at 205 Indian Grove.
48In Hamilton v. Osborne 6 the plaintiff, herself an associate broker in a real estate brokerage agreed to an arrangement where a builder was to buy a particular property and build a home to her specifications which she would then purchase. The builder was unable to come up with the funds necessary to purchase the lot. Rather than walk away the plaintiff sought a new deal. She would buy the property and the builder would construct the home. More problems ensued. It was important to the plaintiff that the home include a separate apartment with its own walk-out. This turned out to be far more difficult and expensive than expected. Ultimately, the plaintiff retained another builder who constructed a home that did not have all the features she desired. She sued the first builder and her colleague at the brokerage who had listed the property and recommended that builder.
49When it came time to value the damages the Court of Appeal found that the most significant factor that restricted the damages to which the plaintiff was entitled was the finding of the trial judge that the plaintiff was determined to go ahead “no matter what”. 7 The limiting feature was the decision of the plaintiff to proceed even after the builder proved unable even to purchase the property.
50The situation here is different. While I accept the observation made by Barbara Kirby that Suzanne Powell wanted desperately to purchase the home, there is no substantive indication of how far she was prepared to go if and once problems appeared. Why? Because the risks were never explained to her by Barbara Kirby. It is not possible to know how she would have reacted had she been told. It should not be forgotten that Joyce Powell indicated (and Barbara Kirby acknowledged) that she was much more reticent and concerned. In the circumstances, it is not possible to know what would have happened if proper advice had been given.
51This does not serve to exculpate Suzanne Powell and Joyce Powell from some blame and accompanying liability. The impact of proper advice on Suzanne Powell is uncertain.
52I find that Barbara Kirby and it follows Lepage Real Estate Services Limited are 25% liable for the damages caused. I find that, in turn, the Suzanne Powell and Joyce Powell must accept that they share in the responsibly for their own loss which I assess at 25%.
53Who is left to absorb the remaining 50%? This would fall to the seller Tadeusz Lojko. It is not for me to make a specific finding or to assess the nature of his responsibility. This was the subject of the Pieringer Agreement entered into between the plaintiffs and Tadeusz Lojko. The details of that agreement are confidential. Tadeusz Lojko was not a party to the trial and did not appear or give evidence. The 50% is simply what is left after the assessment of the contribution of the plaintiffs and the real estate agent to the problems that were the subject of the action.
54In Krawchuk v. Sherbak 8 there was an issue as to the liability of the seller of a home when serious structural problems appeared subsequent to the closing. Was there a breach of contract or had there been negligent misrepresentation as to the condition of the home? The trial judge found and the Court of Appeal confirmed there had been negligent misrepresentation. In the absence of Tadeusz Lojko or anyone acting on his behalf it is impossible for me to directly address the issue of any liability that rests with Tadeusz Lojko; nor, as I understand it am I being asked to do so.
55Nonetheless I point out that Tadeusz was aware of the problem associated with mould. There had been an effort to deal with it in 2007. Based on the evidence of the tenant, this was repeated in 2009 in preparation for selling. It may or may not be that whatever responsibility lies with Tadeusz Lojko merged at the time the transaction closed. With the exception of the obligation to repair the skylight there was no relevant condition attached to the sale. As it is, he did not repair the skylight such that further work was not required. Ultimately the skylight was replaced by the Powells. There is an invoice in the amount of $4,200 for that work and another for $11,678 which includes it. 9 No submissions were made with respect to any further continuing obligations that would have rested with Tadeusz Lojko.
56One might wonder why it is necessary for anything to be said as to the liability of the defendant who has settled. It is because the liability as attributed to those defendants who do not settle will be a several liability. For it to be calculated there must be an understanding of the division of responsibility. 10
DAMAGES
57As part of the evidence called on behalf of the plaintiffs (Suzanne Powell and Joyce Powell) a document entitled “Damages Calculation” was produced. It contains a list of suppliers, inspectors and contractors each of whom contributed to the work necessary to clean up and reconstruct the areas of the home that were damaged. The total shown for repairs is $142,183.22.
58The problem is that not all the amounts shown are backed up by invoices. In particular, there are no invoices confirming that Haverkate and Associates were paid $2,093.89 or that Supertec Plumbing was paid $333.35.
59As to Haverkate and Associates, Frank Haverkate testified. It is clear that he did a substantial amount of work. I have no reason to doubt that his firm was paid what is claimed. There is an invoice for Supertec Plumbing, it lists the work done but shows the “TOTAL DUE” as $0.00. The claim is for $333.35. There is an invoice from 911 Restoration for exactly that amount. It is included in the total shown to have been paid to that company. As explained by Suzanne Powell this is for the work done by Supertec Plumbing. 11 Thus the invoice from Supertec Plumbing would be for $0.00 as the cost was charged by and paid to 911 Restoration. This being so I reduce the claim for the repairs undertaken by $333.35. The “Damages Calculation” includes a claim for $3,646.21 for work done by Keystone Interiors. The invoice from that firm totals $3,579.07. I do not understand where the additional $67.14 is to be found. Accordingly, I reduce the claim by that amount.
60Within the work that was done there were some improvements beyond what was in place at the time the purchase was completed. The floor in the bathroom of the apartment was heated. There was some cost for materials associated with this: a thermostat at $120.15 and the element at $175.14. Nothing was said about any incremental labour costs. Presumably it is caught within the electrical work done by CRD Renovations. While Suzanne Powell suggested, without reference to any invoice that the total cost (labour and materials) of $5,000, there is nothing to suggest it could have been that high. I accept the evidence of Joyce Powell who provided the cost of the element and the thermostat. I find that, on a balance of probabilities, the cost of labour for heating the floor was marginal and did not add to the overall cost of the electrical work in a manner that was calculable 12. However, I reduce the value of the damages by a further ($120.15 + $175.14) $295.29 on account of the materials involved. New appliances were purchased. There is no explanation why this was necessary or that it flowed from the damage to the apartment. They cost ($632.80 + $6,749.49) $7,382.29. Finally, it is clear that there were problems having the roof work properly completed. I note the roof was the subject of concern expressed in the summary of the inspection report prepared for the seller. One of the contractors was paid $11,678. Further work was required. A second contractor was paid an additional $4,200 where the original contract price was for $2,850. Counsel for the defendants proposes that the damages should be reduced by the original contract price. As I understand it this was directed to redoing that which was already supposed to have been done. To my mind this is not an unreasonable request.
61I award damages for repairs of $142,183.22 minus ($333.35 + $67.14 + $295.29 + $7,382.29 + $2,850) $10,928.07 being $131,255.15.
62There is a further claim for lost rent. After the purchase Suzanne Powell rented two rooms each for $800.00 per month. As a result of the work the tenants had to leave and, the rooms were empty for five months (September 2010 through January 2011) demonstrating a loss of (2 rooms x 5 months x $800) $8,000.
63The liability against the defendants is in negligence. Damages are to be reasonably foreseeable. There was no suggestion that these rooms had been rented in the past or whether there was a market for such accommodations. On the other hand, inclusion of rent on this account was part of the calculation done by Barbara Kirby when she attempted to explain the financing available to Suzanne Powell and Joyce Powell. Looking forward, there was no assurance that this was possible or reasonable. In the circumstances I award $4,000, one half of what was sought.
64Rental for the apartment stands apart. It too could not be rented as would have been anticipated by all the parties. The rent was to be increased to $975.00 from the $800.00 the departing tenants had paid. I do not find this particularly egregious. For this the claim is $15,600. The problem is that it is for a period of one year and four months (September 2010 to December 2011). As I calculate it, the claim should be (16 months x $975) $15,200. There is no explanation why it took so long for the apartment to be rented. Any number of the invoices suggest that work was ongoing. This does not explain why it took so long. Again this was not reasonably foreseeable. I allow (6 months x $975) $5,850.
65The total awarded is ($131,255.15 + $4,000 + $5,850) $141,105.15. The defendants Barbara Kirby and Royal Lepage Real Estate are liable for 25% being $35,276.29. This award includes pre and post-judgment interest pursuant to the Courts of Justice Act.
66Nothing was said as to costs. If the parties are unable to agree I will consider written submissions on the following terms:
(a) On behalf of the plaintiffs within 15 days of the release of these reason. Such submissions to be no longer than 4 pages double spaced not including any Costs Outline or Bill of Costs and case law that may be provided.
(b) On behalf of the defendants within 10 days thereafter. Such submissions to be no longer than 4 pages double spaced not including any Costs Outline or Bill of Costs and case law that may be provided.
(c) On behalf of the plaintiffs, if necessary in reply within 5 days thereafter. Such submissions to be no longer than 2 pages double spaced.
Lederer J.
Released: July 25, 2017
Footnotes
Footnotes
- There was some uncertainty in the evidence as to whether both Powells were present for this visit. Barbara Kirby said only Suzanne was there. The Powells both testified that Joyce was there as well.
- The email in its entirety says: One [sic] a purchase price of 730K the land transfer tax is 21,400, therefore we need to finance 755,000 to cover all expenses. The payment of the entire 755K is 2897-825= 2072 for Suzanne to pay + taxes and heat hydro etc, you should add another 500 to this amount. + 2572. If you get 2 students in the paying, say 800.00 inclusive x2 = 1600.00 then Suzanne would pay 2572-1600 = 972 approx. does this make sense? Let me know the scoop. Offers are Monday, so I NEED to know tomorrow afternoon.
- This agreement is entitled “Confirmation of Co-operation and Representation”. It includes the phrase: “The Co-operating Brokerage represents the interests of the Buyer in this transaction.”
- Krawchuk v. Sherbak, [2011] O.J. 2064, 106 O.R. (3d) 598, 2011 ONCA 352, 332 D.L.R. (4th) 310 at para. 125.
- O. Reg 580/05 and see: Krawchuk v. Sherbak, supra at para. 126.
- 2009 ONCA 684.
- Ibid at para. 38.
- See fn. 4.
- The first account referred to is From Roof & Aluminum Inc. and the second from Dubbin Discount Roofing.
- , 71 O.R. (3d) 171 at para. 69.
- The invoice from 911 restoration refers to “23 Thermal Imiging” [sic] and “TV camera Inspection”. The invoice from Supertec Plumbing refers to a “Diagnostic Fee” and describes it as “Inspected all plumbing and drains in the house and found the following problems:” which are listed. It would seem that the inspection was carried out using a TV camera.
- The floor would have to have been laid with or without heating.