Court File and Parties
Barrie Court File No.: CV-14-1448 Date: 20181221 Ontario Superior Court of Justice
Between:
Melinda Phillips and William John White, Plaintiffs – and – Doug Gillis, Re/Max Four Season Reality, William Schulz, Allyson Benedek, Blue Water Flooring Inc., Blue Water Flooring Inc. Carrying on Business as KC Contracting, 2046388 Ontario Inc. Carrying on Business as Global Property Inspections, Margaret Stainton, Robert Stainton and The Corporation of The Township of Clearview, Defendants
Counsel: A. Francis and D. Beaulne, for the Plaintiffs R. Wycherley, for the Defendant, The Corporation of The Township of Clearview S. Fairley, for the Defendants, William Schulz and Allyson Benedek and as Agent for Mr. M. Stahr, for Margaret Stainton and Robert Stainton
Heard: September 19, 2018
Reasons for Decision
MCKELVEY J.:
Introduction
[1] In April of 2008, the plaintiffs, Melinda Phillips and William John White, purchased a home in Clearview, Ontario. Following their purchase, the home was subject to a number of water infiltration problems. They initially brought this action against the defendants, William Schulz and Allyson Benedek, who sold them the property as well as the defendants, Doug Gillis and Re/Max Four Season Reality, who were the listing agents for the property. It is alleged in the statement of claim that the above-noted defendants negligently misrepresented the state of the property and concealed the nature of the water infiltration problems which existed in the home.
[2] Subsequently, the plaintiffs added Margaret and Robert Stainton to the action, as well as The Corporation of The Township of Clearview. Margaret and Robert Stainton were the original builders of the home. It is alleged that they failed to construct the home in a proper and workmanlike manner and failed to comply with all applicable legislation including the Ontario Building Code. With respect to the allegations against Clearview Township, it is alleged that they failed to properly inspect the construction of the home and to enforce the provisions of the Ontario Building Code. The plaintiffs claim damages related to the expenses they incurred in remedying the alleged defects and also claim for the alleged diminished value of the home as a result of the deficiencies associated with its construction.
[3] The Township of Clearview has brought a motion for summary judgment dismissing the action against it. In support of their motion they assert that the action against the Township was commenced after the limitation period had expired.
Background
[4] The plaintiffs’ home was constructed in around 1990 or 1991. It is alleged in the action that the Township of Clearview was responsible for inspections of the home during construction. The plaintiffs purchased the home in April of 2008. Following their purchase, there were numerous incidents of water infiltration into the home. Photos of the home show that there is what has been described as a “gable wall” on the exterior of the house. The gable wall is made of brick and extends above the abutting portion of the house so that it is exposed to the elements.
[5] In support of their claim for damages, the plaintiffs allege that the brick gable wall was not properly supported at its base. The result is that the brick in the gable wall developed a number of cracks in the mortar joints, which allowed water to enter the house when conditions were right, such as a driving rain from the northwest or a heavy snowfall that thawed.
[6] In order to understand the issues which arise in this motion for summary judgment, the following chronology is relevant:
(a) 1990 - 1991 – It is alleged that it was around this time that the defendants, Margaret and Robert Stainton, built the home. It is further asserted that the Township of Clearview was responsible for building inspections during the home’s construction.
(b) October 2007 – In October 2007, the plaintiffs entered into a purchase agreement with the defendants William Schulz and Allyson Benedek. One of the conditions to the agreement was a satisfactory home inspection report.
(c) October 29, 2007 – The defendant, Global Property Inspections, prepared a home inspection report dated October 29, 2007. This report does not specifically identify water infiltration issues in the home. However, the report does identify some cracking in the mortar on the gable wall. Specifically, the report states underneath a photograph of the gable wall, the following:
Some mortar/step cracking appears to have been repaired in this area – nails/screws in flashing should be sealed.
(d) April 29, 2008 – The plaintiffs’ purchase of the home closes on this date.
(e) February 2009 – This is the first of a series of water infiltration problems experienced by the plaintiff. There are some differences in the evidence about the exact date when these water infiltration problems occurred. For purposes of the chronology, I have adopted the plaintiff’s evidence, but it would not appear that anything significant turns on the exact dates. In February of 2009 there was a sump pump failure in the home. The plaintiffs hired Blue Water Flooring Inc. to repair the water damage caused by the sump pump failure.
(f) Spring 2010 – At around this time, water was observed coming through the basement ceiling which was unfinished. The plaintiffs again hired Blue Water Flooring Inc. to repair the damage and to identify the source of the water infiltration. Blue Water Flooring Inc. replaced the shingles at the cap or top of the roof.
(g) April 2012 – There was a further substantial water infiltration to the basement of the home at around this time. The plaintiffs hired an individual named Bob Ransier to identify the source of the water. The plaintiffs’ evidence is that Mr. Ransier informed the plaintiffs that there was a crack in the foundation that needed to be repaired. He dug up and repaired the foundation in or around May of 2012 and added weeping tile in or around June 2012.
(h) October 29, 2012 – There was a further major water infiltration episode at this time caused by Hurricane Sandy. Mr. Ransier was retained to deal with the problem. Initially he attempted to cover the roof cap of the garage with a tarp and then later he identified cracks in the masonry of the gable wall and the attached garage, which he sealed with silicone, which appeared to be effective.
(i) November of 2012 - 2014 – According to the plaintiffs’ evidence, there were a number of instances of water infiltration during this period which were far less substantial than previously. When those instances occurred she added silicone caulking to the gable wall and believed that the issue was one of tuck-pointing, rather than a structural defect.
(j) July 16, 2014 – According to the plaintiff she was advised by a local real estate agent that their home had been built on a spring. She later learned, however, that this information was not accurate.
(k) December 9, 2014 – On this date a notice of action was issued against the defendants William Schulz and Allyson Benedek, who had sold the property to the plaintiffs as well as the real estate agents who acted for the vendors. Following initiation of the action, an engineer was retained to determine the cause of the water infiltration in the home.
(l) January 27, 2015 – An engineer, David Lalonde, delivered a preliminary report dated January 27, 2015. By this point he had conducted a visual inspection only. In his report he states,
It appears plausible, based on my visual inspection, that the brick veneer mentioned above in point one is not supported properly. The settlement of the brick has resulted in a number of cracks opening up in the mortar joints and the connection to the roof flashing. These openings have allowed water to enter the house when the conditions are right, such as driving rain from the northwest or a heavy snowfall that has thawed.
Mr. Lalonde goes on to note that further investigation would be required to determine if the proposed explanation noted above was accurate. This examination involved removal of the drywall inside the house.
(m) January 28, 2015 – On this date a home inspection was performed by Andrew Christie of Safe Home Canada. This home inspection did not identify any major problems in the structure of the home. Under the heading “wall systems” it states that the brick masonry system is sound and stable. Mr. Christie did identify some water damage in the basement. He stated,
Apparently a laundry related floor has caused some damage in the basement. The ceiling is damaged. Minor probably mould and water staining/damage are observable at the front and rear walls in the basement, and at the partition wall in front of the furnace.
(n) May 8, 2015 – Mr. Lalonde prepared a further report based on his inspection of the home which included removing sections of drywall. In his report he identifies a problem with the support of the gable wall. He states,
I believe that the primary concern which has been the ongoing entry of water into the house has resulted from a number of connected deficiencies. Starting at the lowest level, the steel post that supports among other things, the brick veneer is substantially undersized. I cannot with certainty say if it has compressed but I expect it is likely. It also has standard bearing played at the top which is not sufficient for the expected load, nor does it support the full width of the built up wood beam that rests on it. The two built up beams above the steel post are likely caused (sic) of most of the settlement of the masonry. The summation of the various floor, roof and veneer loads has compressed these beams as a result of the reduced bearing surface provided by the posts. The resulting compression would be sufficient to cause the masonry to crack.
(o) May 13, 2015 – The plaintiffs amended their statement of claim to add Clearview and the Staintons as defendants in the action.
(p) June 15, 2015 – The plaintiffs sold the home having advised the prospective purchasers of the issues relating to water infiltration.
The Applicable Limitation Period
[7] The applicable limitation period is contained in ss. 4 and 5 of the Limitations Act, 2002, SO 2002, c. 24.
[8] Section 4 of the Limitations Act provides as follows:
Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.
[9] Section 5 of the Limitation Act further provides:
(1) A claim is discovered on the earlier of,
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).
(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.
[10] The position of the defendant Clearview is that the plaintiffs were first put on notice of the gable wall issue in 2007 when their home inspector disclosed in the home inspection report that there was some mortar-step cracking which appeared to have been repaired in the gable wall of the house. Clearview argues that the plaintiffs ought to have conducted some due diligence either before or after the closing on the property, but they failed to do so. The defendant Clearview also argues that the plaintiffs waited three and a half years from the first instance of water infiltration through the gable wall to begin making inquiries about whether they had a potential claim arising out of the issues with the gable wall and the problem of water infiltration. Finally, Clearview argues that the plaintiffs have not provided a satisfactory explanation as to why they did not consult a lawyer to discuss the issues they were having with the gable wall and the water infiltration from late 2008 to October 2012.
[11] The plaintiffs’ position is that the failure to properly support the weight of the brick gable wall was a latent defect and was not identified until May of 2015. The plaintiffs argue that the plaintiffs acted reasonably and diligently by retaining professionals to investigate and repair the problem with water infiltration and could not reasonably have known about the structural defects before May of 2015.
[12] There is considerable case law on the issue of discoverability under s. 5 of the Limitations Act. In Kowal v. Shyiak, 2012 ONCA 512, the Ontario Court of Appeal noted that certainty of a defendant’s responsibility for the act or omission that caused or contributed to the loss is not a requirement. It is enough to have prima facie grounds to infer that the acts or omissions were caused by the party or parties identified. In Tender Choice Foods Inc. v. Versacold Logistics Canada Inc., 2013 ONSC 80, Justice Perell provides a helpful summary of other relevant criteria which apply to the issue of discoverability. He notes that a plaintiff is required to act with due diligence in acquiring the facts in order to be fully apprised of the material facts on which a claim is based. Thus, a limitation period commences when a plaintiff discovers the underlying material facts or, alternatively, when the plaintiff ought to have discovered those facts by the exercise of reasonable diligence. The question is whether the plaintiff knows enough facts to base a cause of action against the defendant, and if so, then the claim has been discovered and the limitation period begins to run. The discovery of a claim does not depend upon a plaintiff knowing that his or her claim is likely to succeed, nor does discovery depend upon awareness of the totality of a defendant’s wrongdoing. Discovery occurs when a plaintiff knows or ought to know of an injury caused by an act or omission of a defendant and having regard to the nature of the injury, that legal proceedings would be an appropriate way to seek a remedy. For the limitation period to begin to run, it is enough that the plaintiff has prima facie grounds to infer that the defendant caused him or her harm. Certainty of a defendant’s responsibility for the act or omission that caused or contributed to the loss is not a requirement.
[13] The onus is on the plaintiff to establish that the action was brought within the limitation period, including, if necessary, that discoverability delayed the commencement of the running of the limitation period. See Barry v. Pye, 2014 ONSC 1937. The Court notes in that case, that:
The limitation begins to run when the Plaintiff knew or ought to have known, on a prima facie basis, that she had (i) suffered injury, (ii) because of an act or omission (iii) by the defendants, and (iv) that an action would been an appropriate remedy.
[14] The case law also makes it clear that limitation periods are not to be ignored. A plaintiff must act with due diligence in acquiring facts in order to be fully apprised of the material facts on which the claim can be based, including obtaining expert opinions, if these are required, so as not to delay the commencement of the limitation period.
Rule 20 – Summary Judgment
[15] This is a motion for summary judgment under Rule 20. In 2014, the Supreme Court of Canada released its decision in Hryniak v. Mauldin, 2015 SCC 7, which considered when it is appropriate to grant summary judgment under Rule 20 of the rules. Rule 20.04(2) provides that,
(2) The court shall grant summary judgment if,
(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.
[16] Rule 20.04(2.1) provides that,
In determining under clause (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:
- Weighing the evidence.
- Evaluating the credibility of a deponent.
- Drawing any reasonable inference from the evidence.
[17] In its decision in Hryniak, the Supreme Court of Canada notes there will be no genuine issue requiring a trial when a judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This would be the case when the process allows the judge to make the necessary findings of fact, allows the judge to apply the law to the facts, and is a proportionate, more expeditious and less expensive means to achieve a just result. The court notes as well that when a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. The question a court must consider is whether the judge has confidence that he or she can find the necessary facts and apply the relevant legal principles to fairly resolve the dispute.
[18] Under s. 5(2) of the Limitations Act, the burden is on the plaintiff to show that the claim was not discoverable prior to the date in question. However, pursuant to Rule 20, a party moving for summary judgment retains the overall burden of showing that there is no genuine issue requiring a trial. In Peel Standard Condominium Corporation No. 837 v. Davies Smith Developments Inc., 2016 ONSC 4947, Pollak J. cites Shukster v. Young et al., 2012 ONSC 4807 for the following proposition with respect to the burdens of proof:
Pursuant to rule 20, a party moving for summary judgment retains the overall burden of showing that there is no genuine issue requiring a trial. However, where a defendant moves for summary judgment in relation to a statutory limitation period, the evidentiary burden as to the discoverability issue and under r. 20 effectively shifts to the responding party under s. 5(2). In particular, the plaintiff must adduce evidence sufficient to demonstrate that there is a genuine issue, requiring trial, concerning operation of the limitation period pursuant to ss. 5(1) and 5(2). In particular, a plaintiff seeking to defeat the operation of the limitation period on such a motion has the onus to rebut the presumption in s. 5(2), or at least demonstrate that there is a genuine issue requiring trial as to whether that presumption is rebutted. [Emphasis added]
[19] It is apparent that the issue before me is when the plaintiffs in exercising due diligence could have identified the existence of a potential claim against the defendant Clearview. I have concluded that the plaintiffs have satisfied their burden to establish that there is a triable issue on the issue of the limitation period defence advanced by Clearview.
Analysis
[20] There is no evidence before me to call into question the plaintiffs evidence that they did not have actual knowledge of a structural defect in the construction of the house prior to the initial report from Mr. Lalonde in January of 2015 and his subsequent report of May 8, 2015. The issue, therefore, is whether the plaintiffs with the exercise of reasonable diligence should have identified the alleged defect in the construction of the home at an earlier time.
[21] The plaintiffs were clearly aware of serious water infiltration problems shortly after moving into the home in 2008. They were also aware as early as October of 2007 that there were some cracks in the gable wall. By October of 2012 they were aware from the actions of Mr. Ransier that filling the mortar cracks with silicone substantially addressed the water infiltration issue. However, in my view, knowing that sealing the mortar cracks with silicone would not lead lay persons, such as the plaintiffs, to conclude there was possibly a latent structural defect in the house which needed to be investigated.
[22] Since their purchase of the property, the plaintiffs had experienced a series of water infiltration episodes. They proceeded to retain professionals who were apparently qualified to investigate the problem. Various explanations were given to the plaintiffs. On one occasion the damage was caused by the failure of a sump pump. Later there were suggestions that the top of the roof or roof cap needed to be re-shingled. Later, it was suggested that there were problems with the foundation. At one point in July of 2014 it was suggested by a realtor that the problem may have been caused because the home was built on a spring.
[23] It is significant in my view that in January of 2015 another home inspector assessed the property and did not identify any potential for a structural defect or suggest that further investigation was required. This evidence would support the plaintiffs position that there was no reason to believe there was a structural defect before receiving the preliminary report of Mr. Lalonde in January of 2015.
[24] There is also no evidence before me that any of the professionals hired by the plaintiffs recommended that further investigation of the problem was required or that there was evidence of a serious latent defect in the structure of the home. For the same reasons, there would not be a basis to conclude that the plaintiffs should have retained legal counsel to investigate this as a possibility.
[25] This case bears a marked similarity to the factual situation in Sabourin v. Proulx, 2001 ONSC 4099. In that case the defendants brought a motion for summary judgment dismissing the plaintiffs claim on the basis that the claim was barred by the Limitations Act. The plaintiffs in that action had constructed a new home and hired the defendants to apply the exterior stone veneer. The plaintiffs contacted the defendants by the fall of 2007 to complain about a vertical crack in the masonry. The defendant attended and told the plaintiffs that cracks are common and did not indicate defective workmanship. One year later in 2008, the plaintiffs contacted the stone manufacturer about a problem described as efflorescence. A representative of the manufacturer assured the plaintiffs that what they were observing was normal. Later, in August of 2010, the plaintiffs again contacted the manufacturer because of continued efflorescence. This time the manufacturer’s representative advised the plaintiffs that the ongoing efflorescence was likely the result of poor installation and recommended a home inspection. An engineer’s investigation subsequently revealed the absence of a clear opening between the stone and the exterior of the frame unit as required by the Ontario Building Code and pre-mixed mortar. The engineer’s opinion was that the effect of this deficiency was that moisture was perpetually trapped between the exterior wall and the stone veneer and accounted for the sustained efflorescence experienced.
[26] The Court concluded in the Sabourin decision that without the benefit of the engineering report, the plaintiffs did not have the information necessary to found a cause of action. The court noted at para. 30, the plaintiffs are not obliged to search for deficiencies. They were entitled to rely on the defendants’ commitment to capable workmanship.
[27] In the present case, the plaintiffs did not ignore the problem of water infiltration. They reasonably relied upon a number of professionals to investigate and conduct appropriate repairs but at no time was the possibility of a structural defect communicated to them prior to the reports from Mr. Lalonde.
[28] In Jagosky v. Town of Hunstville, 2010 ONSC 4400, Justice Quinlan comments at para. 27,
When dealing with complex matters involving building defects, it would be impractical to expect the owner to be able to identify all latent deficiencies at any given point in time just because one patent deficiency had been identified. In such cases, the limitation period begins to run when the plaintiff knew or ought to have known of each of the latent deficiencies.
[29] In their argument, the defendant Clearview suggested that there was evidence given by the plaintiff Phillips to the effect that she was aware further investigation needed to be done by October 2012. In reviewing the transcript, however, this does not appear to be an accurate reflection of the plaintiffs’ evidence. The following is her evidence on that issue found at pp. 18 and 19 of the moving party’s compendium:
Question: – you recognized in late October, 2012 that it needed more than just silicone, that it needed tuck-pointed at that point in time? Answer: Oh, yes. Oh, yes, yes.
Question: So why did you wait two years or nearly two years to do that? Answer: Well, aside from Bob, it was actually the weather changed and so it was Feb– it was – the weather had changed and all of the sudden winter was coming and our situation – our financial situation just continued to go from one – like it just –
Question: So let me summarize – Answer: Yeah.
Question: – Ms. Phillips. You knew as Hurricane Sandy was happening that there was a problem in the brick area – Answer: Yeah.
Question: – on this gable wall, correct? Answer: Yeah, I – yeah.
Question: And you knew that something other than waterproof caulking had to be done to that wall, correct? Answer: That’s correct.
Question: And, in fact, at that time you instructed Bob Ransier that he should re-tuck it, correct? Answer: Yeah, I said we’re going to have to do – yeah, we’ll have to fix it.
Question: And you knew it was important at that juncture to do a proper repair. You indicated how important repairs are to you? Answer: Yes.
Question: And so then come back to my original question. Answer: Mm, hmm.
505 Question: Why didn’t you further explore that problem at all between October – Answer: Yeah.
- Question: – 2012 and the summer of 2014? Answer: Well, to be perfectly honest, I – I just – it was tuck-pointing. I wouldn’t even have thought the extent of the issues are what they currently are. I didn’t have any clue – like I wouldn’t – I
[30] I do not interpret the evidence of the plaintiff as suggesting that she knew that further investigation was required. Instead her evidence appears to suggest that she simply thought further tuck-pointing was required.
Conclusion
[31] For the above reasons, I have concluded that the plaintiffs evidence does raise a triable issue on Clearview’s limitation defence; therefore, I dismiss the defendants’ motion for summary judgment.
[32] With respect to costs, Mr. Fairley advised that his clients have also raised a limitation period defence. However, they took no position on Clearview’s motion. Mr. Fairley excused himself on the hearing of the motion on the basis that no party was seeking costs against the parties that he represents. I am therefore proceeding on the basis that none of the parties will be seeking to make a claim for costs against Mr. Fairley’s clients and the issue of costs will be a matter between the plaintiffs and the defendant Clearview.
[33] I am further advised that the moving and responding parties on this motion have agreed that the successful party on the motion should be entitled to costs in the sum of $8,250 to be paid by the unsuccessful party. I therefore order costs in accordance with this agreement. If there remains any issue with respect to the costs, the parties may speak to the trial coordinator within 30 days of the release of these Reasons to take out an appointment to address the issue of costs. In such event, the parties will deliver concise briefs at least two days before their attendance.
Justice M. McKelvey