Court File and Parties

Court File No.: 755/16SR Date: 2020-04-14 Ontario Superior Court of Justice

Between: BLUE WATER GOLF COURSE INC. operating as WEST COAST LEISURE SALES, Plaintiff – and – DAVID JOHN BRAD HANSON and MARGARET MacMILLAN, Defendants

Counsel: J.J. Masterson, for the Plaintiff Self-represented, for the Defendants

Heard: March 2 and 3, 2020

Before: Grace J.

A. Overview

[1] In October 2014, David Hanson and Margaret MacMillan agreed to purchase a park model home from Blue Water Golf Course Inc.

[2] The residence was manufactured by Northlander Industries (“Northlander”) and assembled by Blue Water’s employees on a lot the defendants selected in Dashwood, Ontario. Mr. Hanson and Ms. MacMillan moved in on June 1, 2015.

[3] Cool temperatures caused the defendants to activate the furnace. They were awakened early the next morning by the smoke alarm.

[4] The defendants allege that a small explosion or blow back occurred within the furnace because of the presence of an excessive amount of anti-corrosion oil. Smoke was generated which travelled through the ducts and into the living area.

[5] They maintain the furnace issue caused a number of problems. While the smoke dissipated, it left a thin layer of soot. Even after the residence was thoroughly cleaned, an unpleasant odour remained which became more noticeable when the furnace was reactivated in early September 2015.

[6] The defendants argue that Blue Water allowed insulation to protrude into the ducts. They maintain that smoke generated by the furnace interacted with and was stored within the insulation which, in turn, produced the unwelcome aroma. They say that the poor air quality induced headaches. Ultimately, the defendants left their home for an extended period of time and moved into a motel.

[7] The defendants say they have suffered damages in the amount of $61,306.65. That claim relates primarily to the cost of replacing a long list of things including the furnace, the duct work, furniture and clothing. They seek to set off their damages against Blue Water’s claim to the principal sum of $81,370.65. [1] While initially denying an obligation to pay anything further, the defendants’ liability for the balance of $20,064 is no longer disputed.

[8] Blue Water denies that it is responsible for any of the defendants’ complaints. No expert evidence was led by Mr. Hanson and Ms. MacMillan to support their theory concerning: (i) the improper installation of insulation; or (ii) the interaction between smoke from the furnace and the insulation Blue Water’s employees installed.

[9] Blue Water also notes that the defendants filed a claim with their insurer, Intact Insurance Company (“Intact”). They received compensation totaling $26,567.69. Dissatisfied with the amount received, Mr. Hanson and Ms. MacMillan commenced an action again Intact which is ongoing.

[10] The plaintiff submits that, in any event, the defendants have failed to prove the amounts they claim on account of damages.

[11] These reasons explain why Blue Water is entitled to judgment for the amount it seeks.

B. The Evidence and Fact Findings

[12] A longer chronology follows.

[13] I start with the quantum of the plaintiff’s claim. A portion of the purchase price was paid before the incident by way of a trade-in and two instalments of $5,000 each. [2] An additional and final payment of $50,000 was made on June 29, 2015.

[14] Derek Jefferson testified on behalf of the plaintiff. He is its president and was the representative of the company who dealt with the defendants throughout.

[15] Mr. Jefferson recalled receiving a voice mail message from Mr. Hanson concerning an alleged fire. After contacting the service manager of Northlander, Mr. Jefferson met the defendants at their residence. He said he was unable to see smoke damage or smell smoke. However, he recalled that the curtains had a musty smell, as if they had been in storage. The odour of a cleaning substance emanated from some of the pieces of furniture he examined.

[16] When asked his understanding of the problem, Mr. Jefferson said that what transpired was something that occurred normally when a new furnace is activated for the first time. Blue Water relies on a label that was affixed to the furnace prior to and after installation. In part it reads:

Note: The very first time a furnace is lit, it may cause smoke and/or odor. This is normal and is caused by small amounts of oil residue burning off during the initial start-up period. This is not a dangerous situation and the odor will disappear in a matter of hours.

[17] Representatives of Northlander attended the site. Notes made by a Northlander employee on a June 2, 2015 work order included the following:

• Oil residue on furnace burning off
• No apparent smoke damage or residue on inside of unit
• Furnace was ran [sic] 15 minutes with no further evidence of burn off
• Customer on site, details explained, customer seemed satisfied with explanation

[18] Ms. MacMillan did not testify at trial. However, portions of her examination for discovery were read into the record. She described that morning’s events. She said there was no need to call the fire department as no flames were seen. After opening the windows, the couple travelled to London. They had breakfast. Mr. Hanson then attended a medical appointment. By the time they returned, the smoke had dissipated. She remembered a faint smell of smoke but thought it had disappeared by the end of the day. Some little black marks of soot had accumulated on the window sill which she cleaned up using a paper towel.

[19] Mr. Hanson remembered things differently. He said the odour lingered and was a little more pronounced. He asked a restoration company, Winmar London (“Winmar”), for an estimate to thoroughly clean the unit. Its employee, Randy Weir, testified at trial.

[20] The July 17, 2015 estimate Mr. Weir prepared mentioned a “light dusting of soot” and “a smoke odor”. Winmar was subsequently retained to perform the work. The defendants paid its $946.94 invoice and were later reimbursed by Intact.

[21] There matters stood until early September 2015 when the furnace was reactivated. The defendants renewed their complaint about an unpleasant odour. Mr. Hanson alleged that insulation trapped in the ductwork was the source of the problem. Northlander personnel returned to the premises and generated a work order dated September 8, 2015. Notations under the headings “Service Requirements” and “Action Taken” included the following:

Scope ducting at register holes to make sure the ducting is all clear

• Inspected ducts that were accessible
• Removed tyvec + poly from duct at back man door

[22] The defendants were sufficiently troubled by the smell that they moved into the Blue Water Motel in Grand Bend, Ontario later that month. Their insurer covered the cost of the accommodations for several weeks during the period from September 21 to November 8, 2015. [3]

[23] During that period, other services were performed inside the defendants’ residence. For example, the thermostat was replaced. [4] An ignitor was too. [5]

[24] Intact appears to have been directly involved as well. It covered the cost of a second cleaning of the interior living space, [6] the removal of sawdust from the ducts [7] and an inspection that confirmed the furnace and venting met regulatory requirements. [8]

[25] The insurer also retained Caskanette Udall Consulting Engineers (“Caskanette”) to test the air quality within the residence. [9] Its December 1, 2015 report was admitted into evidence on consent. Caskanette’s conclusions included the following:

a) There was no visual evidence of smoke contamination or soiling typical of a furnace blow back; b) There was, however, evidence that too much oil was placed in the heat exchanger when it was manufactured, which resulted in the production of more smoke than normal; c) “[S]ome olfactory evidence of an unknown odour inside the unit, which was more pronounced…near the front door entry” was noted, although no odour was detected from the ducts themselves; d) The odour that was observed “did not smell like smoke or products of combustion”; e) Volatile organic compounds (“VOCs”) were detected. However: i. The highest concentrations were not by-products of burning; ii. The majority were from materials used in new construction or restoration; iii. The levels were lower when taken while the furnace was running meaning that “the source of elevated VOCs and odour in the home is not coming from inside the ducts.” f) There was no need to replace the furnace or ductwork.

[26] Maple Environmental Inc. (“Maple”) was commissioned by another insurer to conduct sampling within the defendants’ residence too. Its January 5, 2016 report also became part of the evidentiary record on consent. Maple described the work it had done and the findings it reached. With respect to its site inspection, the authors wrote in part:

A vinyl and/or rubber odour was perceived to be present within the modular home at the time of the assessment.

[27] Air monitoring was conducted to determine the level of VOCs. Surfaces, including the inside of a duct, were wiped in order to determine the level of polycyclic aromatic hydrocarbons (“PAHs”). Maple’s conclusions included the following:

Low levels of combustion products were detected…however the levels present are typically found in indoor environments. Analysis of the wipe sample results indicated the levels of …PAHs were below the detection limit. In summary, the levels of VOCs within the air and PAHs on the surfaces were within an acceptable range. In addition, sampling does not indicate the presence of obvious fire residue.

[28] The findings of Caskanette and Maple were unchallenged at trial.

[29] In early February 2016, Mr. Hanson and Ms. MacMillan retained LoCity Media to apply a special paint to the ducts. [10] The defendants returned home around that time.

[30] Mr. Weir testified that he had not been asked to reattend at the defendants’ residence for several years. It was his understanding that the defendants were well satisfied with the work LoCity had performed.

[31] Where does this evidence leave us? As noted, the defendants’ liability for $20,064 of the $81,370.65 claimed by Blue Water is no longer disputed. What about the balance?

[32] In their pleading, the defendants maintain that the plaintiff breached the terms of the contract executed by the parties because the plaintiff “delivered a product that was defective, dangerous, and not in proper working order.” [11] Later, they alleged that they “own a trailer which has a furnace damaged by fire and ductwork damaged by excessive smoke.” [12]

[33] Unquestionably, there was an unpleasant odour inside the defendants’ residence for a short period of time following June 2, 2015 and for a longer period following September 1, 2015.

[34] The evidence also establishes that:

a. Some quantity of smoke and/or odour was expected when the furnace was operated for the first time; b. More smoke than normal may have been discharged on June 2, 2015 because of the presence of excess oil in the heat exchanger; c. However, there was no evidence to suggest Blue Water was the one who put oil in the heat exchanger; d. The issues arising from the June 2, 2015 incident were addressed satisfactorily by the cleaning undertaken by Winmar; e. The problem arose for a second time in early September 2015; f. However, there is no evidence Blue Water did something it should not have done or failed to do something it should have done which caused or contributed to the odour problem; g. To the contrary. Based on the reports prepared by Caskanette and Maple, the ducts were not the source of the problem, whether they contained pieces of pink or foam insulation and/or sawdust as Mr. Hanson alleged or not; h. Precisely what caused the odour is, therefore, unknown. However, since February 2016, the defendants have continued to live in the residence, seemingly without complaint.

[35] The evidence introduced at trial simply does not support the defendants’ theory. They have been unable to establish a breach of contract on the part of Blue Water.

[36] In the statement of defence and counterclaim, the defendants also maintained that Blue Water failed to honour the warranty that attached to the residence. That allegation was not pursued at trial.

[37] Even if a breach of contract was established, what damages have the defendants established they suffered?

[38] As noted, the defendants made a claim under their homeowner’s insurance policy. Intact made payments totaling $26,567.69. Additional amounts are sought in the action Mr. Hanson and Ms. MacMillan commenced against their insurer. Liability is denied. The proceeding continues.

[39] In this action, the defendants allege that Blue Water is liable for $61,306.65. The amounts set forth in the documents Mr. Hanson identified during his testimony at trial totaled $50,798.68. He wished to rely on additional documents but was not allowed to do so. They had not been produced despite the fact the defendants were represented by counsel until they served a notice of intention to act in person dated February 7, 2020.

[40] The documents Mr. Hanson relies upon are problematic. I will deal with each of them in turn:

1. $5,600 is claimed on account of furniture, an area rug, a comforter, pillows and drapes. No evidence was led which suggests any of those items need replacement. Indeed, thus far, none of them has been exchanged.
2. $27,215.64 is sought in relation to a range of items including, most significantly, $13,208.46 for a trailer pad, garage pad, driveways, decks, excavating and building permit. Another $7,287.74 is claimed on account of decks, a glass railing and stairs. None of the items have the slightest connection to the issues described in these reasons. There was no suggestion that anything outside the residence was affected by what went on inside;
3. Reimbursement of $1,180.11 is claimed on account of meals purchased during the period from October 26 through November 8, 2015. Intact already reimbursed the defendants for those costs;
4. $16,385 is claimed for a new furnace and new ductwork. As mentioned earlier, those items were inspected and found to meet regulatory requirements. According to the Caskanette report, they do not need to be replaced. Indeed, they are still on site;
5. $417.93 was paid by the defendants to Marty’s on account of a November 19, 2015 invoice for the installation of an ignitor and a lock box. There is no evidence that supports the allegation that Blue Water is responsible for that cost in whole or in part.

C. Conclusion and Costs

[41] The defendants faced unfortunate challenges during their transition into the home they purchased from Blue Water. However, the refusal to pay the balance of the purchase price was not justified. A finding that the plaintiff breached its contractual obligations is not warranted. In any event, the defendants have not proven that they suffered any damage that is compensable. In the circumstances, the balance of $81,370.65 is still owing and must be paid.

[42] For the reasons given, the plaintiff shall have judgment against the defendants in the principal amount of $81,370.65 plus prejudgment interest from June 30, 2015. The defendants’ counterclaim is dismissed. Approval of the form of judgment by the defendants is not required.

[43] Written submissions on costs not exceeding seven pages may be provided to me through Judge’s Administration, Court House, 80 Dundas Street, 12th Floor, Unit “K”, London, Ontario, N6A 6B2 by the plaintiff and the defendants by the close of business on May 4 and 25, 2020 respectively.

Footnotes:

[1] That amount is inclusive of H.S.T. The amount claimed in the statement of claim was slightly lower - $81,368.75. It was corrected at the opening of trial and without a formal amendment. If needed, leave to amend is given. [2] A trade-in allowance of $14,300 was given. [3] The bills from the motel covered the periods from September 21 to October 3 and October 26 to November 8, 2015. It appears Intact also covered the costs of meals at least for the latter period. [4] That work was performed by Scott Townsend Plumbing & Heating Inc. for $197.75 as set forth in a September 30, 2015 invoice. [5] Marty’s Heating & Cooling was retained by Winmar to perform that service. [6] That work was undertaken by Biosweep Canada as set forth in an October 27, 2015 invoice. [7] Described at p. 1 of the Caskanette Udall Consulting Engineers report dated December 1, 2015. [8] Those services were performed by Therm-All as set forth in a November 25, 2015 invoice. [9] As set forth in the December 1, 2015 report of Caskanette Udall Consulting Engineers. [10] A February 3, 2016 invoice in the amount of $813.60 was entered into evidence. [11] That allegation is found in para. 24 of the statement of defence and counterclaim. [12] That allegation is found in para. 27 of the statement of defence and counterclaim.

“Justice A.D. Grace” Justice A.D. Grace Released: April 14, 2020