Winters v. Turner, 2009 CarswellOnt 8159
Winters v. Turner
Karen Maria Winters (Plaintiff) and Mark Turner c.o.b. as Turner Home Inspections (Defendant)
Ontario Superior Court of Justice
S.M. McGill D.J.
Heard: November 26, 2009
Judgment: December 11, 2009
Docket: Kitchener SC 900/08
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Counsel: M. J. Ferguson for Plaintiff
S.T. Jackson (Agent) for Defendant
Subject: Torts; Contracts; Corporate and Commercial; Civil Practice and Procedure; Property; Public
Torts --- Fraud and misrepresentation — Negligent misrepresentation (Hedley Byrne principle) — Particular relationships — Sale of land
Plaintiff and her investment partners entered into agreement to purchase six-unit residential rental property, conditional upon satisfactory home inspection report — Report prepared in 2003 by defendant, who was hired to complete inspection, did not disclose presence of knob and tube wiring — Condition was waived and purchase was completed — Plaintiff became sole owner of property in 2006 — When she tried to sell property in 2007, inspection report prepared by defendant for prospective purchasers indicated knob and tube wiring — Sale fell through and plaintiff had to undertake costly repairs — Plaintiff brought action against defendant for damages for negligent misrepresentation — Action allowed — Plaintiff was one of parties for whom report was intended — Defendant knew that purchasers would rely upon his report when deciding whether to complete purchase — As plaintiff was his client, defendant had special relationship and owed her duty of care in tort law — Description of wiring method and type of distribution wire in 2003 report was inaccurate, and failure to note knob and tube gave false impression of property's electrical system — Plaintiff relied upon inaccurate report when deciding to proceed with purchase — Given that defendant himself discovered and reported knob and tube in 2007, it could not be concluded that 2003 inspection met required standard of care — Knob and tube wiring was visually observable in furnace room ceiling, and should have been discovered and described in 2003 report — Inaccuracy of 2003 report arose from defendant's negligent failure to complete investigation in accordance with industry standards.
Torts --- Negligence — Duty and standard of care — Standard of care
Plaintiff and her investment partners entered into agreement to purchase six-unit residential rental property, conditional upon satisfactory home inspection report — Report prepared in 2003 by defendant, who was hired to complete inspection, did not disclose presence of knob and tube wiring — Condition was waived and purchase was completed — Plaintiff became sole owner of property in 2006 — When she tried to sell property in 2007, inspection report prepared by defendant for prospective purchasers indicated knob and tube wiring — Sale fell through and plaintiff had to undertake costly repairs — Plaintiff brought action against defendant for damages for negligent misrepresentation — Action allowed — Plaintiff was one of parties for whom report was intended — Defendant knew that purchasers would rely upon his report when deciding whether to complete purchase — As plaintiff was his client, defendant had special relationship and owed her duty of care in tort law — Description of wiring method and type of distribution wire in 2003 report was inaccurate, and failure to note knob and tube gave false impression of property's electrical system — Plaintiff relied upon inaccurate report when deciding to proceed with purchase — Given that defendant himself discovered and reported knob and tube in 2007, it could not be concluded that 2003 inspection met required standard of care — Knob and tube wiring was visually observable in furnace room ceiling, and should have been discovered and described in 2003 report — Inaccuracy of 2003 report arose from defendant's negligent failure to complete investigation in accordance with industry standards.
Contracts --- Performance or breach — Breach — Miscellaneous
Plaintiff and her investment partners entered into agreement to purchase six-unit residential rental property, conditional upon satisfactory home inspection report — Report prepared in 2003 by defendant, who was hired to complete inspection, did not disclose presence of knob and tube wiring — Condition was waived and purchase was completed — Plaintiff became sole owner of property in 2006 — When she tried to sell property in 2007, inspection report prepared by defendant for prospective purchasers indicated knob and tube wiring — Sale fell through and plaintiff had to undertake costly repairs — Plaintiff brought action against defendant for damages for breach of contract — Action allowed — Defendant suggested that he did not initially discover existence of knob and tube wiring because it was hidden behind walls and ceilings, and that it was discovered in 2007 because some rafters in furnace room were exposed, revealing wiring — Defendant's evidence was that furnace room ceiling was drywalled in 2003, while plaintiff's evidence was that no changes were made to furnace room ceiling between two inspections and that rafters were always exposed — Evidence of plaintiff and corroborating evidence of her partner G on this point was accepted — Knob and tube was as visible in 2003 as it was in 2007 — Standard form contemplated that knob and tube would be reported if present — Defendant's failure to detect and report this readily accessible and discoverable defect was breach of terms of inspection agreement.
Contracts --- Parties to contract — Capacity — Agents
Plaintiff and her investment partners G and L entered into agreement to purchase six-unit residential rental property, conditional upon satisfactory home inspection report — Report prepared in 2003 by defendant, who was hired to complete inspection, did not disclose presence of knob and tube wiring — Condition was waived and purchase was completed — Plaintiff became sole owner of property in 2006 — When she tried to sell property in 2007, inspection report prepared by defendant for prospective purchasers indicated knob and tube wiring — Sale fell through and plaintiff had to undertake costly repairs — Plaintiff brought action against defendant for damages for breach of contract — Action allowed — Defendant claimed that plaintiff was not party to inspection agreement — Common law and s. 6 of Partnership Act recognize that each partner is agent of others — There was no question that G, L and plaintiff were partners in purchase of subject property — Plaintiff's evidence was that she expressly authorized G and L to engage inspector and attend inspection on her behalf — Defendant was aware that his report was intended for all partners — G's evidence was that he was acting as agent for all partners when he completed authorization form contained in inspection agreement — Defendant was aware that G was agent for all purchasers, including L and another person who was not present — It was not necessary for identity of third principal to be disclosed as long as her existence was known — Three principals were all clients within meaning of agreement and could enforce it.
Contracts --- Performance or breach — Breach — Fundamental breach — Effect on exclusion clauses
Plaintiff and her investment partners entered into agreement to purchase six-unit residential rental property, conditional upon satisfactory home inspection report — Report prepared in 2003 by defendant, who was hired to complete inspection, did not disclose presence of knob and tube wiring — Condition was waived and purchase was completed — Plaintiff became sole owner of property in 2006 — When she tried to sell property in 2007, inspection report prepared by defendant for prospective purchasers indicated knob and tube wiring — Sale fell through and plaintiff had to undertake costly repairs — Plaintiff brought action against defendant for damages for breach of contract — Action allowed — Defendant claimed that terms and conditions in 2003 inspection agreement exempted him from liability — Exemption clause should be strictly construed against party that drafted it — Inspection report stated that it was for exclusive use of client — Transfer in 2006 was change in ownership — Logical interpretation of exclusive use statement was that it limited liability to intended parties — Since plaintiff was one of initial clients and intended recipient of report, she was not excluded simply because her percentage interest changed — Second inspection fulfilled requirements of clause purporting to exempt inspector from liability unless existence of alleged defect could be confirmed prior to repair — Defendant was afforded unlimited length of time to investigate property in 2007, when he discovered existence of defect — Plaintiff's withdrawal of permission two days later to further inspect property did not deny him "reasonable period of time to investigate" — It was reasonable for plaintiff to take position that he had already investigated defect because he brought it to attention of prospective purchasers.
Remedies --- Damages — Valuation of damages — Measure of damages — Real property — Repair value
Plaintiff and her investment partners entered into agreement to purchase six-unit residential rental property, conditional upon satisfactory home inspection report — Report prepared in 2003 by defendant, who was hired to complete inspection, did not disclose presence of knob and tube wiring — Condition was waived and purchase was completed — Plaintiff became sole owner of property in 2006 — When she tried to sell property in 2007, inspection report prepared by defendant for prospective purchasers indicated knob and tube wiring — Sale fell through and plaintiff had to undertake repairs costing $17,134.35 — Plaintiff brought action against defendant for damages for negligent misrepresentation — Action allowed — Description of wiring method and type of distribution wire in 2003 report was inaccurate — Inaccuracy of 2003 report arose from defendant's negligent failure to complete investigation in accordance with industry standards — Defendant was liable for cost of repairs — Under tort law, there was clear causal connection between failure to identify defect and cost of its correction — Had defect been identified, cost would have been negotiated as part of 2003 purchase price — Cost was not overriding criteria for finding electrician, since Electrical Safety Authority imposed harsh condition that identified defects be corrected within 30 days — Plaintiff did not claim for excess work done beyond replacement of knob and tube — Damages were assessed at $7,710.46, based on assessment provided by electrician that 45 percent of work was done for this purpose.
Remedies --- Damages — Damages in contract — Contract for service or repair
Plaintiff and her investment partners entered into agreement to purchase six-unit residential rental property, conditional upon satisfactory home inspection report — Report prepared in 2003 by defendant, who was hired to complete inspection, did not disclose presence of knob and tube wiring — Condition was waived and purchase was completed — Plaintiff became sole owner of property in 2006 — When she tried to sell property in 2007, inspection report prepared by defendant for prospective purchasers indicated knob and tube wiring — Sale fell through and plaintiff had to undertake repairs costing $17,134.35 — Plaintiff brought action against defendant for damages for breach of contract — Action allowed — Defendant's failure to identify knob and tube in 2003 breached terms of inspection agreement — Defendant was liable for cost of repairs which, under contract law, flowed naturally from breach — Omission from report put plaintiff to extra expense she would not otherwise have incurred — Cost was not overriding criteria for finding electrician, since Electrical Safety Authority imposed harsh condition that identified defects be corrected within 30 days — Plaintiff did not claim for excess work done beyond replacement of knob and tube — Damages were assessed at $7,710.46, based on assessment provided by electrician that 45 percent of work was done for this purpose.
Cases considered by S.M. McGill D.J.:
Biggs v. Harris (1999), 1999 CarswellOnt 4121 (Ont. S.C.J.) — considered
Queen v. Cognos Inc. (1993), 1993 CarswellOnt 801, 1993 CarswellOnt 972, 45 C.C.E.L. 153, 93 C.L.L.C. 14,019, 99 D.L.R. (4th) 626, 60 O.A.C. 1, 14 C.C.L.T. (2d) 113, [1993] 1 S.C.R. 87, 147 N.R. 169 (S.C.C.) — referred to
Syncrude Canada Ltd. v. Hunter Engineering Co. (1989), (sub nom. Hunter Engineering Co. v. Syncrude Can. Ltd.) 92 N.R. 1, (sub nom. Hunter Engineering Co. v. Syncrude Can. Ltd.) [1989] 1 S.C.R. 426, (sub nom. Hunter Engineering Co. v. Syncrude Can. Ltd.) [1989] 3 W.W.R. 385, (sub nom. Hunter Engineering Co. v. Syncrude Can. Ltd.) 57 D.L.R. (4th) 321, (sub nom. Hunter Engineering Co. v. Syncrude Can. Ltd.) 35 B.C.L.R. (2d) 145, 1989 CarswellBC 37, 1989 CarswellBC 703 (S.C.C.) — referred to
Statutes considered:
Courts of Justice Act, R.S.O. 1990, c. C.43
Generally — referred to
Partnerships Act, R.S.O. 1990, c. P.5
s. 6 — considered
Rules considered:
Small Claims Court Rules, O. Reg. 258/98
R. 18.02 — referred to
ACTION by property owner for damages for breach of contract and negligent misrepresentation related to omissions from home inspection report completed by defendant.
S.M. McGill D.J.:
Introduction
1 The plaintiff claims damages for breach of contract and negligent misrepresentation related to omissions from a residential home inspection report completed by the defendant. The primary complaint is that the report failed to identify knob and tube wiring that all parties now acknowledge was present. The defendant denies any wrongdoing, submits that the inspection and report were completed properly and in accordance with industry standards, and pleads and relies on the terms and conditions of the inspection agreement.
Facts
2 In 2003 the plaintiff, along with her investment partners, Garth Grimes and Tim Lewis, entered into an agreement to purchase a six unit residential rental property. The agreement was conditional upon the purchasers obtaining a satisfactory home inspection report.
3 The defendant was hired to complete the necessary home inspection. Garth Grimes, Tim Lewis and the purchasers' real estate agent were present during the inspection, the plaintiff was on holidays. The electrical section of the resulting 2003 report indicates that:
• the service to the property was 60 amps and a larger service was recommended,
• the distribution wire was copper and copper clad aluminum,
• the panel was "60,30 Amps" with fuses of 15 amps,
• some circuits were overloaded,
• there were underground outlets and some with reversed polarity,
• there were lose switches and missing cover plates in Apartment 3,
• there were problems with grounded outlets in Apartments 1A and 1B.
4 There is no disclosure of knob and tube wiring. The standard form's electrical page offers at least two locations where the inspector should indicate its presence. On the summary page entitled "The Bottom Line" no electrical issues are noted and the home is rated as "Typical". After receiving the report, the inspection condition was waived and the transaction closed.
5 The partners operated the rental complex until December 2006, when the plaintiff bought out her partners and became the sole owner of the property. In May 2007, the plaintiff listed the property for sale and within a few weeks received an offer to purchase from Geoff and Karen Heminsley conditional on obtaining a satisfactory home inspection. By coincidence, the Heminsley's also hired the defendant to complete their home inspection. This time the type of distribution wire is described as knob and tube rather than copper and copper clad. The 2007 report, completed on June 15, identifies the knob and tube wiring method and recommends that it be replaced.
6 As a result, the Heminsley's backed out of the deal on June 19 indicating that their previous experience with replacing knob and tube wiring was negative: "It is expensive for us and a hassle for our tenants. We did not want to go through it again". The plaintiff, who was previously unaware of the knob and tube, became upset, scared and angry.
7 In accordance with a recommendation in the 2007 inspection report, the plaintiff contacted the Electrical Safety Authority (ESA) and it completed its own inspection on June 20. She was given 30 days to correct the identified defects; first on the list was replacement of the deteriorated knob and tube wiring. Ms. Winters moved quickly to find an electrical contractor who could do the work within 30 days. She hired Toth Electric and they began work on July 3rd.
8 On June 27th, the plaintiff's husband, Chris Winters, emailed the defendant saying that they held him responsible for the omission and the repair would cost around $10,000. Mr. Turner requested a copy of the ESA report and Toth quote, both were provided. He also requested an opportunity to visit the property. This request was initially granted; however two days later permission was withdrawn after discussions with the real estate agent.
9 It took longer than 30 days to complete the work and the cost exceed the quote. Not surprisingly, other work was necessary to satisfy the ESA. Toth was paid the sum of $17,134.35 - Mr. Toth's very general break down of the bill was that 40 - 50 % of the account related to removal and replacement of the knob and tube wiring.
10 Ms. Winters claims the replacement cost from the defendant stating that she would not have completed the 2003 purchase at the agreed price if she had known of the presence of knob and tube. She would have either walked away from the deal or negotiated a reduction in the price sufficient to cover the replacement cost.
Issues
1. Is the plaintiff a party to the inspection agreement?
2. Did the defendant's failure to identify knob and tube in 2003 breach the agreement?
3. Do the terms and conditions contained in the 2003 inspection agreement exempt the defendant from liability? Specifically:
(a) Did the 2006 change in ownership end any liability to the plaintiff?
(b) Did the June 29th withdrawal of permission to inspect the property end any liability to the plaintiff?
4. Does the defendant owe the plaintiff a duty of care?
5. Did the defendant's failure to identify knob and tube in 2003 fall below the standard of care in the industry?
6. Are the damages excessive?
Legal Analysis
1. Party to the Agreement
11 The inspection agreement contains an authorization form that describes the subject property, client information and authorization. The form was completed by Garth Grimes and signed by him at the time of the inspection. The form does not reference either Tim Lewis, who was present, or Karen Winters, who was not. The defendant argues that the plaintiff cannot claim breach of contract because she is not a party to the agreement. She is not listed as a "client" on the document and the fine print states that:
The inspection report is for the exclusive use of the client named above. No use of the information by any other party is intended.
12 There is no question that Garth Grimes, Tim Lewis and Karen Winters were partners in the purchase of the subject property. All of their names are on the agreement of purchase and sale as well as the deed. The plaintiff's evidence is that she expressly authorized her partners to engage the inspector and attend the inspection on her behalf. Following the receipt of the report they collectively decided to waive the condition and said waiver was executed by all three partners. Mr. Grimes' evidence is that he was acting as agent for all his partners when he completed the authorization form.
13 The common law recognizes that each partner is the agent of the others, as does s.6 of the Partnership Act, R.S.O. 1990, c. P5:
s. 6 Every partner is an agent of the firm and of the other partners for the purpose of the business of the partnership, and the acts of every partner who does any act for carrying on in the usual way business of the kind carried on by the firm of which he or she is a member, bind the firm and the other partners unless the partner so acting has in fact no authority to act for the firm in the particular matter and the person with whom the partner is dealing either knows that the partner has no authority, or does not know or believe him or her to be a partner.
14 Jeff Holland, the purchaser's real estate agent, confirms that it was made clear to Mr. Turner that there were three partners buying the property and all three partners needed to be satisfied with the report.
15 The defendant submits that the evidence of Mr. Grimes and Mr. Holland should be given little weight as it was not tested by cross examination and was submitted in written form in accordance with the Rule 18.02 of the Small Claims Court Rules. I reject this assertion as the defendant received copies of the written evidence well in advance of trial together with contact information for both parties; he decided not to summons either of them. Mr. Holland remains in Waterloo and would have been easy to contact. In any event, Mr. Turner acknowledged that he was aware that there were multiple purchasers even if he did not know their names.
16 As a result, I find that Mr. Turner was aware that he was performing the inspection for all the purchasing partners and the report was intended for and in fact used by all of the partners. Mr. Turner was aware that Mr. Grimes was the agent for all purchasers including himself, Mr. Lewis who was present, and one other co-purchaser who was not. It is not necessary for the identity of the third principal to be disclosed as long as the existence of the principal was known. As a result, the three principals are all clients within the meaning of the agreement and may enforce it.
2. Breach of the Agreement
17 Mr. Turner suggests that he did not initially discover the existence of knob and tube wiring because it was hidden behind walls and ceilings at the time of the 2003 inspection. The terms of the inspection agreement state that it is a non-exhaustive "visual examination of the readily accessible features of the building." Inspectors do not go behind walls or ceilings. It was discovered in 2007 because some the rafters in the furnace room were exposed, revealing the wiring. It is Mr. Turner's evidence that the furnace room ceiling was drywalled in 2003. The plaintiff's evidence is that no changes were made to the furnace room ceiling between the 2003 and 2007 inspections and the rafters were always exposed. Mr. Grimes evidence confirms that the beams and rafters of the furnace room were visible during the 2003 inspection and no mention was made of knob and tube.
18 I accept the evidence of the plaintiff and Mr. Grimes on this point. They had regular access to the furnace room during their years of ownership and would have arranged for any alteration to it. Most of Mr. Turner's evidence about the 2003 inspection is couched using phrases such as "I would have..." or "I must have..." or "it had to be...." This language suggests to me that he formed his evidence based on his usual practice rather than an actual recollection of the inspection completed six years earlier. At one point Mr. Turner responded saying "why would I not report it if I saw it?" I believe this is the question that has caused Mr. Turner to believe it was concealed. The answer is that he made a mistake; there was no intention to mislead, he simply missed it.
19 I find as a fact that there was no change in the ceiling in the furnace room between the two inspections. The knob and tube was just as visible in 2003 as it was in 2007. The 2003 standard form contemplates that knob and tube will be reported if present. Therefore the failure to detect and report this readily accessible and discoverable defect is a breach of the terms of the inspection agreement.
3. (A) Exemption Terms - Change in Ownership
20 As noted above (para 12) the inspection agreement states that the report is for the exclusive use of the client. There is a dispute between the parties about the interpretation of this statement. According to Mr. Turner's evidence, this statement is designed to ensure that only the parties retaining the inspector may rely on the report thereby excluding liability to any subsequent purchasers who might obtain the report. By restricting use to the original clients, he suggests that liability is limited by both time and party. He suggests that liability ends when the original clients cease to be the owners. Change of ownership ends liability.
21 Ms. Winters is in fact one of the initial clients and also a subsequent purchaser who took sole title to the property without a new inspection. Her evidence is that she continued to rely on the information she originally received directly from Mr. Turner. Mr. Turner suggests that she ended his liability when she bought out her partners. She submits that since she is an original client for whom the report was intended, any change in her percentage interest is irrelevant; Mr. Turner was not aware of the particulars of the partnership interests. In fact, her original partnership interest was 50% which changed to 100% after the 2006 transfer.
22 I agree that the 2006 transfer was a change in ownership but I do not agree that the exclusive use statement limits Mr. Turner's liability to current ownership. The exclusive use statement is for all intents and purposes an exemption clause and should therefore be strictly construed against the party that drafted it. (Syncrude Canada Ltd. v. Hunter Engineering Co., [1989] 1 S.C.R. 426 (S.C.C.). The plain language of the statement refers to clients and intended parties. The logical interpretation is that it limits liability to the intended parties. There is no reference to either period of time or percentage interest and I will not imply them. Its obvious purpose is to prevent other parties not anticipated at the time of contracting from relying upon the report. As already discussed Ms. Winters was an identified principal and an intended recipient of the report. Therefore, she is not excluded by this clause simply because her percentage interest changed.
3. (B) Exemption Terms - Right to Inspect
23 Under Additional Limitations and Conditions, the agreement states:
We will have no liability to the Client for any claims or complaint if conditions have been disturbed, altered, repaired or replaced or otherwise changed before we had a reasonable period of time to investigate.
24 This clause is also an exemption clause, purporting to exempt the inspector from liability unless the existence of the alleged defect can be confirmed prior to repair. Therefore, it must also be interpreted narrowly against the drafting party.
25 There is a dispute about the meaning of the phrase "a reasonable period of time to investigate." and whether the defendant has been afforded such an opportunity. Key words in the interpretation of the clause are "reasonable period of time" and "to investigate". The purpose of the clause is to allow for confirmation of the alleged defect.
26 "Investigate" is not defined in the agreement but "inspect" is defined. I find that the two words should have a consistent meaning throughout the agreement. The drafter had every opportunity to define "investigate" in a broader way but elected not to. Therefore, I interpret the phrase "to investigate" to mean "to complete a visual examination of the readily accessible features of the building." Mr. Turner has no greater right to look behind walls, ceilings, move fixtures, or to do anything other than what he is contractually authorized to do during a standard inspection.
27 The agreement does not fix the time period during which the investigation must be completed; instead the word reasonable suggests a flexible obligation. I take this to mean that the time period must be reasonable in the particular circumstances. The timing will vary depending upon the situation. Under ordinary circumstances the time period would begin after the plaintiff brings the defect to the attention of the defendant. However, this is an unusual set of circumstances where it is the defendant not the plaintiff who first discovers the defect. The defendant is aware, has observed, investigated and formed conclusions regarding the presence of knob and tube four days before the plaintiff is told. In these circumstances, it is reasonable for the time period to include the entire time during which the defendant was aware of the defect.
28 The defendant submits that the withdrawal of permission on June 29th denied him a reasonable period of time to investigate. I disagree. He was afforded an unlimited length of time to investigate the property on June 15 during which time he confirmed (and in fact discovered) the existence of the defect as part of the Heminsley inspection. It was reasonable for the plaintiff to take the position that the defendant had already investigated the defect because he brought it to the attention of the Heminsleys. The clause does not give the defendant greater inspection rights than were available to him on June 15th. The agreement does not require the defendant be given unlimited or repeated access to the premises, only as much as is reasonable in the circumstances to confirm the existence of the defect. The defendant must have completed all necessary investigation to satisfy himself of the existence of knob and tube or he would not have reported it to the Heminsleys and recommended its replacement. The need for and urgency of replacement is further confirmed by the ESA report, a copy of which was given to the defendant. Nothing changed in the 12 days between the defendant's inspection and Mr. Winter's email. I find that the June 15th investigation fulfilled the requirements of this clause and therefore the clause does not exempt the defendant from liability for breach of contract.
4. Duty of Care
29 The plaintiff's alternate cause of action is based on negligent misrepresentation by way of omission which requires that the there be a special relationship between the representor and the representee (Queen v. Cognos Inc., [1993] 1 S.C.R. 87 (S.C.C.), at 101). Having found that Ms. Winters is a client, Mr. Turner clearly has a special relationship and owes her a duty of care in tort law. She is one of the parties for whom the report was intended. Mr. Turner knew that the purchasers would rely upon his report when deciding whether to complete the purchase. Ms. Winters is one of the intended representees.
5. Standard of Care
30 All parties agree that the description of the wiring method and type of distribution wire in the 2003 report is inaccurate and the failure to note knob and tube gives a false impression of the property's electrical system. Nor is there any dispute over the fact that the plaintiff relied upon the inaccurate report when deciding to proceed with the purchase. The remaining question is did the false and inaccurate representation arise from some negligent behaviour of Mr. Turner? Should an investigation completed in accordance with the standards in the industry have revealed the defect?
31 The 2003 inspection agreement describes the level of performance as "in accordance with the Standards of Practice of the American Society of Home Inspectors" (ASHI). The ASHI standards were also recognized as the appropriate standard for a home inspection in Biggs v. Harris, [1999] O.J. No. 4831 (Ont. S.C.J.) at para 33. The ASHI standards state that inspectors shall:
• inspect readily accessible, visually observable, installed systems and components listed in these standards of practice, (Clause 2.2(b)) (The electrical system is listed at Clause 7)
• describe wiring methods, (Clause 7.1(B)(5))
32 Given that Mr. Turner himself discovered and reported the knob and tube in 2007, it is impossible to conclude that the 2003 inspection met the required standard of care, especially in light of the forgoing finding of fact with respect to the open furnace room ceiling. The knob and tube wiring was visually observable in the furnace room ceiling and as part of the installed electrical system it should have been discovered and described in the 2003 report. Mr. Turner's failure to do so breached ASHI standards. Therefore, the inaccuracy of the 2003 inspection report arises from the defendant's failure to meet the designated standard.
Damages
33 The only damages claimed are for the costs of removal and replacement of the knob and tube. The plaintiff is not claiming damages associated with the loss of the Heminsley deal. The repair costs are recoverable in either tort or contract. Under tort law, there is a clear causal connection between the failure to identify the defect and the cost of its correction. Had the defect been identified the cost would have been negotiated as part of the 2003 purchase price. The fact that the Heminsley deal was aborted because of the knob and tube supports the plaintiff's position that the presence of knob and tube influences a purchasing decision. Under contract law, the cost of repair flows naturally from the breach. The omission from the report put the plaintiff to extra expense she would not otherwise have incurred.
34 The defendant suggests that the work could have been done cheaper but no other quote was obtained. No evidence is offered. I accept that time not cost was the overriding criteria for finding an electrician. The ESA imposed a harsh condition that the work be completed in 30 days failing which it could condemn the property and force the owner to provide alternate accommodations for her tenants. It was reasonable for the plaintiff to proceed with the available qualified electrician without taking valuable time to search for the cheapest electrician.
35 The defendant also complains that the Toth bill lacks specifics. This is true as the bill is presented with only one lump sum for materials. Labour is described by total number of hours and rates. The plaintiff was candid that the work went beyond replacement of the knob and tube and included all work necessary to obtain a clearance from the ESA. She does not claim for the excess work. The only evidence before me as to allocation of the time and materials to particular work is the 40 to 50% assessment provided by Toth. Toth has been paid in full and does not have a motive to offer an inflated estimate. I accept the assessment and allocate 45% of the time and materials to the knob and tube replacement. Damages are assessed at $7,710.46.
Conclusion
36 For the forgoing reasons, I find the defendant liable to the plaintiff under both causes of action, breach of contract and negligent misrepresentation. Judgment is awarded to the plaintiff against the defendant for the amount of $7,710.46, plus prejudgment interest at the rate of 3.3% per annum from November 30, 2007 to December 11, 2009. Thereafter post judgment interest shall run at the rate specified by the Courts of Justice Act. The parties may file written submissions as to cost until January 4, 2010.
Action allowed.
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