Lewis v Plourde, 2017 ABQB 235

Court of Queen’s Bench of Alberta Citation: Lewis v Plourde, 2017 ABQB 235 Date: 20170331 Docket: 1001 14903 Registry: Calgary Between: James Lewis Plaintiff - and - Robert Plourde, Judee Plourde, Tate Mackenzie, and Pro-Spec Home Inspections Inc. Defendants _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice G.A.

Campbell _______________________________________________________ Introduction [ 1 ] In November 2008, James Lewis (“Lewis”) purchased a home (the “Home”) located in Calgary, Alberta from Robert Plourde (“Plourde”) and Judee Plourde (“Mrs Plourde”) (together the “Plourdes”). After he took possession of the Home, Lewis discovered defects in the Home.

Lewis alleges that the Plourdes, in failing to disclose to him these defects in the Home, breached the Residential Real Estate Purchase Contract (the “Purchase Contract”) they entered into on October 17, 2008, or, alternatively, that the Plourdes fraudulently misrepresented the condition of the Home. [ 2 ] Prior to completing his purchase of the Home, Lewis retained Pro-Spec Home Inspections Inc. (“Pro-Spec”) and its principal Tate MacKenzie (“MacKenzie”), to carry out an inspection of the Home.

Lewis alleges that Pro-Spec and Mackenzie failed to advise him of the defects in the condition of the Home and in so doing, breached their agreement with him for the inspection of the property, performed the inspection negligently or misrepresented the condition of the property to him. [ 3 ] Lewis is seeking damages to rectify the Home’s defects.

The Evidence James Lewis [ 4 ] Lewis is a resident of Calgary, Alberta. At the time of the purchase of the Home, Lewis was 23 years old and an apprentice electrician. He was living in a condominium and was interested in buying a home to live in. [ 5 ] Doug McNaughton (“McNaughton”), Lewis’s uncle, was a realtor and acted for Lewis as his realtor. McNaughton and Lewis viewed a number of properties, including the Home. [ 6 ] Lewis reviewed the MLS Feature Sheet (the “Feature Sheet”) for the Home. This is one of the documents that Lewis relied on to inform himself about the Home.

The Feature Sheet stated that the Home is a 1200 square foot bungalow, had been built in 1912, and was “totally renovated from top to bottom”. [ 7 ] Lewis was interested in the Home because the Home was an older home that had been renovated. Lewis knew that the Home had been built in 1912 but he placed great value on the fact that the Home was advertised as having been “totally renovated from top to bottom”. [ 8 ] Lewis, McNaughton and Lewis’s parents viewed the Home. Lewis’s father is a master electrician.

Lewis testified that it appeared to him that the Home had been completely renovated. [ 9 ] Lewis decided to purchase the Home. Lewis entered into the Purchase Contract with the Plourdes to purchase the Home for $367,000. McNaughton was Lewis’s, “Buyer’s Representative” for the Purchase Contract. Lewis reviewed the Purchase Contract with McNaughton and was aware of its terms.

Lewis understood that there were no warranties. [ 10 ] At the time of purchase, Lewis had not seen the Listing Agreement that the Plourdes had entered into with their realtor for the sale of the Home. [ 11 ] Clause 6 of the Purchase Contract included the following representations and warranties: 6.1 The Seller represents and warrants to the Buyer that: ... (

h) Except as otherwise disclosed, the Seller is not aware of any defects that are not visible and that may render the Property dangerous or potentially dangerous to occupants or unfit for habitation. … 6.4 The Seller and the Buyer each acknowledge that, except as otherwise described in this Contract, there are no other warranties, representations, or collateral agreements made by or with the other party, the Seller’s brokerage and the Buyer’s brokerage about the property, any neighboring Property, and this transaction, including any warranty, representation, or collateral agreement relating to the size/measurements of the Land and Buildings or the existence or non-existence of any environmental condition or problem. [ 12 ] As if often the case, the Purchase Contract was subject to a home inspection condition.

The home inspection condition provided Lewis with the right to have the Home inspected by a professional property inspector and the right not to waive or release the inspection condition if defects in the Home exceeded 1% of the purchase price to remedy, which was, in this case, $3,670.00 (the Home Inspection Condition”). [ 13 ] McNaughton recommended Pro-Spec and MacKenzie to Lewis. [ 14 ] Lewis understood that MacKenzie was a certified home inspector, noting that his business card stated that he was a “Certified ASHI Member” and a “Certified CAHPI Member”.

Lewis said he hired MacKenzie because he wanted professional advice about the structure and mechanical condition of the Home and he was relying on MacKenzie to give him the proper advice. [ 15 ] Lewis decided to retain Pro-Spec and Mackenzie and arranged for an inspection of the Home. [ 16 ] On October 20, 2008, Mackenzie attended at the Home with Lewis, his parents, his girlfriend and McNaughton to conduct the inspection of the Home. MacKenzie informed Lewis that he would visually inspect the Home and would advise Lewis of any defects in the Home. [ 17 ] At the start of the inspection, Mrs.

Plourde was at Home but she left shortly after the Lewis group arrival. The temperature was approximately 0 degrees Celsius. [ 18 ] In terms of layout of the Home, there is a full basement underneath the front area of the Home (the living room and loft), a crawl space under the middle part of the Home (the office, dining room, bathroom and hallway) and a concrete slab under the back of the house (master bedroom and bathroom). At the time of the home inspection, the only accessible part was the basement under the front part of the Home.

The crawl space and concrete slab area were not accessible. [ 19 ] MacKenzie started his inspection with the exterior of the Home. Lewis said that MacKenzie told him he did not observe any issues with the exterior of the Home other than the eaves troughs should probably be repositioned. [ 20 ] MacKenzie and the Lewis group then walked around the interior main floor area of the Home. MacKenzie climbed the ladder

to the loft area above the living room area and looked at the area but did not go into it. [ 21 ] In the master bathroom, MacKenzie pointed out that the electrical outlets had no GFCI receptacles and that they should be installed. MacKenzie noted there was a heater on the wall and a thermostat and an electric fireplace. The floor in the master bedroom was laminate. Lewis did not notice the room as uncomfortably cool. In fact, no one noticed that the room was cold. There were no heat registers or vents in the master bedroom.

MacKenzie voiced no other issues to Lewis. [ 22 ] The group then headed downstairs into the basement. In the basement, MacKenzie inspected the washer and dryer, the furnace, and the electrical wiring. MacKenzie noted the age of the furnace and commented that it may have to be replaced in 4 to 5 years. No other comments were made about the electrical or ductwork. Lewis’s father also noticed no issues with the electrical wiring. [ 23 ] In the basement, there is a room with one door and no windows that Lewis described as a “panic room”.

Part of the ducting that runs into the crawl space is located inside the closet in the panic room. [ 24 ] During the inspection in the basement of the Home, Mackenzie presented Lewis with the inspection binder, which contained a 14 page document titled Pro Spec Home Inspections Inc. Building Inspection Report (the “Home Inspection Agreement and Report”) and asked him to sign the front page of the document. Lewis testified that he did as requested, without taking the time to read the document.

Lewis said that MacKenzie did not advise him of any of the terms of the Home Inspection Agreement and Report. [ 25 ] The group then proceeded upstairs to inspect the outside area of the Home where there was a deck and a hot tub built into the deck. MacKenzie voiced no concerns with the deck, siding, roof or hot tub to Lewis. [ 26 ] After the approximate two and one-half hour inspection was completed, MacKenzie provided Lewis with the binder containing the Home Inspection Agreement and Report that documented the results of his inspection of the Home.

Lewis said that Mackenzie never explained to him the limited scope of his investigation or informed Lewis that he would not confirm the existence of building permits or the Home’s compliance with applicable building codes. Lewis testified he was not certain what the inspection would entail. [ 27 ] Lewis testified that he and MacKenzie never did a page-by-page review of the findings in the Home Inspection Agreement and Report. MacKenzie verbally told Lewis that the condition of the Home looked good with no significant issues noted.

MacKenzie highlighted the issues that he had observed in the Home Inspection Agreement and Report. Minor repairs were noted for the roofing and for the electrical. [ 28 ] At the end of the inspection, Lewis paid Pro Spec and MacKenzie $393.75 for the home inspection.

Lewis had no questions for MacKenzie. [ 29 ] The Home Inspection Agreement and Report make it clear that the inspection was to provide the prospective purchaser client with “a better understanding of the observed condition of the house” was “limited to the physical evidence that was visually accessible at the time”, does not “cover code compliance issues” and that the purchaser was advised to “ask the property owner if they are aware of any defects that would not normally be detected by a visual inspection”.

The Home Inspection Agreement and Report on page 14 under the heading “General Limitations” describes the inspection as being “similar to a “general audit” performed by an accountant or a “regular check-up” by a doctor and is not an “audit” or a “complete physical with blood tests and x-rays”. [ 30 ] In the few days between the time the home inspection was completed and waiving the Home Inspection Condition, Lewis said that he never read the limitations set out in the Home Inspection Agreement and Report.

Lewis said he never read the “fine print” such as the 12 itemized points set out on page 1, but rather focused in to see what were the problems identified with the condition of the Home. [ 31 ] The Home Inspection Agreement and Report indicated that the functional condition of the Home was average. Under the heading “Foundation Construction Type”, MacKenzie had noted “Slab on grade; “no access to rear crawlspace”.

The slab under the master bedroom could not be visually inspected because it was completely covered by the deck. [ 32 ] After receiving the Home Inspection Agreement and Report and receiving the information he had from MacKenzie and Pro- Spec, Lewis concluded that the Home was in good condition and that any necessary repairs would cost less than 1% of the Home’s purchase price to remedy. Lewis had not asked MacKenzie how much the defects MacKenzie had identified would cost to repair.

Lewis testified that he knew he had to replace four GFCI plugs at $5 a piece, purchase some eaves troughs and that the furnace may have to be replaced in four to five years. [ 33 ] Lewis testified that it was on the basis of the positive Home Inspection Agreement and Report that he decided to remove the Home Inspection Condition in the Purchase Contract and purchase the Home. Lewis’s purchase of the Home closed in November 2008. [ 34 ] After the home inspection was completed, Lewis never spoke to MacKenzie again until these proceedings. [ 35 ] After the home inspection, Lewis had returned to the Home to ask Mr.

Plourde how the fish tank and hot tub worked. There were no discussions with the Plourdes about the Home or problems with the Home. [ 36 ] Lewis moved into the Home at the end of November 2008. [ 37 ] In December 2008, Lewis encountered the first major problem with the Home, which was the lack of heating in the master bedroom. The temperature outside was approximately minus 20 and Lewis was unable to get water in the master bedroom as the water pipes were freezing. The temperature in the bedroom was also uncomfortably cold. Lewis testified that he and his girlfriend wore extra clothing to bed.

After inspection, Lewis discovered that there were no heating vents in the master bedroom. Lewis said that turning on the electric fireplace and electric wall heater in the master bedroom did little to heat the room.

[ 38 ] Lewis also discovered that there was no air coming out of the floor vents in the middle part of the Home in the office or hallway, which made those areas uncomfortably cold as well. [ 39 ] To alleviate the heating problem in the Home, Lewis decided to install a new forced air furnace. While installing the new furnace, the installers discovered that they had to go through a crawl space to access the ductwork in the back of the Home. To access the crawl space, an opening had to be cut into the floor in the main floor hallway.

Lewis testified that there was no other access to the crawl space. [ 40 ] Lewis testified that no one had told him that there was a hatch that gave access to the crawl space underneath the fish tank. He said that he did not discover any hatch that gave access to the crawl space when he dismantled the fish tank. [ 41 ] When the crawl space was entered, Lewis discovered two electric space heaters connected to a thermostat. The thermostat was set to 20 degrees Celsius. There was also debris in the area that was flammable.

Lewis was shocked to see space heaters in the crawl space because it was dangerous and made no sense. Lewis had the space heaters disconnected and removed from the crawl space. Lewis also observed that the ductwork coming in through the foundation to the crawl space was not connected to the ductwork running to the furnace. [ 42 ] In the panic room in the basement, the furnace installers noted that the ductwork that would have connected to one of the upstairs vents was missing.

Lewis said the missing ductwork was very apparent – one only had to look inside the closet of the panic room to see the missing ductwork, which appeared to be an elbow piece that would connect the two pieces of ducting. [ 43 ] Lewis had not gone into the closet of the panic room before his purchase of the Home. Lewis said that the closet in the panic room had not been inspected by MacKenzie.

MacKenzie never mentioned any problem with the ductwork to Lewis or noted this as an area of concern for further inquiries or investigation in the Home Inspection Agreement and Report. [ 44 ] Much of the ductwork was readily visible in the basement with the exception of the ductwork in the crawl space. Lewis agreed that there would be no way to discover that the ductwork did not run into the master bedroom. [ 45 ] Ultimately, Lewis discovered that the ductwork to run central heating from the furnace did not run throughout the entire Home.

Specifically, the addition with the master bedroom had no ductwork running to the area so that the area was not connected to any ducting or any other means to the central heating system. Lewis said there was no possible way to have the ducting run from the furnace to the master bedroom because there was a cement barrier that prevented any ductwork being placed underneath the master bedroom.

A few years later, after Lewis removed part of the deck around the master bedroom, it was discovered that the master bedroom addition had been built on an approximate five- inch cement slab with no frost walls running underneath the slab. [ 46 ] Lewis subsequently learned that the master bedroom addition had been built over what had been the garage. [ 47 ] Lewis testified that the foundation underneath the master bedroom was not visible at all because of the decking that wrapped around the exterior of the Home. [ 48 ] According to Lewis, the electric fireplace and the wall heater in the master bedroom were insufficient to supply adequate heating throughout the room in the absence of supplementary heating through a forced air central furnace system.

MacKenzie never mentioned any problem with the heating or foundation under the master bedroom to Lewis or noted this as an area of concern for further inquiries or investigation in the Home Inspection Agreement and Report. [ 49 ] To rectify the heating issue in the master bedroom, it was initially recommended that Lewis install a gas fireplace in place of the electric fireplace. When the wooden mantle over the electric fireplace was removed, Lewis discovered that the receptacle in the mantle was powered by one extension cord going into the wall.

Upon further examination, the extension cord was attached to another extension cord that was attached to a single light switch in the master bedroom. These extension cords were not visible until the wooden mantle was removed from the wall. [ 50 ] Since its installation, the master bedroom has been heated by the gas fireplace. [ 51 ] On further inspection of the electrical wiring, Lewis discovered extension cords also used as electrical wiring in the loft and office areas. The loft area had once been the attic of the Home.

In the loft area, it was discovered that the projector for the television, which was hanging from the ceiling, was powered by an extension cord that had been spliced in and then run from the projector up through the ceiling back down underneath the baseboard and then under the carpet to a plug-in in the wall. Lewis said that if you were looking for it, the cord could be felt under the carpet. This use of an extension cord in the loft had not been identified by MacKenzie, who had not entered the loft area. [ 52 ] In May 2009, the fish tank in the office area started to leak.

When the fish tank was removed, Lewis discovered a couple of extension cord pieces used as part of the electrical wiring. The electrical plugs were not concealed but inside a cabinet behind the fish filters, that were visible by looking inside the cabinet. [ 53 ] Lewis eventually learned that there were numerous building code violations involving the electrical wiring in the Home, such as loose electrical wiring, unsupported receptacles and electrical wires tapped off with masking tape. Most of the electrical wiring that violated building code requirements was visible in the basement of the Home.

MacKenzie never mentioned any problem with the electrical wiring to Lewis or noted this as an area of concern for further inquiries or investigation in the Home Inspection Agreement and Report. [ 54 ] Lewis understood that the extension cords used as electrical wiring on the main floor of the Home were building code and safety issues. These electrical defects were not visible as they were concealed behind drywall. [ 55 ] In the basement, Lewis discovered that the jetted bathtub in the master bathroom was not adequately supported by the floor

joists. He understood that this was probably a code compliance issue. The floor joists were visible from the basement area. MacKenzie never mentioned any problem with the floor joists to Lewis or noted this as an area of concern for further inquiries or investigation this as an issue in the Home Inspection Agreement and Report. [ 56 ] Lewis also discovered that the plumbing drainage lines in the basement were inadequate. The drainage lines were in the open and visible in the basement.

According to Lewis, this plumbing issue is apparently a code issue. [ 57 ] Another plumbing issue was found in the basement in the room with the washer and dryer. Lewis discovered a green hose coming through a hole drilled through the window frame that was connected to a water line to the washer and dryer in the basement. The green hose ran behind the washer and dryer and was visible when looking directly at the washer or when the door to the room was closed. The green hose, running into window in the basement of the Home, was also visible from the exterior of the Home.

Lewis did not elaborate on what the green hose had been used for or what happened after he disconnected it from the washer taps. [ 58 ] MacKenzie never mentioned any problem with the floor joists to Lewis or noted this as an area of concern for further inquiries or investigation in the Home Inspection Agreement and Report. [ 59 ] With respect to the exterior of the Home, Lewis testified that he learned that the hot tub had been improperly installed on the deck because it had been placed on top of an emergency gas relief valve, blocking access to the valve.

Lewis testified that in June 2009, ATCO Gas had attended at the home as he had decided to participate in ATCO Gas’s meter relocation program. Apparently, when the ATCO Gas representative discovered that the hot tub was on top of the valve, Lewis was asked to either move the emergency gas relief valve or turn off the hot tub. Lewis turned off the hot tub, emptied it and has not used it since. The emergency gas valve was located underneath the hot tub but was accessible from the deck if a portion of the deck was removed. Lewis said that one would have to know the valve was there to locate it.

MacKenzie never mentioned any problem with the emergency gas relief valve to Lewis or noted it as an area of concern for further inquiries or investigation in the Home Inspection Agreement and Report. [ 60 ] Lewis testified that the repairs undertaken to the Home to date are: (

a) the electric fireplace was removed with the extension cords and a gas fireplace was installed in its place in the master bedroom; (

b) the plumbing was repaired to code; (

c) the joists under the master bathroom tub were stabilized in the basement; (

d) duct work was remedied and repaired; and (

e) a new furnace was installed. [ 61 ] The total cost for these repairs was $18,812.35 of which $6000 was the cost for the installation of the new furnace and $340 for the duct work. These costs were primarily for material as Lewis’ father-in-law, Lewis’s father and Lewis did most of the physical repair work themselves. [ 62 ] Lewis obtained a quote from a third party as to what these repairs would have cost.

The quote he received provided an estimate of $25,000. [ 63 ] Lewis obtained a quote from a third party that estimated the cost to complete the plumbing repairs and some of the ducting repairs that he and his family had completed to be $4304. [ 64 ] Lewis together with his father completed repairs to the electrical wiring in the Home.

Lewis obtained a quote prepared by his father that estimated that the electrical work completed by Lewis and his father would have cost $2385. [ 65 ] Lewis obtained a quote of $48,750 to complete foundation work to the Home, including the supply and installation of a frost wall under the master bedroom and the removal and reinstallation of the exterior decking. [ 66 ] Lewis testified that a permit search revealed that there had been no permits issued for the Home since 1985. In 1985, a building permit was issued for an attached garage.

At the time of his purchase of the Home, Lewis said that no one advised him that he should inquire into whether the requisite permits had been obtained for the renovations made to the Home. Neither McNaughton nor MacKenzie made mention of obtaining information about permits. Lewis did not know that no permits had been obtained for the Home until after his purchase of the Home. [ 67 ] Lewis estimated that he has spent approximately 300 hours rectifying the repairs to the Home. [ 68 ] Lewis says there are still ongoing issues with the Home.

When the weather gets cold, the pipes to the master bedroom still freeze and the room while still cold, it is much better than it was. The room is much cooler than the rest of the Home. [ 69 ] Lewis does not believe that he could ever sell the Home unless it undergoes major renovation to rectify the structural and other defects. Lewis is seeking damages to pay for a complete rebuild of the Home to bring the Home into compliance with current construction standards and building codes. [ 70 ] Lewis has now lived in the Home for almost eight years.

Ken Bjerke [ 71 ] Ken Bjerke (“Bjerke”) is a licensed electrical safety code inspector. Bjerke was a friend of Lewis’s father for many years.

[ 72 ] During the trial, it was ruled that Bjerke could not be qualified as an expert and give opinion evidence because Lewis had not complied with Rule 5.34 of the Rules of Court (Alberta) . In the result, Bjerke appeared as a lay witness and testified to his observations of the Home. [ 73 ] Bjerke conducted an electrical inspection of the Home after Lewis’s purchase but prior to December 2, 2009. All of the electrical wiring that Bjerke inspected was in plain view. [ 74 ] In the basement, Bjerke observed very messy electrical wiring, with some of the wring unsupported and not secured to any structures.

For example, the electrical receptacle for the washer and dryer were not firmly attached to structural supports. This receptacle was visible and hanging above the washer or dryer. The furnace switch was not secured to a structural support. A higher voltage cable was not supported by a structure. There were other unsecured outlet boxes. The vacu-flow receptacle was not on a separate dedicated circuit.

Bjerke observed the original inspection label for the Home on a structure in the basement but no inspection label for the recent renovations to the Home. [ 75 ] In the crawlspace, which was now accessible through the hole cut into the upstairs floor by Lewis, Bjerke observed inaccessible outlet boxes and unsupported cabling. [ 76 ] In the hallway on the main floor of the Home, Bjerke observed a number of electrical deficiencies. He observed branch circuit wiring that had been spliced and concealed behind drywall.

A lightning fixture had been removed but no connectors had been used to enter the cabling to the utility box. The wiring to some of the receptacles was not grounded to the plugs and there was no vapour barrier. Receptacles in the back bedroom were not wired from an arc-fault circuit. Scott Forster [ 77 ] Scott Forster (“Forster”) is a construction manager and construction consultant. Forster was qualified as an expert witness to express opinions in the area of home construction and evaluation. [ 78 ] Forster inspected the Home on four separate occasions. [ 79 ] Forster’s first inspection was on May 23, 2014.

He agreed that he did not know what the Home would have looked like when it was purchased some five and one half years earlier in 2009. [ 80 ] After completing his inspections, Forster noted a number of deficiencies that he set out in a report he prepared for Lewis dated February 15, 2015 (“Forster’s Expert Report”). Forster testified that the deficiencies identified by him in the Forster’s Expert Report were as follows: (

a) Exterior Finishing : Lack of exterior flashing above the front door, around all of the windows, the decorative stone work and under the front of the Home onto the deck. Forster opined that lack of flashing will result in water penetration causing damage to exterior wall plywood, interior insulation and drywall. Water from the deck could penetrate into the foundation and into the Home. If not rectified, rot and mold would appear.

Forster said that the building code requires flashings to be placed on top of windows, roofs, decks, and horizontal trim pieces, which was not done on the Home’s windows, roof, deck and trim. There was also a lack of caulking of the Home’s windows and trims in violation of the building code. Forster acknowledged that the flashing and caulking issues he identified were building code issues. (

b) Exterior Deck : The decks surrounding the home were not installed at the right height from openings, not permitting proper drainage of deck water. Forster said that industry standards require a minimum of one and one-half inch clearance below doors opening inwards and four inches below windows. If this is not done, Forster said that water will run under the doors and window and rot out the floor below the doors and the lower sections of affected windows. This could also produce mold. Forster removed planks of the deck to inspect the underside of the deck.

He observed a lack of joist hangers and proper fastening of deck to house. Industry standard requires the use of lag bolts at a minimum of 16 inches on center and joist hangers to prevent sagging and separation of deck. There was also a lack of proper flashings used on the deck. Forster said that he had to remove some of the decking to observe these deficiencies. Forster acknowledged that the gaps between the planks on the deck would permit water drainage. Forster also noted that the deck appears to be sagging indicating to him that issues were already happening with the deck.

Forster agreed that the deck was functional. Nonetheless, Forster classified these deficiencies in the deck as a major deficiency. (

c) Roof : Multiple layers of shingles had been installed on the roof, there was a lack of drip edge and the chimney chase roof flashing not installed. These deficiencies would create a real potential for rotting of the roof. Forster classified these deficiencies in the roofing as a major deficiency. (

d) No Frost Wall : There was no crawlspace or concrete frost walls with rigid insulation below the master bedroom living area because the area had been constructed on a concrete slab on grade. Forster had to remove some of the deck planking in order to inspect the foundation. Once he did that, he was able to visually see that there were no frost walls under the slab. Forster said that the building code requires all foundations below living space to extend down a minimum of 1.2 meters if heated or 2.13 meters, if not heated.

There must be, at a minimum, a one-foot frost wall below a living space, regardless of soil type. Forster classified the lack of frost walls or insufficient crawlspace below the master bedroom living area as a major deficiency. (

e) Interior Finishing : Forster observed substandard quality of workmanship throughout the interior of the Home such as fit and finish of door frames, casings; drywall and painting. He did not classify these finishing deficiencies as major deficiencies. [ 81 ] Forster explained that because there was lack of access to the crawlspace area, it was impossible to assess this area without removing the existing flooring. Forster noted that the building code requires a two foot by two foot opening to access a crawl space. However, the issues with the deck and absence of flashings around windows, doors and trims and the roofing were very visible to him as he walked around the Home.

[ 82 ] Forster said that extension cords cannot be used for electrical wiring. Forster also said that a garden hose should not be run from the exterior to the interior of a home. [ 83 ] Although not qualified in the area of home inspection, Forster offered the opinion that the Home Inspection Agreement and Report provided very basic and superficial information and did not properly advise the prospective homeowner about areas of the home that required careful consideration before purchase.

For example, Forster noted there was no explanation that areas constructed on slab on grade require a frost wall, insulation and must be heated for proper warmth. It was Forster’s view that the client should have been directed to investigate this further to ensure proper construction. Forster also suggested that the visible multiple layers of shingles on the roof should have caused the author of the Home Inspection Agreement and Report to have concluded that the roof was questionable.

Forster did not believe that it was possible to give an estimate that the roof had a remaining 15 years lifespan without an understanding of what lay beneath the layers of shingles. Forster also noted that there was no mention in the Home Inspection Agreement and Report of the lack of floor drains on the deck and of the issues flowing from the proximity of the deck to the windows and doors. [ 84 ] In Forster’s opinion, there were some deficiencies that should have raised red flags for the home inspector, prompting, at the very least, the recommendation that additional inquiries be made.

He pointed to no access to the rear crawlspace as suggestive of non- compliance with a building code and to the lack of permit and inspection stickers anywhere in the Home, again, as suggestive of a lack of compliance with building code requirements. Forster said that inspection and permit stickers are typically displayed in conspicuous places so they can be readily seen by any interested party. [ 85 ] Forster’s view was that the Home Inspection Agreement and Report was of little value to any prospective purchaser wishing to learn of potential defects in a home.

However, Forster did agree that there may have been scope limitations and a verbal part to the home inspection to which he was not privy. [ 86 ] When he was in the master bedroom, Forster said that he did not notice anything about the flooring that would have suggested to him a slab on grade foundation. He noticed that the flooring was laminate but that was all.

He said that there are many homes with interior slab flooring. [ 87 ] Forster would not have expected the home inspector to have known that there were no frost walls under the slab on grade foundation if he did not know the foundation had previously been used for a garage. He also would not have expected a qualification in a home inspection report just because there was a slab on grade foundation . [ 88 ] Forster stated that permits were required for the renovation completed to the Home because the renovations effected a change to the existing space.

Forster said that the City would have required that frost walls be constructed under the foundation for the proposed new living space. [ 89 ] Forster researched the permits granted for the Home. He said there was a permit for the original garage construction in 1985 but no applications on file for any permits for work completed on the Home after that date. Forster was able to get this permit information by calling the City of Calgary. No fee was required for this information. [ 90 ] Forster said that permits and inspections would ensure that the components of the home being renovated would be compliance in code.

Indeed, the primary purpose for obtaining building permits and required inspections for a home being renovated is to ensure the construction undertaken is in compliance with the building code. [ 91 ] Forster described the permit process. He said that permits are to be placed in a permit pouch and the permit pouch is to be placed on a visible place from the street. Each inspector will complete their inspection sheet and then place their report in the pouch. Sometimes inspection tags are placed on the component inspected, such as an electrical inspection sticker on an electrical panel.

The lack of inspection stickers should raise a red flag about after a renovation has been done. These inspection stickers are always placed in conspicuous places. [ 92 ] Forster opined that if proper procedures had been followed and permits obtained, the work completed would have had to pass inspection, there would be a record from all trades regarding specifications passed by the City and province, and all warranties on products used by the trades would have been available.

There also would have been a complete set of drawings completed for the renovations and there would have been verifications by engineers of the structures. This permit and inspection process would have taken considerable time. [ 93 ] Forster confirmed that the building code has always required the installation of frost walls below a living space, whether heated or not heated. Forster stated that construction of a living space on a concrete slab on grade is not permitted.

Lack of frost walls and appropriate heating would lead to broken water pipes, frozen water pipes and it would be impossible to heat the floor of the living space above the foundation. [ 94 ] Forster confirmed that the flashing deficiencies he noted were building code issues and that building codes require building permits for construction of structures.

Forster also confirmed that it was possible that because of the age of the Home, the plumbing, electrical and other building components might not be expected to be in compliance with the building codes in effect at the date of the purchase of the Home. [ 95 ] Forster made three primary recommendations to rectify the deficiencies he discovered. They are: (

a) Removal of the surrounding deck and reinstall at the industry standard height; removal of affected exterior siding and install appropriate flashing and reinstall siding to rectify the issues with the deck; (

b) Removal of the master bedroom addition and construction of a new dwelling on a new concrete foundation; and

(

c) Rectification of interior plumbing and electrical defects to comply with building codes. [ 96 ] Forster opined that to remedy the major deficiency, namely the lack of frost walls or crawl space beneath the master bedroom, the addition with the master bedroom should be torn down and rebuilt in order to meet current residential construction building code requirements. Forster estimated that this rebuild would cost approximately $150,000. This estimate includes the cost to bring the existing plumbing and electrical components to current building code standards.

Forster noted that an additional cost of approximately $17,500 would be required to complete the necessary repairs to the exterior of the older part of the Home not rebuilt. However, if the City requires major work to be completed on the rest of the Home to bring it up to current building code requirements, then Forster estimated the cost would be at least $185,000. This would include the cost to demolish the existing Home and rebuild a new 1200 square foot home. [ 97 ] Although Forster never measured the master bedroom, he estimated that the master bedroom was approximately 300 to 400 square foot.

Replacement cost of only the master bedroom, using $225 per square foot, would cost from $67,500 to $90,000. [ 98 ] Forster noted that it is very possible that if the City determines that the existing Home does not meet building code and engineering requirements, it may require the replacement of all electrical, heating and plumbing components and the installation of a new sewer service. If that occurs, Forster believed that the only sensible choice to remedy all the deficiencies would be to tear down the Home and construct a new home on the property.

Forster agreed that the remedy he is suggesting, to demolish and rebuild, would replace a 100 year old home with a 2016 home. A new home would have new wiring, new plumbing, new insulation, new fixtures, new doors, new windows, new millwork, new flooring and would be a huge improvement over the current Home. [ 99 ] Forster concluded that based on the major deficiencies known and unknown, the only way to completely remedy the deficiencies in this Home is to demolish it and construct a new home. He estimated that the costs for constructing a new 1750 square foot two-story home would be $393,750.

Scott Williamson [ 100 ] Scott Williamson (“Williamson”) was qualified as an expert to express opinions in the areas of heating, ventilation and air conditioning construction (“HVAC”) systems in buildings. He has approximately 30 years’ experience in the HVAC area. [ 101 ] Williamson attended the Home on one occasion with Forster in December 2014 to review the heating issues with the Home. [ 102 ] Williamson understood that the major area of concern in the Home was the change in temperature from the north side of the Home to the south side of the Home, where the master bedroom was located.

He was informed that the north side of the Home was an original, existing structure, and the south side was an addition to the existing backside of the Home. He was also advised that the foundation under the master bedroom addition was a slab on grade foundation that had been previously used for a garage. Williamson had also been advised by Forster that there were no frost walls under the slab on grade foundation.

Williamson agreed that this was important information and that this information affected his overall opinion. [ 103 ] Williamson noted that he could feel the temperature drop as he moved towards the back of the Home and into the master bedroom. He also noticed that there were no hot or cold air registers in the floor of master bedroom or any cold air return and that the floor felt cold. These features confirmed for Williamson what he had been told: that the foundation was slab on grade. He also noted a wall mounted recessed electric heater.

Lewis told Williamson that the wall mounted recessed electric heater was not working properly, but Williamson was uncertain as to what that meant as he never checked the heater himself. He did not believe that this heater was working when he attended at the Home. [ 104 ] Williamson stated that from a visual inspection, there was nothing unusual about the heating in the Home. [ 105 ] Williamson did note that it was not usual to see a wall mounted electric heater in a residential living space as these types of heaters are typically used in commercial spaces where there is no forced air heating.

Williamson confirmed that the building codes do permit different methods of heating for an addition to a building. [ 106 ] Williamson said that the typical construction process for any addition to a single family residence always requires plans drawn up by an architect showing what is proposed to be built, materials to be used and a permit has to be in place from the City for the addition including for any HVAC changes. However, mechanical drawings from an engineer for the HVAC system are not always required.

Williamson stated that before any construction is commenced, it is common knowledge that building codes must be complied with and permits obtained. [ 107 ] Williamson inspected the heating ductwork in the basement. He saw the City of Calgary yellow inspection permit sticker for the new furnace and ducting. He observed that the air supply and return duct work stopped at the concrete wall going into the crawl space. Two round holes had been cored into the concrete wall and two five-inch pipes had been run into the crawl space area that Williamson said supplied heat to the kitchen area.

Williamson did not go into the crawl space, even though there was access door to go into the crawl space. Williamson confirmed that it is a building code requirement and good practice to have access to a crawl space for maintenance, inspection and other requirements. He had seen homes without access to a crawl space. [ 108 ] Williamson determined that the furnace was adequate to heat the Home but the area of the master bedroom was not connected to the furnace.

He found that there were in effect two separate heating zones created in the Home, one under the main floor of the Home that was heated by the furnace and one under the master bedroom that was not heated by the furnace. In his opinion, a wall mounted electric heater and a gas fireplace would not provide sufficient heat to the master bedroom area of the Home. [ 109 ] Williamson opined that a concrete slab foundation with no frost wall (insufficient crawlspace) would make supplying sufficient heat to the master bedroom a challenge.

There would be no way to run the supply and return air ducting through to the master bedroom unless the ground was excavated under the concrete slab and lines drilled, into which the pipes would be placed. While it may be

possible to provide heat to the master bedroom by running hot and cold air ducts from outside the Home, it was his view, that the proper fix for this heating issue would be the installation of a frost wall under the concrete slab foundation. [ 110 ] When asked about the use of electric space heaters in a crawl space, Williamson said he had never seen an electrical space heater used in a crawl space because of the obvious concern for electrical shock if water got into the space and that this use would create a significant fire hazard.

Judee Plourde [ 111 ] Mrs Plourde and her husband purchased the Home in 2003 and lived in it until 2008, when they decided to retire, sell the Home and move to Vancouver Island. [ 112 ] The Home, when originally purchased, was very tiny consisting of a living room, a bathroom, a kitchen, a bedroom and an attached garage at the back of the Home. [ 113 ] After they purchased the Home, but before taking possession, a number of renovations were made to the Home, including: adding to the front foyer area; adding an exterior deck with a hot tub; adding the loft area with a bathroom; turning the then master bedroom into an office and dining room; and, converting the garage at the back of the Home into the master bedroom.

In the master bedroom, they had added a bathroom that included a toilet, jetted tub and sink. Windows were replaced in the front and back of the Home, including a wall of windows in the master bedroom. New countertops and cabinets were installed in the kitchen. New flooring was installed. A large fish tank and a pond were installed in the living room area. The renovations took approximately six weeks to complete. [ 114 ] Mrs Plourde said that the renovations had been carried out by an individual identified only as “Sheldon”, who Plourde had known and hired.

Mrs Plourde said that Plourde completed some of the cosmetic work such as painting and installing the trim. He also constructed some of the deck that went around the exterior of the Home. [ 115 ] Mrs Plourde understood that a plumber and an electrician had been hired to do the plumbing and electrical work to the Home. [ 116 ] Mrs Plourde’s understanding, from her husband, was that Sheldon was responsible for obtaining the requisite permits and that permits had been obtained. She did not know if Sheldon had obtained permits for the renovations.

Mrs Plourde did not see any inspection or building permits. [ 117 ] Mrs Plourde was not aware of any defects in the Home. [ 118 ] After the renovations were complete, Mrs Plourde and her husband moved into the Home where they lived for the next five years. During that time, Mrs Plourde said she slept in the master bedroom, used the bath tub in the master bedroom and used the master bedroom closet to dress. She stated that she never noticed any difference in temperatures throughout the Home. She said there was a commercial grade electric heater with its own thermostat that they used to heat the bedroom.

The electric fireplace was used for ambiance, not heat. Mrs Plourde testified that the water pipes had never frozen in the master bedroom during the time that she had lived in the Home. [ 119 ] Mrs Plourde testified that the electrical fireplace was an appliance that had been purchased from Home Depot and was not attached to the Home. If they used the fireplace, they plugged it in and unplugged it when it was not in use. She did not know if the electric fireplace was compliant with building code requirements. [ 120 ] Mrs Plourde said there were no issues with the electricity in the Home.

The projector TV in the living room worked well. They often watched movies on it with their grandchildren. [ 121 ] Mrs Plourde said there was access to the crawl space under the fish tank. A board had been placed over the access point that had not been nailed down. She recalled Plourde going into the crawl space to place some mouse traps. [ 122 ] Mrs Plourde did not recall any changes to the ventilation or duct work during the renovation. She also recalls no concerns expressed by ATCO Gas or any problems with the gas fitters.

She was not aware of any building code or ATCO Gas issues with the hot tub. [ 123 ] The Plourdes decided to retire, sell the Home and move to British Columbia. On July 31, 2008, the Plourdes listed the Home for sale. They entered into a Residential Listing Contract (the “Listing Agreement”) with Alliance Real Estate Calgary Ltd. Ron Carson (“Carson”) was the Plourde’s realtor and the “Sellers’ Representative” for the Purchase Contract. [ 124 ] The Feature Sheet prepared for advertising the Home for sale described the Home as having been “totally renovated from top to bottom”.

The Feature Sheet further stated that the Home had a concrete foundation, listed the heating source as “IF-A (single forced air furnace)” and the heating fuel as natural fuel. No other foundation type, heating source, or heating fuel was identified in the Listing Sheet. [ 125 ] When signing the Listing Agreement, clause 11.4 (“Clause 11.4”) was brought to the Plourdes’ attention.

Clause 11. 4 states: Sellers are required by common law to disclose defects that are hidden, not visible or discoverable through a reasonable inspection of the Property, and that render the Property dangerous or potentially dangerous to the occupants or unfit for habitation. Sellers may also be required to disclose government and local authority notices, lack of development permits and hidden defects that would involve great expense to remedy. [ 126 ] Clause 11.4 then requires the vendors to answer yes or no to the following questions: “Are you aware of any lack of permits for

any development on the property”; and “Are you aware of any hidden defect that would involve great expense to remedy?” [ 127 ] Mrs Plourde testified that when answering these questions she and her husband told Carson that Sheldon had been responsible for getting the permits for the renovations but that they did not know where the permits were and that Sheldon was difficult to contact. Mrs Plourde said that Carson told her and her husband to just tick off the box that said “No”. [ 128 ] Mrs. Plourde testified that she never met nor spoke to McKenzie or anyone from Pro-Spec.

Robert Plourde [ 129 ] At the time of the purchase of the Home, Plourde was employed as a site superintendent for Pointe of View Condominiums. He was the construction supervisor for the construction of new condominium projects. Plourde also has experience as a finishing carpenter for cabinetry and flooring renovations and dry walling. He had some experience with electrical work from working with his father as a teenager.

He has a journeyman ticket for framing. [ 130 ] After the sale of the home, in approximately 2010, Plourde started the business of general home renovations through his own renovation company, R & J Renos. [ 131 ] Plourde testified that while he is familiar with the requirements for building permits, in his role as construction supervisor he never personally obtained inspection or building permits. The permits were given to him by others, which he then placed in a drawer in his office.

Plourde said he had posted the permits on site a few times but after a couple of permits went missing, he used his desk to store them. [ 132 ] After purchasing the Home in 2003, the Plourdes decided to renovate the Home before moving into it. It was an old home. [ 133 ] To complete the renovations, Plourde hired Sheldon to be the contractor for the Home’s renovation. He had known Sheldon, who had worked as a plumber on Pointe of View construction sites, for approximately four years. There was no written contract for services entered into between he and Sheldon; it was a handshake transaction.

No drawings or schematics were created for the proposed renovations. As later learned, the renovations were completed without obtaining the required inspections, approvals or building permits. [ 134 ] While the renovations were underway, the Plourdes spent little time at the Home, residing elsewhere. Plourde said he was very busy at work so had little to do with the renovations and he spent little time supervising Sheldon. Plourde testified that he only attended at the Home four or five times.

Sheldon was responsible for acting as the general contractor, hiring the trades, although Plourde oversaw Sheldon. [ 135 ] Sheldon completed all the plumbing work. He installed the bathroom in the master bedroom and the bathroom in the loft area. [ 136 ] Sheldon hired an electrician named “Greg” to complete the electrical work. Greg had installed the electrical space heaters in the crawl space to keep the floor warm and ensure the water lines to the Home did not freeze.

Plourde did not know if Greg was a certified electrician. [ 137 ] Sheldon hired an individual named “Rob”, who Plourde understood was a journeyman carpenter, to assist him with installing the new windows – one in the living room and one in the master bedroom. Plourde did not know anything about the installation of the windows.

Plourde said that the windows were vinyl windows with metal flanging that reflected water. [ 138 ] Plourde said that no duct work had been done during the renovation, other than an air return had been moved to a corner in the front half of the basement. [ 139 ] Plourde admitted to constructing a small part of the deck where the hot tub was, installing the projector and screen, including running an extension cord to power it and doing a small amount of the drywall finishing work and cabinetry in the Home.

Plourde also admitted to building the hot tub, which was installed in the deck by himself, Sheldon, Greg and Rob. Greg completed the electrical wiring for the hot tub. [ 140 ] Plourde admitted that he knew that permits would have to be obtained for the renovations. Plourde said that he had told Sheldon that permits would be needed for the plumbing, electrical and any framing work. Sheldon was responsible for obtaining the requisite permits. Sheldon had shown Plourde a drawing of what he proposed to submit in connection with obtaining permits.

Plourde said he asked Sheldon if he had obtained the permits and that Sheldon had told him that he had. Plourde said he had no reason to doubt Sheldon about this as Sheldon was a friend; he trusted him and had worked with Sheldon on other job sites. [ 141 ] When questioned as to whether he had seen any building inspectors or permits, he admitted he had not. Plourde also admitted that despite having read Clause 11.4 of the Listing Agreement, he never followed up with Sheldon or the City to see if the permits had been obtained. [ 142 ] Plourde paid cash for the renovations.

Plourde believes he paid approximately $13,000 to Sheldon for the labour and permit costs. Plourde purchased all of the building materials used in the renovations. [ 143 ] Apparently Sheldon passed away a couple of years before the Home was sold. [ 144 ] After the renovations were completed, the Plourdes moved into the Home where they lived for five years. They slept in the master bedroom, which Plourde said was always a comfortable temperature, with him always only wearing a t-shirt in the Home. There were no issues with the plumbing in the master bedroom.

The heat source for the master bedroom was the wall mounted electric heater. The electric fireplace was used for ambiance, not heat. Plourde said that the electric fireplace was plugged in when used. Plourde said that the temperature in the master bedroom was no different than the temperature in other parts of the Home.

[ 145 ] The projector TV was powered by plugging its cord into an outlet in the loft. To do this, Plourde had run the extension cord from the projector through the ceiling in the loft under the baseboards and carpets to an electrical outlet but did not think this was dangerous or unusual. [ 146 ] Plourde said that he had never seen any extension cords behind the drywall. [ 147 ] Plourde testified that he did not know what the foundation was under the garage/master bedroom.

He was aware that there was no crawlspace or basement underneath the concrete slab. [ 148 ] Plourde said there was access to the crawl space through a hole that had been cut into the floor under the left side of the fish tank. A piece of flooring laminate had been placed on the plywood over the hole. Plourde said he had gone into the crawl space many times to set some mouse traps. He had also installed foam insulation in the crawl space to block access points by rodents.

Plourde said that the spray foam in the crawl space was blocking the entrance, which made it visually impossible to see inside the crawl space from the basement and made access a tight squeeze. [ 149 ] Plourde had seen the debris in the crawl space but did not think much about it. Plourde had never noticed any missing ductwork in the crawl space. [ 150 ] Plourde was not aware of any issues with the natural gas supply to the Home.

ATCO Gas had never advised him of any concerns. [ 151 ] With respect to Clause 11.4, Plourde, like his wife, said that although he had not seen any permits, he and his wife checked off the answer box “No” to the question “Are you aware of any lack of permits for any development work on the property?” At the time, Plourde said that he was concerned about this lack of permits. Plourde said he told Carson that Sheldon was to have obtained the permits but he had not seen any of the permits.

Carson told the Plourdes to just check off the answer “no” to the question, so they did. [ 152 ] At the time of signing the Listing Agreement, Plourde said he answered “no” by checking off the box to the questions, “Are you aware of any such defects in the property” and, “Are you aware of any hidden defects that would involve great expense to remedy” because that was the case; he had no knowledge. Plourde took no steps to follow up was made after signing the Listing Agreement to ascertain the existence of permits for the renovation. [ 153 ] The Feature Sheet for the Home was prepared by Carson.

Plourde saw no inaccuracies in the Feature Sheet. [ 154 ] With respect to Paragraph 11.4, Plourde like his wife, said that although he had not seen any permits, he and his wife checked off the answer box “No” to the question “Are you aware of any lack of permits for any development work on the property?” because Carson told them to do so. No follow up was made to ascertain the existence of permits for the renovation. [ 155 ] Plourde said that he had talked to someone on the day of the inspection.

He said that there were a couple of areas that he did not think the home inspector would see: a water line behind the electric fireplace and how to access the crawl space. Plourde said he returned to the Home to show these areas to the home inspector. His recollection was that MacKenzie was busy at the time in the basement, so he showed someone, he does not know who, how the electric fireplace came out of the wall because there was a water line behind it and the access to the crawl space under the fish pond. Tate MacKenzie [ 156 ] MacKenzie is a journeyman carpenter.

He also had experience in building new residential homes in Calgary in the early 1990s. [ 157 ] MacKenzie has been a registered home inspector for 20 years. MacKenzie has inspected over 9000 residential homes during his career as a home inspector. In 2008, MacKenzie would have completed approximately 6000 home inspections. [ 158 ] MacKenzie is a member of the Canadian Association of Home and Property Inspectors (the “CAHPI”) and the American Society of Home Inspectors (the “ASHI”). Both the CAHPI and ASHI have standards of practice and a code of ethics for its members.

The CAHPI did not have standards of practice in effect in 2008 so home inspectors in Alberta used the ASHI standards of practice and its code of ethics. MacKenzie believed that the current CAHPI standards of practice were modelled very closely after the ASHI standards of practice. [ 159 ] MacKenzie is the owner and operator of Pro-Spec. He is Pro-Spec’s president and its two directors are he and his wife. Pro- Spec has three employees, of which he and another person carry out home inspections. [ 160 ] Pro-Spec has used the Home Inspection Agreement and Report from shortly after its inception.

The form and information in the document came from information MacKenzie had sourced from other home inspectors and conferences. [ 161 ] MacKenzie testified that the purpose of a home inspection is to educate prospective purchasers about the condition of the home they are considering purchasing and to use that information to help them decide if they wish to purchase the home. The education is about problems a purchaser might encounter with the home but does not assist in what types of repairs might be required.

The home inspector will attempt to look at about 150 items that are visible in a home and state their condition. The home inspection is not intended to identify building code violations. [ 162 ] McNaughton referred Lewis to MacKenzie. McNaughton had referred other clients to Pro-Spec. MacKenzie understood that McNaughton or his wife contacted Pro-Spec offices to arrange for Pro-Spec to inspect the Home. MMacKenzie understood that this was to be a pre-purchase inspection. He also understood that Lewis was relying on his inspection and advice as part of his decision to purchase the Home.

[ 163 ] At the start of the inspection, MacKenzie said he reviewed with Lewis and his group the scope of the inspection, which is limited to a visual inspection. MacKenzie told Lewis that this would not be a building code compliance inspection. MacKenzie agreed that he did not suggest to Lewis that he have a building code compliance inspection, noting that it was a 100 year old Home.

McKenzie then went on to complete about a two and one-half hour inspection of the Home with Lewis. [ 164 ] When he carries out a home inspection, MacKenzie typically follows the items listed in the Home Inspection Agreement and Report as a guide for him in carrying out a home inspection. At the end of the inspection, MacKenzie reviews report with the client. [ 165 ] In this case, MacKenzie recalls first walking around the exterior of the Home where he observed eaves trough damage and multiple layers of shingles on the roof.

MacKenzie said he told Lewis that, although the roof was functional, the roof appeared to have more than one level of shingles, with new shingles having been placed over old shingles. Even with that deficiency, MacKenzie believed that it was still a functional roof with at least a 15 year lifespan left. On the whole, the exterior of the Home looked in good condition to him. MacKenzie said he did not notice anything untoward about the flashing. He recalled that the windows were vinyl framed windows, aluminum slider windows or wood windows. There were no flashings visible.

He could not see behind the siding or trim to determine the existence of flashings or whether there had been any water damage. MacKenzie observed sufficient caulking on the exterior of the Home when he inspected it. MacKenzie said that caulking needs to be redone every three to five years. [ 166 ] In the basement, MacKenzie noted an electrical inspection permit that stated that the Home had been renovated 25 years ago. He could tell that this was an old house, with an electrical panel from the 1980s. Because Lewis and his father were electricians, MacKenzie had them look at the electrical panel with him.

MacKenzie observed no visible major issues with the electrical panel or the wiring in the basement, which was the only place that there was visible older electrical wiring. MacKenzie checked some of the electrical outlets and they were in working condition. MacKenzie recalled a discussion with Lewis’s father that repairs required for the electrical wiring in the basement was a minor issue.

MacKenzie said that the visible wiring in the basement would not have led him to suspect that extension cords would be used as electrical wiring behind drywall in some areas of the Home. [ 167 ] MacKenzie said that the plumbing appeared older but in fair condition. There was a mix of different types of pipes. Given the age of the Home, a mixture of plumbing pipes was not unexpected. MacKenzie did not recall seeing a green garden hose coming into the Home through a window in the basement.

If it was there, MacKenzie said it was not proper and he would have noted it as an issue if he had seen the hose. [ 168 ] It was not evident to MacKenzie from his visual inspection that there was anything wrong with the floor joists. He noted that this was a 100 year old structure that had supported its fixtures for years. [ 169 ] There was central heating in the Home but he could not assess the adequacy of the heat in the Home. MacKenzie said he turned on the thermostat and the Home warmed up up quickly. He noted that according to

section 9.2 of the CAHPI 2012 National Standards of Practice (the “CAHPI 2012 Standards”), a home inspector is not required to determine system adequacy or distribution balance of heating systems. A similar provision was in the ASHI Standards of Practice and Code of Ethics, effective October 15, 2006, (the “ASHI Standards of Practice”), which was used by Canadian home inspectors in 2008. [ 170 ] MacKenzie said that there was no way to access the rear crawl space from the basement as would be expected. The ducts and pipes were going somewhere but he could not see where.

It was not evident that the ducts did not go to the rear crawl space. He was not told there was an access point to the crawl space under the fish tank. MacKenzie never did locate an access point to the crawl space. [ 171 ] In the panic room, MacKenzie observed a duct with duct tape on the end.

He did not see two missing elbows to some of the ducting. [ 172 ] With respect to the hot tub, MacKenzie observed that the gas meter was still inside the Home and there was a shut off valve to the gas in the basement. [ 173 ] With respect to the master bedroom, MacKenzie pointed to page six of the Home Inspection Agreement and Report, on which he noted that the Home’s foundation is a continuous foundation and a slab on grade and that there was no access to the rear crawlspace. He agreed that it was apparent to him that the master bedroom had been constructed on a concrete slab on grade.

It was also very apparent that the addition with the master bedroom did not have a basement and there was no access to the crawl space under it. He also agreed that by definition “a slab on grade” would not include a crawl space and would not speak to the existence of a frost wall. MacKenzie said he attempted to inspect the foundation but could not see much of it. MacKenzie noted that many additions are built on concrete slabs on grade. He conceded that there can be heating issues with this type of foundation.

However, while he had assumed that there would be a frost wall, he conceded that he could not know that for certain on a visual inspection. [ 174 ] MacKenzie did note during his inspection that the Home was a comfortable temperature and he did not notice any significant difference in temperature in the master bedroom from the other areas of the Home. MacKenzie had observed the wall mounted electric heater and the electric fireplace. However, this supplementary heat source did not indicate to him that there was no other heat source to the room. The wall mounted electric heater was working.

He did not test the fireplace as it was an appliance. He did acknowledge that he had not observed forced air registers in the master bedroom.

MacKenzie agreed that he made no recommendation that Lewis should look into the slab on grade foundation with the sellers or or have a code compliance inspection on the foundation. [ 175 ] The extension cord that was run behind baseboards and under the carpet in the loft area running to the projector was not evident to MacKenzie during his inspection. [ 176 ] MacKenzie agreed that replacing a foundation is a critical structural issue and not having the right type of foundation would be a significant issue for a homeowner.

MacKenzie was also pointed to page eight of his report titled “Supplementary Heating” “Rooms above unheated spaces/garages/crawl spaces” under which he had made no comments. [ 177 ] MacKenzie was referred to to

section 2.2(

c) of the ASHI Standards, which stated that a home inspector is obliged to “report those systems and components inspected that, in the professional judgment of the home inspector, are not functioning properly,

significantly deficient, unsafe or are near the end of their service life”. MacKenzie agreed that this would include the use of the wrong type of foundation for a structure. However, in this case, MacKenzie said that he had not reported the use of a slab on grade foundation for the master bedroom addition as a major deficiency because he had assumed the master bedroom would have had a frost wall.

MacKenzie testified that while he had seen many slab on grade constructions, this was the first time ever that he seen or heard of one without a frost wall. [ 178 ] At the time of his inspection, MacKenzie had not known that the master bedroom had been converted from a garage. He said he would never have guessed that the master bedroom had once been a single, unheated garage. He pointed to the fact that there was no evidence of a driveway in the back of the Home.

MacKenzie said he had also assumed that the master bedroom had been constructed as an addition to the Home in the 1980s because of the City permit or inspection certificate he had seen in the basement. Consistent with his evidence, on page 14 of the Home Inspection Agreement and Report, MacKenzie had noted his understanding that the Home had been “substantially upgraded/renovated 25 years ago”.

MacKenzie said further inspection would have been recommended to Lewis had he known that the master bedroom addition had been built as a garage originally. [ 179 ] MacKenzie also noted that there are many different types of foundations. According to

section 4.2 of the CAHPI 2012 Standards, a home inspector is not required “to offer an opinion as to the adequacy of any structural system or component”. This standard was the similar to

section 3.2(

b) of the ASHI Standards that governed Canadian home inspectors in 2008. MacKenzie said he had told Lewis that the master bedroom would be the coldest room in the Home. [ 180 ] In the read-ins, MacKenzie said that he and Lewis had met with Plourde at the end of the inspection. Plourde told the two men that he had insulated the crawl space to R40 and that it was real tight in the crawl space so he had closed it up. MacKenzie said he told Lewis he would have to take Plourde’s word because he was not going to be able to see inside the crawl space.

Before their discussion with Plourde, MacKenzie said he had told Lewis that the inability to see inside the crawl space was “a bit of a problem”. MacKenzie said he had recommended to Lewis that he should gain access to the crawl space to take a look at what was in there. At trial, MacKenzie could not recall these events. MacKenzie did recall speaking with Mrs Plourde about either the electric fireplace or the electric wall heater, but he could not recall which one.

He said that Mrs Plourde had said something to the effect that “it took the edge off on the cold days because there were lots windows”. [ 181 ] MacKenzie testified that he placed the Home in the top range of “average condition” because it was in that kind of condition for a 97 year old home. He had not observed any visually apparent major defects or glaring problems. [ 182 ] MacKenzie agreed that he had given Lewis the Home Inspection Agreement and Report in the basement, where he asked Lewis to review page one and then sign it.

At that time, MacKenzie did not review the Home Inspection Agreement and Report with Lewis or point him to the limitations on the scope of the inspection set out on pages one and fourteen. [ 183 ] At the end of the inspection, MacKenzie said that he reviewed each and every page of the Home Inspection Agreement and Report with Lewis. He recalled going over the document with Lewis in the kitchen of the Home. MacKenzie said there are no initials on each page of the document because he never asked Lewis to initial the pages. He did advise Lewis, as did the document, to call him if there were any issues.

Lewis never contacted MacKenzie about the defects he discovered with the Home until this lawsuit. Positions of the Parties [ 184 ] Lewis argues that there are latent and patent defects in the Home that rendered the Home either dangerous or capable of rendering the Home unfit for habitation. With respect to the latent defects, Lewis argues that he relied on the warranty in the Purchase Contract that the Plourdes were not aware of any defects that were not visible that would render the Home dangerous or unfit for habitation.

Lewis argues that the Plourdes’ failure to obtain permits was a latent defect that gave rise to the presence of the other latent defects in the Home. Lewis further argues that the Plourdes knew or were reckless about the latent defects and negligently or fraudulently mispresented the existence of the latent defects prior to execution of the Purchase Contract. Lewis argues that he relied on the representations or lack of representations made by the Plourdes when he entered into the Purchase Contract. Lewis argues that because of the latent defects in the Home, the principle of caveat emptor does not apply to him.

Lewis also seeks punitive damages against the Plourdes for their concealment activities, namely the building of the deck that concealed the Home’s foundation. [ 185 ] Lewis argues that with respect to the patent defects, he relied on the home inspector MacKenzie to advise him of those defects so that he could make an informed decision as to whether to purchase the Home.

Lewis argues that MacKenzie, in failing to observe the patents defects and communicate their existence to Lewis in the Home Inspection Agreement and Report, was negligent and in breach of his contractual obligations and responsibilities under the Home Inspection Agreement and Report. Lewis argues that the clause in the Home Inspection Agreement and Report that excludes liability for Lewis’s claim is not applicable in the circumstances here.

Further, Lewis contends that, notwithstanding that the Home Inspection Agreement and Report was made between Pro-Spec and Lewis, MacKenzie, as the sole employee and one of two directors (the other director is MacKenzie’s wife), should be held personally liable for the damages suffered by Lewis. [ 186 ] The Plourdes contend that any defects in the Home were patent defects that could have been discovered upon reasonable inspection or upon making reasonable inquiries and therefore the principle of caveat emptor applies to bar Lewis’s claim for damages.

The Plourdes dispute that they were aware of any latent defects in the Home. The Plourdes also argue that clauses 6.1(

h) and 6.4 of the Purchase Contract apply and Lewis is precluded from seeking any damages or remedies, arising out of his purchase of the Home, against them. The Plourdes deny any acts of concealment on their part. [ 187 ] The Plourdes further argue that Lewis hired MacKenzie and Pro-Spec to inspect the Home and Lewis relied on MacKenzie and Pro-Spec and not the Plourdes to identify for him any defects in the Home. The Plourdes argue that the inspection of the Home by MacKenzie and Pro-Spec therefore relieves them of any duty of care they owed to Lewis.

Further, The Plourdes say that MacKenzie’s failure to identify the requirement for a crawl space under the master bedroom also breaks the chain of causation that might flow from negligence or breach of contract on the part of the Plourdes. The Plourdes contend that the fault lies with MacKenzie and Pro-Spec for

MacKenzie’s failure to advise Lewis that there was an obvious defect in the foundation under the master bedroom addition. If there isany liability for damages, the Plourdes contend that MacKenzie and Pro-Spec are the parties responsible for those damages. [188] MacKenzie and Pro-Spec first point of argument is that there is no basis for an action against MacKenzie personally as Lewiscontracted with Pro-Spec. [189] MacKenzie and Pro-Spec deny that they breached their contractual obligations to Lewis.

MacKenzie and Pro-Spec contend thatMacKenzie inspected the Home within the limitations of the contractually agreed to inspection, namely that it was a visual inspectiononly that would not identify compliance with building codes or offer any opinion as to the adequacy of any heating or structural system orcomponent. MacKenzie and Pro-Spec point out that the purpose of the home inspection was not to assist Lewis in deciding whether topurchase the Home but rather to decide whether to waive the Home Inspection Condition if defects identified in the Home would exceedone percent of the purchase price to remedy.

Lewis was made aware that there were defects in the Home that would exceed $3700 (beingone per cent of the purchase price) for the Home but he waived the Home Inspection Condition anyway. MacKenzie and Pro-Speccontend that the Home Inspection Agreement and Report contained a limitation on liability that is effective as against Lewis. [190] MacKenzie and Pro-Spec deny that MacKenzie was negligent in carrying out his duties as a home inspector in respect of hisinspection of the Home. They point out there was no expert evidence provided as to the standard of care required of a home inspector inthese circumstances.

Specifically, there is no evidence that a home inspector acting reasonably would have informed the purchaser toinvestigate further a Home’s foundation, after noting that one of the rooms in a home was on a foundation that was a concrete slab ongrade and there was a wall heater and an absence of floor registers in the room, and with no knowledge that the room was an additionthat had been converted from a garage. MacKenzie and Pro-Spec submit that this important missing information affected the informationgiven by MacKenzie to Lewis in respect of the slab on grade foundation.

This was not a defect that could have been detected on a visualinspection. MacKenzie and Pro-Spec point to the fact that no one knew there were no frost walls under the slab on grade foundation.Lewis himself had retained numerous people to investigate the heating issue in the master bedroom, but it was not until Forster’sinvestigation (who made four inspections of the Home and removed some of the deck planking) that it was discovered that there were nofrost walls under the master bedroom addition.

Analysis The Application of Caveat Emptor [191] Deficiencies subsequently discovered in previously owned real property are generally not actionable by the purchaser. This isbecause the common law doctrine of caveat emptor or “let the buyer beware” governs the purchase and sale of real property. The resultbeing that there is no implied warranty that the real property is either sold in any particular condition or is fit for any purpose. Thismeans that a purchaser must provide for its own protection through either express warranty in the purchase and sale contract or byindependent inspection of the real property.

Should the purchaser fail to require an express warranty or inspect, he will be barredrecovery of a clai

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