Heinrichs v Woo, 2017 ABQB 492

Court of Queen’s Bench of Alberta Citation: Heinrichs v Woo, 2017 ABQB 492 Date: 20170804 Docket: 1303 17407 Registry: Edmonton Between: Allison Heinrichs and Sean Mlinaritsch Plaintiffs - and - Kim Lanh Woo and Robert Gordon Woo Defendants Corrected judgment: A corrected judgment was issued on August 9, 2017; the corrections have been made to the text and the correction is appended to this judgment. _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice B.R.

Burrows _______________________________________________________ [ 1 ] Allison Heinrichs and Sean Mlinaritsch (“the Purchasers”) purchased a house in Edmonton from Kim Lanh Woo and Robert Gordon Woo (“the Vendors”) in December 2011. The Purchasers allege that there were significant latent defects in the house when they purchased it. They discovered the defects in 2012 and 2013. They allege that the Vendors were aware of the latent defects at the time of the purchase but did not disclose them.

Further the Purchasers allege that the Vendors took steps to conceal the defects so that they would not be discovered. [ 2 ] The Purchasers allege fraudulent misrepresentation, or alternatively, negligent misrepresentation, or alternatively, breach of a contractual warranty by the Vendors. [ 3 ] In their Statement of Claim, the Purchasers claimed damages for the cost of remedying the defects and for emotional distress totalling $250,000, punitive damages of $100,000, costs “on a solicitor and his own client basis,” and interest.

In their counsel’s submissions at trial, the total amount of the Purchasers’ claim was stated to be $209,319.91 plus interest and costs. [ 4 ] The Vendors deny that they had knowledge of any latent defects in the house. They say that some of the defects were patent not latent – that the Purchasers knew of those defects from the report of the home inspector they retained prior to the sale closing. The Vendors deny fraudulent or negligent misrepresentation. They say that much of the cost incurred and claimed by the Purchasers was not for the purpose of remedying the defects or was otherwise unnecessary.

They seek enhanced costs because of what they say are unfounded allegations of fraud. [ 5 ] For the following reasons I have concluded that the Purchasers’ claim is without merit. I dismiss it.

Patent Defects, Latent Defects and Caveat Emptor [ 6 ] As mentioned the Purchasers allege that the defects for which they seek damages were latent, were known to the Vendors at the time of purchase, and were not disclosed to the Purchasers. Counsel were agreed as to the law applicable in this case. I am not called upon to resolve any issue of law. [ 7 ] The undisputed applicable law distinguishes between “patent” and “latent” defects. A patent defect is one which is discoverable by inspection or ordinary vigilance. A latent defect is one that is not discoverable by inspection or ordinary vigilance.

A purchaser has no claim in respect of patent defects – the principal, caveat emptor, buyer beware, applies. In some circumstances a purchaser may have a claim in respect of latent defects and in those circumstances caveat emptor does not apply. [ 8 ] Both Counsel referred me to the discussion and

summary of the law relating to caveat emptor and its exceptions set out by Campbell, J. in Lewis v. Plourde, 2017 ABQB 235 . Campbell J. begins: (para. 24) Deficiencies subsequently discovered in previously owned real property are generally not actionable by the purchaser. This is because the common law doctrine of caveat emptor or “let the buyer beware” governs the purchase and sale of real property. The result being that there is no implied warranty that the real property is either sold in a particular condition or is fit for any purpose.

This means that a purchaser must provide for its own protection through either express warranty in the purchase and sale contract or by independent inspection of the real property. Should the purchaser fail to require an express warranty or inspect, he will be barred recovery of a claim for defects discovered after the closing of the transaction. [ 9 ] In this case the only relevant warranty made by the Vendors to the Purchasers in their contract was: 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. [ 10 ] This warranty, which relates to latent defects, is an exception to caveat emptor. At law there are other exceptions to caveat emptor . Here is a list of the exceptions which I have derived from the discussion of the law in McCluskie v. Reynolds (1999) 19 RPR (3d) 219 at paras. 53 and 54 .

Caveat emptor will not operate to deny the plaintiff’s recovery in the following situations: 1. where the vendor breaches his contractual duty to disclose a latent defect which he knows of and which renders the premises dangerous or unfit for habitation; 2. where the vendor fraudulently misrepresents or conceals a defect; 3. where the vendor is reckless as to the truth or falsity of his statements relating to the fitness of the house for habitation; 4. where the vendor does not disclose a defect and, though he is not subjectively aware of it, he is reckless as to whether or not it exists. [ 11 ] In Lewis Campbell J. summarized the applicable principles at para. 208: In

summary, the case law provides that for a vendor to be held liable for failing to disclose a latent defect in improvements made to the real property purchased, the purchaser must prove that: 1. there is a defect; 2. the defect is a latent defect because it could not have been identified by an ordinary purchaser’s reasonable inspection; 3. the vendor knew of the latent defect or concealed the latent defect or was reckless as to knowing of the existence of the latent defect; 4. the latent defect renders the property dangerous or potentially dangerous or unfit for inhabitation; 5. the purchaser relied on the misrepresentation or concealment when purchasing the property.

The Plaintiff has the onus of proving the vendor’s degree of knowledge or recklessness of a latent defect. History of Ownership of the House [ 12 ] The house which is the subject of this action was built in 1984. It has had five owners. Its first owners held title for 6 years, from September 1984 until January 1990. Its second owners held title for over 8 years, from January 1990 until July 1998. Its third owners held title for 6½ years, from July 1998 until February 2005. The Vendors, the fourth owners, purchased the house in February 2005 and lived in it for 7¾ years from February 2005 until December 2011.

On December 13, 2011, the Purchasers became the fifth owners of the house when title was registered in their names. [ 13 ] The evidence indicated that in total seven families have lived in the house. The second owners rented it to a series of three families. It has been occupied by four families who owned it and three families who rented it. Purchase Transaction, Inspection [ 14 ] The Purchasers first became interested in purchasing the Vendors’ house in October 2011. They inspected it twice, once with their parents, before making an offer to purchase it through their real estate agent.

After some counter-offering, they entered a real estate

purchase contract with the Vendors on November 1, 2011. The price was $438,500. The contract was subject to conditions, including the Purchasers’ approval of a property inspection by November 8, 2011. [ 15 ] The Purchasers never had any direct contact, conversation or communication with the Vendors or the Vendors’ agent. The Vendors made no written or verbal representations to the Purchasers or the Purchasers’ agent.

All the dealings between the Vendors and the Purchasers were conducted by their respective agents. [ 16 ] On November 2, 2011, the Purchasers retained Chris Bottriell of Alberta Property Inspection Ltd. to inspect the house. Mr. Bottriell conducted the inspection with the Purchasers and their real estate agent in attendance. He provided a written report which identified several deficiencies. [ 17 ] Mr. Bottriell did not testify at this trial. [ 18 ] On November 5, 2011 the Purchasers sought a $1000 reduction in the purchase price as result of some of the deficiencies identified by Mr. Bottriell.

Through their agent they submitted a form of “Amendment to Purchase Contract” to the Vendors. It provided: The following amendments shall be made to the above Purchase Contract: 1. Amend (3) flat areas of roof need immediate repair. Signs of (3) previous leaks in attic of garage. Seller agrees to reduce the sale price by $1000 to enable the buyer to fix/repair these 3 roof areas. [ 19 ] On November 7, the Vendors agreed to a price reduction of $250 and the Purchasers accepted. [ 20 ] The Purchasers removed the conditions on November 8, 2011 and the sale closed in mid-December, 2011.

Flat Roof Areas [ 21 ] The three flat roof areas identified as major deficiencies by Mr. Bottriell were all in the area of a second floor bedroom which was located partially over the attached garage which was at the front of the house and a bathroom and hallway which were behind the garage. Two of the flat roof areas were ledges outside of the two windows of this bedroom, one window faced west and one faced south. The west window rose from the slope of the west sloping roof and the south window rose from the south sloping roof.

There is no good photograph or drawing in evidence which shows the exact layout or dimensions of the ledges but from the available evidence, I understand them to have extended about two feet out from, and to have been the length of, their respective windows. [ 22 ] The third flat roof area was at the highest portion of the roof over the garage next to but higher than, and south of, the west bedroom window. It appears to have been about five foot by seven foot, but that is my own estimate made from the photographs and diagrams in evidence.

It was certainly larger than either of the window ledge flat roof areas. [ 23 ] In the Inspector’s

Summary and Chart of Deficiencies which Mr. Bottriell provided as part of his inspection report, the flat roof deficiencies were described as follows: Flat Roof – Major Deficiency – Replace flat roof

section asap. Windows – Major Deficiency – Replace flat roof sections by both windows on south and west – (substandard) – Stains and leakage visible in attic. [ 24 ] The report defined a “major deficiency” as: A visual deficiency that has a severe and immediate affect on the habitability of the building and likely costs more than 1% of the property value to repair. [ 25 ] The Chart also had this note: Window – suspect wood damage under metal capping.

In respect of this point, the Chart indicated that more information was required. [ 26 ] In February 2012, about three months after the purchase, the Purchasers retained a roofing firm, Acron Roofing Systems Inc., in relation to the flat roof issues noted by Mr. Bottriell. The evidence indicates that Acron removed and replaced the roof materials in the third, larger, flat roof area noted above, and at most applied caulking to the metal flashing of the two bedroom windows. The two window ledge flat roof sections were not replaced as recommended by Mr.

Bottriell. [ 27 ] No one from Acron Roofing Systems Inc. testified at this trial. Deficiencies [ 28 ] The various deficiencies that have inspired this action can, for convenience of discussion, be organized into four groups according to their apparent causes: 1. Leak from Bathtub Plumbing, 2. Foyer Water Damage, 3. Bedroom Water Damage,

4. Kitchen Damage. The Foyer Water Damage and the Bedroom Water Damage groups are made up of damage to various elements of the foyer and bedroom which other organizations of the defects, such as in the Statement of Claim and the Purchasers’ counsel’s trial submissions, have listed separately. I accept that each damaged element of the foyer and bedroom constitutes an individual defect and do not intend by my organization to suggest otherwise.

In my view, however, defects with a common cause can be considered together for purposes of determining whether the Vendors have been shown to have liability in respect of them. [ 29 ] There were other problems with the house mentioned in the evidence. However they were not mentioned in the Statement of Claim and no repair costs were claimed in respect of them. It is not therefore necessary for me to discuss them except in the context of one argument made by the Purchasers as will appear.

First Defect – Leak from Bathtub Plumbing [ 30 ] The first of four defects in the house for which the Purchasers seek damages in this action became apparent in May 2012 about five months after they took possession of the house. A leak from the bathtub plumbing in the main bathroom of the house damaged the ceiling of the dining room immediately below. [ 31 ] The evidence includes a letter dated June 12, 2012, from Brian Sochr of Unified Mechanical Services Ltd., the firm that repaired the leak. It says: On May 31, 2012 the home owners at [address of the house] noticed that their ceiling in the dining room was wet.

After the ceiling was opened up we were able to gain access to the plumbing under the tub. We found that one of the fittings had large calcium growth on it and had separated from the pipe. [ 32 ] Mr. Sochr did not testify at this trial. [ 33 ] The Purchasers claimed for this damage under their household insurance. The insurer paid them an agreed amount, $2500, in respect of the damage to the dining room ceiling.

As the Purchasers were planning renovations which would include the replacement of the dining room ceiling (to facilitate the installation of pot lights in the dining room) they did not have the ceiling repaired at the time. The Purchasers did not claim for the cost of repairing the bathtub plumbing in this action, if there was any cost. Ms. Heinrichs testified that the repair was done by a friend of Mr. Mlinaritsch. [ 34 ] Ms.

Heinrichs testified that she was told by someone who inspected the damage on behalf of the insurer that the leak had been caused by the improper installation of the connection for the water to the shower in the bathtub. She also testified that she saw what had caused the leak. She saw a threaded connector with Teflon plumbing tape on it, and when the water was turned on, water poured out around the plumbing tape. She testified that she instructed a plumber to solder the pipes. Since then there have been no further leaks. [ 35 ] The hearsay evidence Ms.

Heinrichs provided as to the cause of the leak appears to me to be inconsistent with the cause described in the letter written by Mr. Sochr, the plumber who did the repair, which, though it is also hearsay since Mr. Sochr did not testify, I find more reliable. Ms. Heinrichs was testifying as to what some unidentified person told her five years before she testified. Mr. Sochr’s letter was written within a month of the observation recorded in it. [ 36 ] Ms. Heinrichs’ own observation of the cause of the leak is inconsistent with observation recorded in Mr. Sochr’s letter.

The plumber indicates that the cause of the leak was a buildup of calcium which had caused the fitting to separate from the pipe. It does not suggest improper installation of the fitting. There is no evidence as to whether or not a calcium buildup can occur even though a plumbing fitting is properly installed. There is no evidence as to how long it would take a calcium build up to affect a plumbing fitting.

There is no evidence as to whether the connection was initially soldered or as to whether proper installation requires that it be soldered. [ 37 ] There is no evidence that the installation, even if it was done improperly, was done during the time the Vendors owned the house or that the Vendors knew it was done improperly. Mr. Woo testified that while he owned the house, he installed tiling around the bathtub involved in the leak, but he did not do anything to the bathtub itself. Conclusion as to First Defect [ 38 ] The bathtub leak was a latent defect.

The Purchasers have not proved on a balance of probabilities that the Vendors had any knowledge of its existence. Neither have they proved that the Vendors concealed it, that they were reckless as to whether or not it existed, or that they made any representation about it. Since it has not been proved that they had any knowledge of it, no representation can be inferred from their silence.

The Vendors did not breach their contractual warranty that they were not aware of any defects that were not visible in respect of the bathtub plumbing. [ 39 ] The Purchasers have not proved liability on the part of the Vendors for the cost of repairing the bathtub plumbing leak or the damage caused by it. Skylight Leak [ 40 ] The Inspector’s

summary of deficiencies identified what Mr. Bottriell classified as a minor deficiency in relation to the skylight located in the ceiling of the living room near the front door foyer. Mr. Bottriell’s noted: Skylight – minor deficiency – Add sealant on the shingles at the back side. [ 41 ] The Purchasers did not follow Mr. Bottriell’s recommendation. Nothing was done to the skylight until more than a year after the Purchasers moved into the house. Ms. Heinrichs testified that when they did the flat roof work in March 2012, Acron inspected the skylight and advised that it did not need any repair. No one from Acron testified and there was no written report from Acron which

mentioned the skylight in evidence. [ 42 ] In January 2013 the Purchasers observed a leak in the area of the skylight. Acron Roofing performed a temporary repair. As I understand the evidence the repair was temporary because the Purchasers had decided to have the skylight removed in the planned renovation of the house. [ 43 ] The Purchasers do not claim that the skylight leak was a latent defect, presumably because the skylight deficiency was observed and reported by Mr. Bottriell during the home inspection.

Second Defect – Water Damage in Foyer [ 44 ] The second defect raised in this action was discovered in February 2013, a year and two months after the Purchasers took possession of the house. On February 3, 2013 the Purchasers noticed bubbling of paint in the front entry, the foyer, of the house. Ms. Heinrichs testified that what they found was “a small pimple of water blistering out of the beam in the foyer”.

On a photograph of the beam taken prior to the investigation described below, she indicated that the bubble was on the bottom of the beam approximately at the middle of its span. [ 45 ] The Purchasers immediately reported the damage to their insurer. An adjuster, Tarrin Zdebiek, attended at the house to inspect the damage the next day. Ms. Zdebiek testified that when she went to the house she was accompanied by a contractor, Mr. Chris Horvatis of Paul Davis Systems. [ 46 ] Mr. Horvatis removed the drywall from the foyer beam. This revealed the wood of the foyer beam. Ms.

Zdebiek testified that the foyer beam was saturated. Insulation in the area was holding water. Water had penetrated the vapour barrier causing the bulge in the latex paint which the Purchasers had observed. Ms. Zdebiek took photographs of the area from which the drywall was removed and they are in evidence. She observed that the wood of the foyer beam had rot damage. It was clear to her that the damage was not sudden or accidental – it was a condition that had existed before the police commencement date. She advised the Purchasers that their claim would be denied on that basis and they withdrew it.

She also advised the Purchasers that their insurance policy would not be renewed at its expiry date unless the damaged beam was repaired. [ 47 ] Mr. Chris Horvatis was not called to testify at this trial. [ 48 ] As previously mentioned, at the time the Purchasers were planning renovations to the house. A contractor, Mr. Rory Shipton, had been retained and work on the renovation project was expected to begin later in 2013. The Purchasers arranged for Mr. Shipton to replace the rotten beam in July 2013 in advance of the commencement of the renovation, before the insurance policy renewal date.

No work beyond removing the rotten beam and replacing it was done at that time. Finishing work was left to be done with the planned renovations. [ 49 ] The extent of the damage related to the foyer water infiltration was discovered during the course of the renovations, which commenced in October 2013. The renovation plan called for the realignment of a closet next to the front door and a change to the layout of the staircase which proceeded from the foyer to the second floor. Instead of turning toward the living room at the bottom, the stairs would be straight.

These renovations required the removal of the stairs and some or all of the drywall of the wall beside the staircase and at the bottom of the stairs. Removal of the drywall also facilitated the determination of the extent of the damage caused by the water infiltration which had caused the foyer beam to rot. [ 50 ] When the drywall was removed water damage to the insulation and the framing of the wall on the garage side of the foyer was found. On the other side of the foyer, the living room side, water damage was found at the floor level proceeding to the middle of the living room window.

On the exterior of the house, the brick under the living room window was found to be loose. Purchasers’ Theory [ 51 ] The Purchasers allege that the Vendors were aware of the water damage in the foyer area in December 2011 at the time they sold the house to the Purchasers. It was a defect that was not visible or discoverable by ordinary vigilance – a latent defect. The Vendors did not advise the Purchasers of the defect, indeed they had taken steps to conceal it.

The defect rendered the house dangerous and unfit for habitation. [ 52 ] The Purchasers’ theory of liability in this context consists of four elements each of which, the Purchasers’ submit, shows that the Vendors knew of the water damage in the foyer area: 1. The Vendors knew of the roof defect which permitted the water to infiltrate . The Vendors knew that there was a deficiency in the flashing on the roof above the foyer/garage wall. It was at the point of this deficiency that the water which caused the foyer area damage infiltrated. 2. The damage to the foyer beam started during the Vendors ownership period.

The opinion evidence of an expert witness proves that the rotting of the foyer beam began during the time the Vendors owned the house. 3. The Vendors knew that water was infiltrating into the foyer area. The Vendors must have been aware that water had infiltrated from melting snow on the roof of the garage because their next door neighbor had seen significant water dripping from the garage ceiling. 4. The Vendors knew that the water infiltration had caused damage in the foyer area because they repaired water damaged drywall in the foyer during their ownership period.

Evidence that a patch of drywall on the wall below the foyer beam had been repaired was observed when the drywall was removed. The Vendors therefore knew that there had been water infiltration damage in the area, knew of, or were reckless as to, the extent of the damage, and took steps to conceal it.

[ 53 ] The Vendors deny that they had any knowledge that water had infiltrated the foyer area or that there was any water damage to the foyer area.

The First Element: Vendors’ Knowledge of Roof Defect [ 54 ] In my view the evidence does not establish that, more likely than not, the Vendors knew of the roof defect which the Purchasers submit permitted water infiltration that caused the foyer area damage. [ 55 ] The Purchasers theory is that the water which caused the foyer damage infiltrated from the roof immediately above the wall system between the foyer and stairway on one side, and the garage on the other. [ 56 ] There are two roof planes on the front of the house: the garage roof plane and the house roof plane.

The garage roof is a few inches higher than the foyer roof. The two roof planes meet immediately above the wall between the foyer and the garage. According to the Purchasers’ theory, metal flashing at the top of the small exterior wall between the two roof planes was not of an appropriate design. It was “L” shaped. It should have been “Z” shaped. The “L” shaped flashing did not proceed under the shingles on the higher level roof, the garage roof. Water, for example from accumulated snow on the roof melting, could enter at the top edge of the flashing.

If the proper flashing, “Z” shaped flashing, had been used, the upper arm of the “Z” would have proceeded under the shingles on the higher level roof, the garage roof, and water infiltration would not have occurred. [ 57 ] There are two other possibilities. [ 58 ] First, it is possible that the water entered at the previously mentioned skylight. The skylight was located in the ceiling at a higher point on the sloping roof near and to the north of the foyer beam. As noted Mr. Bottriell identified the skylight as requiring maintenance attention.

As noted, in January 2013, a year before they observed the water bubble on the foyer beam, the Purchasers observed that the skylight was leaking. [ 59 ] Second, it is possible that the water entered from the flat roof area of the window ledge on the south side of the second floor bedroom.

By this theory water entered from the flat roof area at the bottom of the bedroom window and traveled the relatively short distance to the wall between the garage and the foyer and to the foyer beam. [ 60 ] The evidence does not establish which of the three possible mechanisms of water infiltration (at the “L” flashing, at the skylight, or at the bedroom south window flat roof area) was most likely the actual infiltration mechanism. [ 61 ] Mr. Demitt, the Purchasers’ expert witness, indicated as part of his opinion that the water entered at the site of the “L” shaped flashing.

He did not mention the other two possibilities in his report. It is not clear that he realized there were alternative theories. In cross-examination he accepted that the water might have entered at the skylight. In my view the statement in his report that the water entered at the “L” shaped flashing, is not a conclusion reached after the application of his expertise. It is a statement of what he had been told. [ 62 ] Mr.

Shipton was of the view that the water entered at the site of the “L” shaped flashing, but, in my view, his evidence did not address whether he had considered and excluded the other possibilities. And he was not put forward as an expert witness whose opinions on such matters should be received let alone accorded significant weight. [ 63 ] That the skylight, and the bedroom south window flat roof area were defects capable of permitting water infiltration was known to the Purchasers at the time of the purchase. Their home inspector, Mr. Bottreill, had brought both of them to their attention.

They were patent defects. [ 64 ] In my view, even if the water entered at the “L” shaped flashing, the evidence does not prove that, more likely than not, the Vendors knew of that defect. The evidence does not establish when the “L” shaped flashing was installed. The Vendors testified that before they bought the house in early 2005, they retained an inspector. The inspector told them that the cedar shakes on the roof of the house were nearing the end of their useful life and should be replaced.

In late 2005, less than a year after they purchased the house, the Vendors hired Jason Roofing, to remove the cedar shakes and install asphalt shingles.

The Purchasers appear to have assumed that Jason Roofing installed the “L” shaped flashing at that time, though there was no direct evidence on that point. [ 65 ] The Purchasers, the party with the onus of proof, did not call anyone from Jason Roofing as a witness at this trial. [ 66 ] In any event even if the “L” shaped flashing was installed during the period when the Vendors’ owned the house, this does not prove that the Vendors knew either that “L” shaped flashing had been installed or that it was not the appropriate kind of flashing.

The Vendors testified that they did not go on the roof at the time Jason Roofing did its work. [ 67 ] That the presence of “L” shaped flashing was not an obvious defect is demonstrated by the fact that Mr. Bottreill, the Purchasers’ inspector, did not mention the flashing in his report. Ms. Heinrichs testified that she was present when Mr. Bottriell did his inspection, that Mr. Bottreill went on the roof of the house, and as far as Ms. Heinrichs could tell, had inspected all of the roof’s features.

If an experienced home inspector did not identify the flashing as a concern, it is difficult to conclude that the Vendors knew, or ought to have known, that it was a deficiency. [ 68 ] I am not satisfied that, more likely than not, the Vendors were aware of the roof defect caused by the inappropriate use of “L” shaped flashing.

Second Element: Foyer Water Damage Started During Vendors’ Ownership [ 69 ] In my view the evidence does not establish that more likely than not the rotting of the foyer beam, which was the most extensive water damage in the foyer area, began during the period when the Vendors owned the house. But even if it did begin then, that does not constitute evidence that the Vendors knew of the water damage in the foyer area.

Expert Evidence as to Foyer Water Damage [ 70 ] Anast Demitt is a civil engineer whose qualifications with respect to water ingress to residential structures, decay of structural framing members, and mold infiltration were admitted by the Vendors. He testified as to the opinion he reached on the basis of information he was given about the discovery of the damage and photographs of the decayed foyer beam and of other elements of the foyer area. [ 71 ] Based on the information he had been given and what he saw in photographs of the foyer beam in its decayed state, it was Mr.

Demitt’s opinion that the rotting process would have begun between 5 and 8 years before rot was discovered in 2013. This was during the time the Vendors owned the house. [ 72 ] The Vendors called Henrick Scholten, a mechanical engineer, whose qualification to present opinion evidence on the same subjects as Mr. Demitt was established to my satisfaction. Mr. Scholten testified that it is not possible to determine the age of wood rot observed in a photograph. If the wood dried to less than 15% moisture content after the rotting began the rotting would stop. It would resume if wood thereafter “wetted up” again.

Without knowing what cycles of wetness and dryness the beam had experienced over time, it was not possible, in Mr. Scholten’s view, to state how long the rotting process had been going on. [ 73 ] The evidence established that when the rot was discovered, it was wet. As I understand the evidence (though it was not clear on this point), there was a plastic vapour barrier between the beam and the drywall which covered it. There was water on the beam side of the plastic when the drywall was removed.

Apparently some water had escaped the vapour barrier causing the bubble on the underside of the beam which the Purchasers observed. [ 74 ] The evidence did not establish whether there was always water in contact with the beam, or whether, alternatively, there were wet and dry cycles. The evidence did not therefore establish whether the rotting was a continuous process from the time it commenced or whether it started and stopped as the wood of the beam dried to below 15% water content in the course of the wet and dry cycles.

It was not proved that, more likely than not, the wood of the foyer beam was continuously rotting from the time the rotting began. Mr. Demitt’s opinion was founded on the premise that the rotting had been more or less continuous and therefore had begun no earlier than 2005. That premise was not proved. [ 75 ] In any event, when the rotting commenced has very little significance to the question of whether or not the Vendors knew that there was water damage in the foyer area and in particular to the foyer beam.

There was no evidence that the decaying wood of the foyer beam or other elements of the foyer area was visible, or that the rotting process would have caused any odor, or that there would have been any other indication to an occupant of the house that the rotting was in progress. Indeed the Purchasers lived in the house for 14 months before they had any knowledge that there was water damage in the foyer area. [ 76 ] In my view this second element was not proved, but more to the point and in any event, it has no significance to the Purchasers’ theory that the Vendors knew of the water damage to the foyer area.

Third Element: Vendors knew water was infiltrating into the foyer area [ 77 ] The Purchasers allege that whether or not the Vendors knew the path by which the water infiltrated into the foyer area, and whether or not the rotting of the wood in the foyer beam began during the time the Vendors owned the house or earlier, the Vendors must have been aware that water was infiltrating because their next door neighbor had seen a significant dripping of water in the middle of the garage which shared a common wall with the foyer area. [ 78 ] In my view the neighbor’s evidence does not establish that, more likely than not, the Vendors were aware that water was entering the foyer area.

Evidence of Robert Holmes [ 79 ] Mr. Robert Holmes, who has lived in the house next to the Purchasers’ house for 32 years, testified that during the time the Vendors owned the house, he saw water falling from near the garage door opener mechanism inside the garage, to the garage floor. He testified that he saw the water falling inside the garage in the springtime when he was walking in front of the house and the garage door was open. He saw it from a distance of about 20 feet. He testified that the water flow was more than a drip, more like a stream or rain, and he attributed it to melting snow on the roof.

He testified that he had seen water falling in that place more than once, including on occasions before the Vendors owned the house. He testified it was a regular thing and could not say how many times he had seen it. He did not discuss what he had seen with the Vendors though he was not a stranger to them – their respective children played together and he had been in the Vendors home when he had picked up his child. [ 80 ] Mr. Woo testified that the Vendors never experienced water dripping in the garage. He confirmed that Mr. Holmes had never told him that he, Mr. Holmes, had seen water dripping in the garage.

Ms. Woo testified to the same effect as her husband. [ 81 ] I am not prepared to rely on Mr. Holmes’ evidence as proof that the Vendors knew water was infiltrating into the foyer area. [ 82 ] Mr. Holmes testified that he had seen the water dripping in the garage on more than one occasion in the 32 years he lived next to the house. He was uncertain as to how many times he had seen the dripping, but knew that he had seen it on occasions before the Vendors owned the house.

The possibility that he is mistaken about having made the observation during the Vendors’ tenure is real. [ 83 ] Further it is curious that though he was not a stranger to the Vendors and had contact with them in connection with their respective children playing together, he did not say anything to them about his observations, which he considered significant enough to report to the Purchasers several years later. [ 84 ] Even if there was water dripping into the middle of the garage in one of the years that the Vendors owned the house, this does not constitute an indication that water was infiltrating into the foyer area which was several feet away from the middle of the garage.

[ 85 ] If water was dripping in the middle of the garage, it seems likely that it was coming from snow melting in the bedroom south window flat roof area which was immediately above the middle of the garage. If that was the case, the leaking water was the result of a defect of which the Purchasers were aware because they had been advised of it by Mr. Bottreill.

This was a patent defect. [ 86 ] Indeed the evidence of water dripping in the garage, if there was water dripping in the garage is of no significance to liability in this case because the Purchasers were aware at the time of the purchase that water had infiltrated into the garage. Mr. Bottreill reported to them that there was visible water damage in the attic of the garage and water stains were visible on the garage’s north wall. Both the Vendors and the Purchasers testified that they were aware of the staining on the garage walls.

The Vendors said the stains had not changed in the time they owned the house so they were not concerned about them. The Purchasers acknowledged seeing the stains at the time of their own inspection of the house prior to the purchase. [ 87 ] In my view Mr. Holmes’ evidence that he saw water dripping from the ceiling in the middle of the garage during the time that the Vendors owned the house does not prove that, more likely than not, water was infiltrating into the foyer area during the Vendors tenure or, if it was, that the Vendors were aware of it.

Fourth Element: Vendors Repaired Water Damaged Drywall in the Foyer Area [ 88 ] Mr. Shipton testified that when he removed the drywall in the area of the foyer beam and the wall between the foyer and the garage, he saw indications of earlier repairs to the original drywall. He saw drywall mud which appeared to have been coloured with yellow chalk, a technique used, he testified, in drywall repair to permit easy identification of newly applied mud. He also saw what he considered to be poor quality taping which suggested to him that a repair had been done by an amateur.

The patch was located about two feet above the “stringer” of the staircase. As I understand the evidence, it was directly below the point where the foyer beam meets the stairway wall. He did not testify as to the proximity of the repair site to a location where there was evidence of water damage. He did not testify as to the size of repair patch, though the photograph in evidence which showed a portion of it, suggests that it was small. He testified that he knew nothing about its age or who had made it. He testified that it appeared that the drywall in that location had been repaired more than once. [ 89 ] Mr.

Shipton also testified that in one place in the framing of the wall between the stairs and the second floor bedroom there were some “stub studs” – small pieces of 2X4 attached to the studs. Stub studs are sometimes used, he testified, in the installation of a patch in the drywall. To Mr. Shipton’s eye, the wood of the stub studs appeared newer than the wood of the original framing studs to which they were attached.

This, the Purchasers submit, is evidence of drywall repair in another place located above the foyer beam. [ 90 ] The Purchasers submit that this evidence of drywall repairs to the wall near the foyer beam shows that there was previous water damage to that wall. The repairs effected a concealment of the fact that water damage had occurred. [ 91 ] The Vendors testified that they never did any drywall patching or replacement in the foyer area during the time they owned the house. Immediately after they bought the house, and before they moved in, they had a painter paint the interior of the house. Mr.

Woo testified that no drywall repairs beyond covering of nail holes had been done at that time. [ 92 ] I note that there was no evidence that the insurance adjuster or the contractor who accompanied her in response to the Purchasers’ report of water damage in the foyer saw any indication of previous repairs to the drywall they removed, which was immediately around the water damaged beam and in the wall to one side of it. This, it seems fair to infer, would have been the area where water damage to the drywall would have occurred, if it had ever previously occurred.

As noted, the contractor who accompanied the adjuster was not called to testify at this trial. [ 93 ] In my view, the evidence that there had been a previous repair to the drywall of the foyer wall falls far short of establishing that, more likely than not, the Vendors were aware that there had been water damage in the foyer area. The existence of evidence of earlier repairs does not extend to establishing when, why or by whom the repairs were done. That they were in response to water damage and were intended to, or had the effect of, concealing water damage, is entirely speculative.

Conclusion as to Second Defect [ 94 ] The water damage in the foyer was a latent defect. The evidence does not prove that, more likely than not, the Vendors were aware of any of the water damage in the foyer area, or that they were reckless as to whether or not there was water damage in that area, or that they made any representation about it, or that they did anything to conceal the presence of water damage in the foyer area. Since it has not been proved that they had any knowledge of it, no representation can be inferred from their silence.

The Vendors did not breach their contractual warranty that they were not aware of any defects that were not visible in respect of the foyer area. The Purchasers have not proved liability on the part of the Vendors for the cost of repairing the foyer area water damage. The Third Defect – Water Damage in Second Floor Bedroom [ 95 ] The third defect in respect of which the Purchasers claim is damage caused by water infiltration from the second floor bedroom west window flat roof area.

The Purchasers allege that the Vendors were aware of this damage and failed to inform them of it at the time of the purchase and that the Vendors concealed this damage. [ 96 ] That the second floor bedroom west window flat roof area was a major deficiency in the house had been advised to the Purchasers by their house inspector, Mr. Bottriell. It was therefore a patent defect. The Purchasers were aware that water could infiltrate the house at that point and could cause damage. Their allegation is that the Vendors knew and concealed that water had actually infiltrated and had actually caused damage.

The actual damage is therefore, they allege, a latent defect known to the Vendors who are liable because they did not inform the Purchasers of it, and, indeed, concealed it. [ 97 ] It is not necessary for me to determine whether their knowledge of the patent defect fixes the Purchasers with constructive knowledge of the actual damage that resulted from it because, as will appear, I find that the Purchasers have not proved either that the Vendors had actual knowledge of the actual damage or that they concealed it.

[ 98 ] The Purchasers’ renovation contractor, Mr. Shipton, discovered the water damage when he commenced the renovations in the fall of 2013. The planned renovation was mainly to the area of the main floor of the house immediately behind the attached garage. The plan was to convert a small office or computer room and hallway located in that area into a mud room. An existing bathroom in the area would remain. The door from the garage into the space would be moved to a different place on the common wall between the garage and the space to be renovated.

The bathroom was immediately below the second floor bedroom with the west window flat roof area. [ 99 ] Upon removing drywall from the space to be renovated, Mr. Shipton discovered wet insulation, wet drywall, saturated trusses, and water staining on the plywood above the insulation. A beam at the top of the wall between the office and the bathroom was water stained, rotten and mouldy. [ 100 ] Immediately above the office was the window ledge on the roof outside the bedroom’s west window. The exterior wall of the bedroom and the bedroom’s west window were immediately above the water damaged beam which Mr.

Shipton discovered in the office. Mr. Shipton could see that the water had infiltrated from the window ledge above the beam. He could see that there was metal flashing and caulking on the window frame apparently intended to keep the water out. [ 101 ] The renovation plan also involved changing the direction of the slope of the roof above the office. This would eliminate the flat roof window ledge outside the bedroom’s west window. The plan also required replacement of the west window. In removing the existing roof and the window, Mr.

Shipton noted that the window frame and the framing of the wall around the window was also water damaged and rotted. [ 102 ] Mr. Shipton lifted the laminate floor covering in the bedroom revealing that near the west window and along the west window wall, the plywood subfloor was water stained and rotten. [ 103 ] The Purchasers’ theory is that the Vendors installed the laminate floor in the bedroom knowing that the subfloor plywood was water damaged. The installation of the laminate concealed the water damage from detection by the Purchasers.

Further, the Purchasers allege, the Vendors painted the drywall west wall of the bedroom to conceal water damage on that wall. [ 104 ] The Vendors testified that Mr. Woo with the assistance of a work colleague, Alberto Saliba, installed the laminate flooring in the bedroom, indeed in all three bedrooms on the second floor, at the time they moved into the house in 2005. They denied that there was any water damage to the subfloor at that time. The walls were painted at that time as well, and no water damage to the drywall was visible at the time of the painting.

Neither the installation of the laminate nor the painting concealed water damage. [ 105 ] Mr. Alberto Saliba testified that he worked for the same employer as Mr. Woo and had assisted Mr. Woo to install the laminate flooring. He testified that in order to install the laminate, he and Mr. Woo removed the carpet covering the floor. Mr. Saliba testified that there were many staples securing the underlay cushion foam which was under the carpet to the plywood subfloor. He and Mr. Woo removed each of the stables. [ 106 ] Mr.

Saliba recalled that the plywood subfloor was old and that some of it was dusty and dull looking. But it was not water damaged in any place including under the west window. Mr. Saliba examined photographs in evidence which show the subfloor stained and water damaged. He testified that the floor was not in that condition when the laminate was installed. [ 107 ] Mr. Saliba testified that before installing the laminate, he and Mr. Woo placed a white foam underlay on top of the subfloor. The laminate was installed on top of that. [ 108 ] Mr.

Woo’s own testimony regarding the installation of the laminate and the condition of the plywood subfloor before it was installed was the same as Mr. Saliba’s evidence. Mr. Woo testified first and Mr. Saliba was not in the courtroom when Mr. Woo testified. [ 109 ] Mr. Woo also testified that if the plywood had been water damaged and rotting as it was found to be nine years later when the laminate floor covering was removed, he would not have installed the laminate on top of the rotten plywood. The room was to be his daughter’s bedroom.

He would not have permitted his daughter to sleep in a room where moulds associated with wet and rotting wood were present. [ 110 ] Indeed, after the laminate had been installed, Mr. Woo became concerned that a heating duct ran from the furnace to the garage travelling below the same bedroom floor. He understood such an arrangement to be contrary to the building code. Initially he capped the duct to prevent car exhaust fumes travelling from the garage to the bedroom. Then he decided that remedy was not sufficient to protect his daughter. He removed the heating duct altogether.

To do so he pulled back the laminate and underlay, cut through the subfloor of the bedroom with a jigsaw, removed the insulation under the subfloor, and removed the duct. He then replaced the insulation and the subfloor, underlay and laminate. This was done about six months after the laminate had been installed. Mr. Woo testified that at that time the subfloor was in the same condition as it had been when the laminate was originally installed. There was no water damage or rotting. [ 111 ] The bedroom in question was Mr.

Woo’s daughter’s bedroom the whole time they lived in the house – that is for almost eight years. [ 112 ] Mr. Woo also testified that at the time the Vendors purchased the house in 2005 the inspector they retained told them that in addition to the replacement of the cedar shakes they should have the flat roof areas re-tarred. As mentioned, he retained Jason Roofing to perform that work in the fall of 2005. He testified that Jason Roofing did not report having seen any water damage associated with the flat roof area at the time. [ 113 ] The Purchasers rely on evidence of their expert, Mr. Demitt.

He testified that the water damage to the bedroom subfloor must have existed at the time the laminate was installed in the bedroom because if the subfloor was wet enough to decay after the laminate was installed, the laminate would also have had visible water damage. However the laminate was reported to be in good condition when the Purchasers took possession of the house. (Mr. Demitt saw a photo of undamaged laminate in the bedroom but it was not a photo of

laminate that was in the area of the water damaged part of the subfloor). Assuming the laminate was not water damaged, it must have been installed over a subfloor that was already water damaged at the time the laminate was installed. It flows from that conclusion that the installer of the laminate would have seen and been aware of the damage, and that installing the laminate concealed the damage. [ 114 ] The Vendor’s expert witness, Mr. Scholten, did not agree with Mr. Demitt’s conclusion. He noted that many modern laminates are moisture resistant. He also noted that Mr.

Demitt did not himself inspect the laminate and doubted, therefore, that he was in a good position to comment on its condition. Further he noted that the underlay between the subfloor and the laminate would form a barrier to moisture in the subfloor reaching the laminate. [ 115 ] Responding to Mr. Scholten’s observations, Mr. Demitt accepted that the underlay could act as a moisture barrier. He also agreed in cross-examination that it was possible that water could get to the plywood subfloor and cause decay after the laminate was installed.

He suggested, however, that if water had infiltrated into the plywood after the foam underlay was installed, there would be stains on the foam underlay. He had seen photos of the foam and had not seen any stains. He acknowledged the photos were not close ups of the foam underlay. And he acknowledged that he had not seen the foam itself. [ 116 ] It logically follows from Mr.

Demitt’s opinion that there cannot have been any time during the Vendors’ tenure as owners of the house that the subfloor was wet and decaying or the laminate or underlay would have become wet and would also show damage or, in the case of the underlay, staining. This must mean that all infiltration of water from the west window flat roof area to the subfloor stopped in 2005. The damage to the bedroom subfloor must have all occurred prior to 2005 when the laminate was installed. [ 117 ] However, that logical extension of Mr. Demitt’s opinion cannot stand with Mr. Shipton’s evidence.

As noted he testified that when he removed the ceiling of the office below the west window flat roof area he found that the insulation, drywall and trusses above it were wet. Clearly there was water infiltration from the west window flat roof area significantly after 2005. If that infiltrating water was able to travel to the bedroom subfloor at any time, as clearly it was, nothing had happened to prevent it from doing so after the laminate was installed in 2005. [ 118 ] This inconsistency was put to Mr.

Demitt in cross-examination and, in my view, he did not convincingly or satisfactorily reconcile his opinion to Mr. Shipton’s evidence concerning the wetness he observed. It was also revealed in cross-examination that Mr. Demitt had not been aware when he provided his opinion that the laminate had been installed more than eight years prior to the discovery of the water damaged subfloor. [ 119 ] Given the unreconciled inconsistency between Mr. Demitt’s opinion and the observations made by Mr. Shipton, I cannot rely on Mr.

Demitt’s opinion that the water damage existed at the time the laminate was installed. [ 120 ] Mr. Demitt’s evidence does not therefore justify rejection of the evidence of Mr. Woo and Mr. Saliba that no water damage to, or decay of the subfloor was present when they installed the laminate in 2005. [ 121 ] The Purchasers also alleged that the Vendors painted the bedroom before they listed it for sale and thereby concealed evidence of water damage on the drywall. The Vendors denied doing so. Ms. Woo testified that the interior of the house was painted after they purchased it but before they moved into it.

She also testified that after the laminate was installed in the bedroom but before her daughter moved into the room she painted the west wall of the bedroom pink. The wall was not painted again before the Purchasers purchased the house. [ 122 ] The Plaintiffs evidence to support their allegation that the room had been painted to conceal damage was Mr. Heinrich’s testimony that when they moved in the west wall was white and the paint on all the walls in the house was in better condition than one would expect if they had not been painted for several years. Ms.

Heinrich denied that at pre-trial questioning she had testified that the room was painted “pinky and white” though the certified transcript of the questioning recorded that as her answer. [ 123 ] In my view, Ms. Heinrichs’ evidence does not justify rejection of Ms. Woo’s. Conclusion as to Third Defect [ 124 ] I conclude that the Purchasers have not proved that, more likely than not, the Vendors had knowledge of water damage to the wall or subfloor of the second floor bedroom or that they were reckless about the existence of such water damage, or that they made any representation about it.

They have not proved that the Vendors concealed that damage by installing laminate flooring or by painting drywall or otherwise. Since it has not been proved that they had knowledge of the bedroom water damage, no representations can be inferred from the Vendors’ silence. The Vendors did not breach their contractual warranty that they were not aware of any defects that were not visible in respect of the bedroom water damage.

The Purchasers have not proved liability on the part of the Vendors for the cost of repairing the bedroom water damage or any of the water damage resulting from infiltration of water at the bedroom west window flat roof area. The Fourth Defect – Water Damage Behind the Kitchen Counter [ 125 ] The fourth defect alleged by the Purchasers is water damage behind the kitchen counter caused by leaking from a drain pipe travelling from a dysfunctional garburator under the sink. Ms. Heinrichs testified that the floor boards were rotten and mould was present. Photographs confirmed the damage she described.

At the time of this discovery the area was dry. Ms. Heinrichs observed that the sink had been disconnected two months before the damage was discovered because the Purchasers had temporarily moved out of the house to facilitate the renovations. [ 126 ] The Purchasers allege that the Vendors were aware of this damage and dealt with it by placing kitty litter behind the “Lazy Susan” cupboard in the corner of the kitchen counter to absorb the moisture from the leak.

They alleged that the placing of the kitty litter concealed the leak and the damage it caused. [ 127 ] Although the renovation plan did not originally involve any work in the kitchen, the Purchasers decided during the renovations

to change the kitchen countertop and back splash. When the countertop was removed, the water damage and kitty litter were discovered. [ 128 ] In his home inspection report Mr. Bottriell noted that the garburator was not operational. The Purchasers both testified that they were aware of the presence of a dysfunctional garburator in the kitchen at the time they purchased the house. This was of no concern, Mr.

Mlinaritsch testified, because the Purchasers had never had a garburator. [ 129 ] The Purchasers testified that the “toe kick” at the base of the Lazy Susan was loose and, as I understand their position, invited the inference that the toe kick had been removed in order to permit placement of the kitty litter behind the Lazy Susan. The toe kick had then been reinstalled but not firmly fixed to the base of the Lazy Susan cabinet.

Exactly how removal of the toe kick would permit placement of the kitty litter was not developed in the evidence. [ 130 ] Both of the Vendors testified that they were unaware of any leak from the kitchen sink drain pipe or in the area where the damage was found, and that they were unaware of the presence of kitty litter in the cavity behind the Lazy Susan. They had not used the garburator during the time they owned the house. They denied having placed the kitty litter behind the Lazy-Susan cabinet. [ 131 ] There was no evidence as to the cause of the leak.

As I understood the Purchaser’s theory, they speculated that it had something to do with the dysfunctional garburator but they offered no evidence to support that proposition. Similarly there was no evidence as to how long the kitty litter had been in the place it was discovered or as to when the leak that caused the damage had occurred. Conclusion as to Fourth Defect [ 132 ] The damage behind the Lazy Susan was a latent defect.

The Purchasers have not proved that, more likely than not, the Vendors were aware of the water damage discovered in the kitchen or that they were reckless as to the existence of this defect or that they took steps to conceal it, or that they made any representation about it. Since it has not been proved that they had any knowledge of it, no representation can be inferred from their silence. The Vendors did not breach their contractual warranty that they were not aware of any defects that were not visible in respect of the water damage in the kitchen.

The Purchasers have not proved liability on the part of the Vendors for the cost of repairing the water damage in the kitchen. Purchasers Allegations of Fraud [ 133 ] As previously noted the Purchasers alleged in the Statement of Claim that the Vendors had fraudulently withheld information concerning the alleged defects. They pled, “The Contractors determined that attempts were made to conceal some or all of the Defects”.

They pled, “. . . the Defendants, or either of them, made the Representations [that the House was in excellent or otherwise habitable condition] fraudulently, or withheld information in that they, or either of them, knew the Representations were false.” They pled that they were induced to enter the contract to buy the house by the fraudulent misrepresentations of the Vendors and suffered losses and damages due to the fraudulent misrepresentations of the Vendors.

They claimed that punitive damages should be ordered against the Vendors and that the Vendors should be ordered to pay them costs on a solicitor and own client basis. [ 134 ] The Purchasers cited foyer drywall patching, installation of laminate in the bedroom, painting of the foyer and bedroom, and placement of kitty litter as evidence of fraudulent concealment on the part of the Vendors.

The did not prove on a balance of probabilities that the Vendors did any of these things, or in the case of the installation of laminate and painting of the bedroom, that they were done to conceal defects or that defects existed at the time they were done. [ 135 ] The Purchasers cited other evidence to support their allegations of fraud and fraudulent concealment.

This included evidence that the during their tenure as owners of the house the Vendors: - filled in a basement window with bricks and piled boxes along the basement wall to prevent the Purchasers from observing the bricked in window during their pre-purchase inspection of the house; - in breach of code, ran an electrical cord from the kitchen light to the master bedroom and behind baseboards to get power to an otherwise unserved point in the bedroom; - removed the batteries from the smoke detectors in the house making them non-operational before they moved out. Ms.

Heinrichs testified that the first defect they discovered upon moving into the house was that the smoke detectors did not work. [ 136 ] The Purchasers did not claim any damages flowing from any of these “deficiencies”. They argued that their existence showed that the Vendors had fraudulent propensities. [ 137 ] The Vendors acknowledged filling in the basement window. They did so because the window was under the steps from the house to the back patio. The Purchasers lead no evidence that there was anything improper about the filling in of the window.

That the Vendors attempted to hide the bricked in window during the Purchasers viewing of the house never matured into anything beyond an speculative accusation. [ 138 ] The Vendors acknowledged having run the electrical cord in the bedroom. They denied that they ran it from the kitchen light. They testified that they ran it from an outlet in the bedroom to the point where they required power.

The Purchasers failed to establish that the installation of the cord had any relevance to any aspect of their claim. [ 139 ] As to the smoke detectors, in his Chart of Deficiencies provided to the Purchasers after completion of the inspection of the house, Mr. Bottreill noted: Smoke Det – Minor Deficiency – Add one per floor – not working. Mr. Woo testified that the smoke detectors were working when they lived in the house. He believed they were hardwired. He did not

know if they had battery backup. Asked if he had removed batteries from the smoke detectors before moving out of the house, he answered, “I don’t think that I would have.” [ 140 ] In my view the Purchasers failed in their efforts to show either that the Vendors fraudulently concealed the defects, or that they had a propensity toward fraudulent concealment. Adverse Inference [ 141 ] During submissions there was discussion about the drawing of adverse inferences against a party who fails to call a witness whose evidence could be significant.

I have not drawn any adverse inferences in reaching my conclusions in this case. Dismissal of Claim [ 142 ] I find that the Purchasers have not proved on a balance of probabilities, that the Vendors had any knowledge of latent defects in the house, that the Vendors were reckless to the existence of latent defects, that the Vendors either by their silence or otherwise made any negligent or fraudulent misrepresentations concerning the condition of the house or the absence of defects in the house to the Purchasers, or that the Vendors concealed any defects from the Purchasers.

I find that the Vendors did not breach their contractual warranty that they were not aware of any defects that were not discoverable by inspection or ordinary vigilance. [ 143 ] The Purchasers’ claims are entirely without merit and I dismiss them. Provisional Assessment of Damages [ 144 ] In some situations a trial judge will make a provisional assessment of damages for possible use should it be determined at appeal that the judge erred in dismissing the action. [ 145 ] In my view it is not appropriate for me to do so in this case.

The evidence concerning the damages, though it occupied a considerable portion of the seven days during which evidence was presented in this case, was problematic. The Purchasers recognized that a distinction between costs associated with the renovation project and costs incurred to remedy the defects discovered by the Purchasers was necessary.

However, that distinction was not clearly or reliably made in the damages evidence. [ 146 ] A provisional assessment of damages, in order to be useful in one or more of the many possible appeal dispositions in relation to the several trial conclusions, would require isolation of the damages associated with each defect. The time it would take to reach such a provisional assessment given the manner in which the damages evidence was presented would not, in my view, be a justifiable use of judicial resources.

Costs [ 147 ] On the face of it the Vendors are entitled to costs, and on the face of it, enhanced costs because of the Purchasers’ failure to prove the fraud they alleged. If it is necessary, the parties may arrange to speak to costs. Heard June 5 to 16, 2017. Dated at the City of Edmonton, Alberta this 4 th day of August, 2017. B.R. Burrows J.C.Q.B.A. Appearances: Richard J. Cotter, Q.C. and Katherine Fisher for the Plaintiffs Andrew C. Paterson for the Defendants

_______________________________________________________ Correction of the Reasons for Judgment of The Honourable Mr. Justice B.R. Burrows _______________________________________________________ The date this Judgment was signed has been corrected to August 4, 2017.