1893569 ALBERTA LTD. CLAIMANT AND: LORNE VALENTINE MARYON DEFENDANT, 2017 BCPC 417

Citation: 1893569 Alberta Ltd. v. Maryon Date: 20171123 2017 BCPC 417 File No: C-3501 Registry: Burns Lake IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: 1893569 ALBERTA LTD. CLAIMANT AND: LORNE VALENTINE MARYON DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE J.T. DOULIS Appearing for the Claimant: Nelson, J. and Daibo, B. Appearing on his own behalf: Maryon, L. Place of Hearing: Burns Lake , B.C. Date of Hearing: October 26, October 27, 2017 Date of Judgment: November 23, 2017 Introduction

[ 1 ] On August 25, 2015, the Claimant, 1893569 Alberta Ltd., entered into a contract to purchase the lands and premises at 30229 Colleymount Road, Burns Lake, B.C. from the Defendant, Lorne Maryon. The Contract of Purchase and Sale included a Property Disclosure Statement wherein Lorne Maryon made certain representations as to his awareness of various issues concerning the Property. [ 2 ] The Claimant’s principal, its realtor and a home inspector viewed the premises prior to the Claimant finalizing the purchase.

Nevertheless, the Claimant did not become aware of significant defects to the Property until after closing. The Claimant now seeks damages for defects to the water, plumbing and sanitary systems, structural damage, mould contamination and for a missing woodstove. [ 3 ] Lorne Maryon says the Property Disclosure Statement is a truthful representation of his awareness of the condition of the Property at the time he signed it and at the time of closing. He denies having removed a woodstove from the Property. Issues: [ 4 ] The issues before the court are as follows: a.

Should the Court permit the Claimant to amend its Notice of Claim to increase the amount claimed to $35,000? b. What are the statements of fact upon which the Claimant can rely? c. What is meant by “problems” in the Property Disclosure Statement? d. Is the Defendant liable to the Claimant for defects to the water system? e. Is the Defendant liable to the Claimant for defects to the sanitary sewage system? f. Is the Defendant liable to the Claimant for defects to the plumbing system? g. Is the Defendant liable to the Claimant for the moisture, rot and mould in the eastside crawlspace? h.

Did the Defendant wrongfully remove a wood burning stove from the mini-apartment in the Shop? i. If Mr. Maryon is liable to the Claimant for any defect or deficiency, what are the damages? Nature of the Proceedings [ 5 ] On January 31, 2017, 1893569 Alberta Ltd. (the “Claimant”) filed a Notice of Claim in the in the Burns Lake Provincial Court against Lorne Valentine Maryon (the “Defendant”) claiming the following damages: Item Defects and deficiencies Value 1. The jet water pump was not functional and the water lines were clogged. Both the water pump and lines required replacing: $1,200.00 2.

The cost of hand excavation to locate the septic tank for the eastside of the House: 100.00 3. The cost of replacing leaking/cracked ABS lines: 200.00 4. . The sanitary sewer system for the eastside of the House was not functional. The septic tank and sewer lines require replacing. The Claimant claims the cost of replacing the septic tank, lines, excavation and permits: 27,300.00 5. The floor joists on the east end of the House are rotten and the support columns are damaged. Both structures require replacing: 12,022.50 6.

There is excessive moisture and mould in the eastside of the House which requires remediation: 250.00 7. Three crawl spaces required the installation of adjustable vents: 200.00 8. Both toilets in the House are leaking and require repair. The Claimant also seeks the costs of auguring sewer line, engaging a sewer line locator and camera and excavating to locate the sewer line: 1,770.30 9. The Claimant replaced two kitchen and two bathroom faucet cartridges: 25.00 10.

The Defendant removed from the premises a wood burning stove which was a fixture included in the sale price: 2,250.00 Total Claimed $45,317.80 The Claimant abandoned its claim for any amount in excess of the monetary jurisdiction for small claims cases in Provincial Court. [ 6 ] On February 17, 2017, the Defendant filed a Reply to the Notice of Claim in which he states: a. the water system was working at the time of sale; b. the septic system was functional at the time of sale; c. he was unaware of any problems with the floor; d. he was unaware of problems in the crawlspace under the house; and e. the plumbing and wood stove were functional at the time of sale.

[ 7 ] This matter came before Judge Jackson on May 9, 2017 for a settlement conference. The parties did not settle and Judge Jackson ordered: a. the parties exchange all documents four weeks before the trial; b. the Claimant provide the Defendant with a copy of the Home Inspector’s Report; and c. the Claimant may add Steve Davis and AmeriSpec Home Inspection Service as Defendants to the Notice of Claim. [ 8 ] On October 5, 2017, the Claimant filed an Application to a Judge to increase the total amount claimed to $35,000. This application came before me for hearing on October 26, 2017.

The Defendant did not oppose the application. [ 9 ] The trial of this matter commenced before me in Burns Lake Provincial Court on October 26 and continued on October 27, 2017. Both parties were self-represented. [ 10 ] The Claimant did not add Steve Davis or AmeriSpec Home Inspection Service as Defendants to the Notice of Claim. [ 11 ] At the trial, the Claimant called the following witnesses: a. Bawo Daibo, the owner of 1893569 Alberta Ltd.; b. Jill Nelson, Bawo Daibo’s mother; c. Des Willson, a tradesman for Willson’s General Plumbing & Heating Ltd.; and d.

Karl Weller, a contractor. [ 12 ] The Defendant testified on his own behalf. [ 13 ] At trial, the parties entered the following exhibits: Exhibit 1: Twenty coloured photographs of the lands and premises at 30229 Colleymount Road, Burns Lake, B.C. from the MLS Listing; Exhibit 2: Contract of Purchase and Sale of the lands and premises at 30229 Colleymount Road, Burns Lake, B.C. dated August 22, 2015; Exhibit 3: Property Disclosure Statement Residential dated March 19, 2015; Exhibit 4: Correspondence dated August 8, 2016, from the Claimant to the Defendant; Exhibit 5: AmeriSpec Home Inspection Service Report dated August 25, 2015; Exhibit 6: Inspection Agreement; Exhibit 7: Invoice from Karl Weller dated August 18, 2016, in the amount of $445.75 together with an estimate of the cost to replace rotten floor members in the amount of $12,022.50; Exhibit 8: Seventeen pages of invoices and estimates; Exhibit 9: Twenty-five pages colour photographs; and Exhibit 10: An enlarged photograph of the carport at 30229 Colleymount Road, Burns Lake, B.C. [ 14 ] I reserved my decision both with respect to the Claimant’s application to amend the Notice of Claim to increase the total amount claimed to $35,000 as well as on the merits of the case.

These are my reasons for judgment with respect to both matters. Issue #1: Should the Court permit the Claimant to amend its Notice of Claim to increase the amount claimed to $35,000? [ 15 ] At the time the Claimant filed its Notice of Claim, the monetary jurisdiction for small claims cases in Provincial Court was $25,000 : s. 3 , Small Claims Act , RSBC 1996, c 430 ; Small Claims Court Monetary Limit Regulatio n, BC Reg 179/2005.

On June 1, 2017, the monetary jurisdiction for small claims cases in Provincial Court increased to $35,000. [ 16 ] Rule 1(6) of the Small Claims Rules , precludes a claimant who abandons part of a claim from suing for that part unless the claimant withdraws the whole of the claim under Rule 4 (9) and pursues it in the Supreme Court. [ 17 ] Rule 8(7) of the Small Claims Rules sets out a transitional exception to Rule 1(6):

(7) A claimant who filed a notice of claim before June 1, 2017 may change that notice of claim to increase the amount of the claim to an amount that is more than $25,000 and not more than $35,000, not including interest and expenses, whether or not the claimant had, in that notice of claim, abandoned part of the claim in accordance with Rule 1(5). [ 18 ] Rule 8(9)) sets out the procedure for changing the amount of the claim: How to change amount of claim or counterclaim

(9) In order to increase the amount of a claim under subrule (7) of this rule or the amount of a counterclaim under subrule (8), the party making that claim or counterclaim must change the notice of claim or reply in which the claim or counterclaim was made (

a) by complying with subrule (2), and (

b) by attaching to the changed notice of claim or reply a separate page giving detailed reasons for the change. [ 19 ] Subrule (2) states: H ow to change a document

(2) All changes must be underlined, initialled and dated on the revised document and, if there is an order authorizing the change, the document must contain a reference to it. . . . When notice of claim or reply may be changed

(10) A notice of claim or reply may be changed under subrule (9) before or after a settlement conference without the permission of a judge, but must not be changed after (

a) judgment has been granted, (

b) the claim or counterclaim has been dismissed by a judge, (

c) a default order has been issued by a judge or a registrar, or (

d) the claim or counterclaim has been settled. . . . Changed notice of claim or reply must be filed and served

(11) After a notice of claim or reply is changed under subrule (9), it must be filed and served in accordance with subrule (3). [ 20 ] The Claimant submits its claim fell within the scope of the transitional exception set out in Rule 8(7), and asks to amend its Notice of Claim to claim $35,000. [ 21 ] Although the Claimant did not follow the precise procedural steps set out in Rule 8 to amend its Notice of Claim, it did file and serve an Application to a Judge clearly setting out its intention to seek damages up to $35,000. I will allow the Claimant’s application.

I find the Claimant is entitled to amend its Notice of Claim to seek damages totalling $35,000, and so order. The parties and agents [ 22 ] The Claimant, 1893569 Alberta Ltd. is an Alberta corporation. [ 23 ] Bawo Daibo is the sole director, officer and shareholder of 1893569 Alberta Ltd. [ 24 ] At the material time, Bawo Daibo and Jill Nelson were agents of 1893569 Alberta Ltd. [ 25 ] Bawo Daibo and Jill Nelson reside in St. Albert, Alberta. Bawo Daibo is a trained physician and Jill Nelson is an endocrinologist. [ 26 ] Jill Nelson was born in Burns Lake and grew up in Francois Lake. Dr.

Nelson and her siblings still have a family home on the Francois Lake, at Kilometre 43 approximately 15 kilometres past the hamlet of Colleymount. [ 27 ] Over the years, Bawo Daibo also spent time at his mother’s family home on Francois Lake. [ 28 ] Lorne Maryon owned the lands and premises at 30229 Colleymount Road, Burns Lake, B.C. (the “Property”) from 2002 until September 8, 2015. [ 29 ] Mr. Maryon moved to Canada in 1997 from England after serving 23 years in the British army. He then worked for Decker Lake Sawmills until he retired in 2015. [ 30 ] Mr. Maryon resided on the Property from 2000 to 2015.

Until he purchased the Property in 2002, Mr. Maryon lived in a “mini-apartment” in one of the outbuildings and helped care for the then owner, Hugh Cowan. [ 31 ] Des Willson and Carl Weller are both tradesmen who worked on the Property after its purchase by the Claimant. The Property [ 32 ] The MLS Listing on the Remax Wrightway website described the Property as follows: Single Family in Burns Lake Unique Francois Lake, 1300+ sq ft lakeshore home. This property is located on the lake side of Colleymount Road with approximately

500 ft of pebble beach, a paved boat launch, 3 shops, and a single carport. There are no visible neighbors to the west or east, giving this 0.39 acre [property] lots of privacy. There are 2 kitchens, 2 full bathrooms, and 3 bedrooms. This home has the potential to be 2 completely separate suites. A perfect spot for a lakeshore retreat, or a year-round dwelling. [ 33 ] The MLS description of the Property is followed by a general disclaimer by the BC Northern Real Estate Board which assumed no responsibility for its accuracy: Exhibit 1. [ 34 ] Mr.

Maryon said the main house on the Property was built in the 1970’s by Hugh Cowan, a former guide and trapper. [ 35 ] In the early 1980’s, Mr. Cowan constructed an addition to the house together with a carport. By 1985 the house (the “House”) consisted of three sections, the original cabin, referred to as the “westside”, the addition, referred to as the “eastside” and the carport. [ 36 ] In addition to the House, the Property included the following three outbuildings: a. a workshop (the “Shop”) which contained various tools and, in the back, a “mini apartment” where Mr.

Maryon lived from 2000 to 2002; b. a boat house (the “Boat House”) which stored a boat with an outboard motor and fishing equipment; and c. a rustic trapper’s cabin (the “Rustic Cabin”) which Mr. Maryon converted into a sauna 18 months before he sold the property to the Claimant. [ 37 ] Exhibit 1 depicts the House as an older residence situated on a lakeshore surrounded by a mowed lawn and mature trees. The House’s interior and appliances are fairly dated. [ 38 ] The Shop and Boathouse also appear old and somewhat weathered.

The Rustic Cabin resembles an old trapper’s cabin adorned with moose antlers and a Coleman lantern. [ 39 ] Mr. Hugh Cowan lived in the house until he died in 2002. Later that same year, Mr. Maryon purchased the Property from Mr. Cowan’s estate. Mr. Maryon owned and lived on the Property for 13 years. Background Facts [ 40 ] The original owner of the Property, Hugh Cowan, was known to Mr. Maryon, Dr. Nelson and Dr. Daibo. Dr. Nelson knew Mr. Cowan for many years. Her father and Mr. Cowan were friends and fellow guides. Dr. Nelson and other Francois Lake residents often called upon Mr.

Cowan for plumbing and electrical services. [ 41 ] Drs. Daibo and Nelson met Mr. Maryon when he resided in the Shop apartment before Mr. Cowan died. Before August 2015, Dr. Daibo was last on the Property in about 2001, the year before Mr. Cowan died. [ 42 ] Prior to viewing the Property in mid-August 2015, Dr. Nelson had last been in the House in the late 1990s. At that time, she noted the house had two self-contained apartments. She said Mr. Cowan lived in the “original cabin” which had two bedrooms, an open kitchen and one bathroom. Mr.

Cowan built the eastside addition for his daughter, which consisted of one bedroom, and open kitchen and a bathroom. [ 43 ] Over the years, Dr. Daibo drove past the Property on multiple occasions. He had been in it often when growing up. He said “I loved the property and I always wanted to have it.” [ 44 ] In the spring of 2015, Mr. Maryon retired from his employment with Decker Lake Sawmills after 17 years. He decided to sell the Property and move to Kimberly, B.C. To this end, Mr. Maryon retained the services of Wrightway Realty in Burns Lake, B.C.

His realtor, Henry Washington, suggested the ultimate list price of $239,000. [ 45 ] On March 19, 2015, Mr. Maryon completed a Property Disclosure Statement in a form prescribed by the BC Real Estate Association. The seller is instructed to initial one of four answers to the questions posed: (a) “Yes”; (b) “No”; (c) “Do Not Know”; and (d) “Does Not Apply”. For many of the posed questions, the seller’s available responses are limited “Yes” or “No”. [ 46 ] The Property Disclosure Statement begins with the following

preamble: THE SELLER IS RESPONSIBLE for the accuracy of the answers on this property disclosure statement and where uncertain should reply “Do Not Know”. This property disclosure statement constitutes a representation under any Contract of Purchase and Sale if so agreed, in writing, by the seller and the buyer. [ 47 ] On March 20, 2015, the Property appeared on the Multiple Listing Service website: Exhibit 3. [ 48 ] In the Property Disclosure Statement, Mr.

Maryon indicated, among other things, that he was not aware of: a. any problems with the water system: Property Disclosure Statement, 2(B); b. any problems with the sanitary sewer system: Property Disclosure Statement, 2(F); c. any structural problems with any of the buildings on the Property: Property Disclosure Statement, 3(G); d. any moisture and or water problems in the walls, basement or crawl space: Property Disclosure Statement, 3(K);

e. any problems with the plumbing system: Property Disclosure Statement,3(O); or f. any material latent defects to the premises which were dangerous or potentially dangerous to the occupants or unfit for habitation: Property Disclosure Statement, 4(B). [ 49 ] Mr. Maryon moved to Kimberly and rented a small apartment. He returned to Colleymount every two weeks to maintain the Property. While in Burns Lake Mr. Maryon stayed in the House. [ 50 ] In August 2015 Drs. Daibo and Nelson drove by the Property and noticed it had sprouted a “For Sale” sign.

They arranged to view the Property with Henry Washington, the listing agent and Mr. Maryon’s realtor. [ 51 ] In mid-August 2015, Drs. Daibo and Nelson arrived on the Property before Mr. Washington. While they waited for Mr. Washington, Mr. Maryon spent 45 minutes or so showing Drs. Daibo and Nelson the Property. On this “walk through” Mr. Maryon pointed out various features, including: a. the House, the Shop, the Boathouse and Rustic Cabin; b. the mini-apartment in the Shop where Mr. Maryon lived prior to acquiring the house on the Property from Mr. Cowan’s estate; c. Mr.

Cowan’s taxidermy projects which adorned the walls in the various buildings; d. the Red Lion water pump and the water line from the pump to the lake; e. the septic tank and its new lid he had recently installed because the previous one had rotted; f. the wood stoves in the House and outbuilding(s); g. the cement mixer with which Mr.

Cowan built the breakwater on the lakeshore fronting the property; h. a propane heater in the west side of the House; i. the propane tank outside the House j. the exterior entrance to the crawl space; k. the shut off valve to the water to the House and outbuildings; l. the water tap at the corner of the carport for the garden hose; m. the outside drain for the laundry room; n. the sauna he had constructed inside the Rustic Cabin; and o. the roofing shingles on the house which Dale Pettigrew had recently installed on the House. [ 52 ] During his walk through with Drs. Daibo and Nelson, Mr.

Maryon explained how to winterize the Property, which included shutting off the water and draining the lines. Mr. Maryon assured Drs. Daibo and Nelson that all systems worked fine. [ 53 ] Drs. Daibo and Nelson said that although Mr. Maryon pointed out the location of the pump and water lines, he did not show them operational. Mr. Maryon had put up a sign setting out instructions on how to operate the pump. There is no suggestion that either Dr. Daibo or Dr. Nelson asked Mr. Maryon to operate the water system or that he indicated any reluctance to do so. [ 54 ] After 45 minutes or so, Mr.

Maryon’s realtor, Henry Washington arrived on the Property. Drs. Daibo and Nelson then spent approximately one and one-half hours with Mr. Washington viewing and inspecting the Property. Mr. Maryon was not present during this process. Neither Dr. Daibo nor Dr. Nelson testified as to what they viewed or inspected on the Property in mid-August 2015 in Mr. Maryon’s absence. Mr. Washington was not called as a witness at trial. [ 55 ] Drs. Daibo and Nelson left immediately after viewing the Property with Mr. Washington. However, Dr. Daibo returned later that same afternoon and offered Mr.

Maryon $150,000 for the Property. Mr. Maryon rejected the offer, which was $89,000 less than the list price. If this offer was made in writing, it was not adduced or referred to by either party at trial. The Contract of Purchase and Sale [ 56 ] Dr. Daibo arranged for the Claimant to retain its own independent realtor and requested a second viewing of the Property. [ 57 ] On August 22, 2015, Drs. Daibo and Nelson attended the Property with Gordon Shanks, a realtor with Frame Realty Ltd. in Burns Lake, B.C. Mr. Maryon was asked to absent himself from the Property, which he did. Mr. Maryon estimates Drs.

Daibo and Nelson and Mr. Shanks spent approximately three hours viewing the Property. [ 58 ] Neither Dr. Daibo nor Dr. Nelson testified as to what it is they viewed or inspected on August 22, 2015. Mr. Shanks was not called as a witness at the trial. [ 59 ] After Drs. Daibo and Nelson and Mr. Shanks viewed the property on August 22, 2015, the Claimant made a new offer of $205,000, this time in writing on the B.C Real Estate Association and Canadian Bar Association standard form contract of purchase and sale: Exhibit 2.

[ 60 ] Mr. Maryon rejected the Claimant’s $205,000 offer and countered with $229,000, which the Claimant, in turn, rejected: Exhibit 2, Page 1. [ 61 ] On August 24, 2015, the Claimant made a further offer to purchase the Property which Mr. Maryon accepted.

The resulting Contract of Purchase and Sale (the “Contract”) included the following terms: a. a purchase price of $220,000; b. the agreement was conditional upon the buyer viewing and approving a from an inspector of his choice by August 25, 2015; c. the sale was to complete and the buyer was to have possession of the Property on September 8, 2015; d. the purchase price included: i. any buildings, improvements, fixtures, appurtenances and attachments thereto, and all blinds, awnings, screen doors and windows, curtain rods, tracks and valances, fixed mirrors, fixed carpeting, electrical, plumbing, heating and air conditioning fixtures and all appurtenances and attachments thereto as viewed by the buyer at the date of inspection; and ii. all furniture and fixtures miscellaneous items, stoves, etc. (everything) in the house and sheds at the time of viewing. e. the Property and all the included items were to be in substantially the same condition at the possession date as when viewed by the Claimant on August 22, 2015; f. the Property Disclosure Statement was incorporated in and formed part of the Contract of Purchase and Sale; g. there were no representations, warranties, guarantees, promises or agreements other than those set out in the Contract and the representations contained in the Property Disclosure Statement. [ 62 ] The Contract specified that Mr.

Maryon had an agency relationship with Henry Washington of Re/Max Wrightway and the Claimant had an agency relationship with Gordon Shanks of Frame Realty Ltd. The Home Inspection Report [ 63 ] The Claimant commissioned a Home Inspection Report of the Property, which Dr. Daibo received August 25, 2015. The Home Inspection Report was authored by Inspector, Steve Davis, on behalf of AmeriSpec Home Inspection Service: Exhibit 5. It states, in part: Major Systems Our evaluation of major systems is both visual and functional provided power and/or fuel is supplied to the component.

Identifying or testing for the presence of . . . potentially hazardous materials is not within the scope of this report. Judging the sufficiency of water flow in plumbing . . . is a subjective evaluation, therefore, we only note a poor condition, if, in the inspector’s opinion the adequacy seems to be less than normal. There is a time period from inspection to closing that varies with each property. We can only state condition at the time of inspection.

Therefore, we urge you to evaluate and operate all major systems prior to any subject removal. [ 64 ] On page 5, the Home Inspection Report includes a photograph of the exterior of the House, a schematic and the following comments: The ground around the perimeter of the home should slope away from the foundation rather than toward it. Consider adding topsoil and re-grading the first six feet around the foundation.

The ground should slope one inch per foot for the first six feet to ensure a dry crawlspace. [ 65 ] On that same page, the Home Inspection Report shows photographs of the exterior washing machine drain and roof and states: The washing machine appears to drain through this pipe directly onto the ground. Consider piping this to the septic system instead to keep soapy water away from the lake. The roof of the home was in good condition and has been recently replaced.

Consider installing gutters and downspouts to manage water off the roof. [ 66 ] On page 9, of Home Inspection Report, Inspector Davis states: Gutters/Downspouts: Not present, recommended installing gutters and downspouts to manage water off the roof. This will help ensure a dry crawlspace. [ 67 ] On page 6, the Home Inspection Report includes a photograph of the crawlspace and states: The crawlspace, seen in the photo of the right, was in good condition in the visible areas, but access was limited due to the access hatch in the laundry room being covered by the water pump and pressure tank.

The floor of the crawl space should be covered with plastic to limit the amount of water from condensation getting into the home. [ 68 ] Also on page 6, Mr. Davis notes the woodstove in the kitchen did not conform to code requirements and should not be used for safety reasons.

[ 69 ] On page 15 of the Home Inspection Report, Mr. Davis states the kitchen faucets were “serviceable” meaning they “were inspected and appeared to function normally at the time of inspection.” [ 70 ] On page 16 of the Home Inspection Report, Mr. Davis states the bathroom sinks, faucets, drains, tubs and showers were serviceable.

The toilet in the westside of the house was loose and needed to have the bolts holding it to the floor tightened. [ 71 ] On page 20 of the Home Inspection Report, Inspector Davis sets out his observations of and comments about the crawlspace: Water seepage and moisture penetration are common problems in basements or crawlspaces [and usually result] from inadequate water management above ground. Improving drainage and grading can correct most causes. Our review of the basement or crawlspace cannot always detect the past or future possibility of water in this area.

If you are concerned about this possibility, we suggest that you inquire with the owner. NOTE: The presence of a sump pump can suggest water has or may enter the basement. Most causes of moisture or water penetration at the foundation can be corrected by improving the drainage at the exterior. Prolonged or heavy rains may occasionally bring seepage. Moisture in a crawlspace can promote wood decay, therefore crawlspaces should be adequately ventilated and vents should be left open during the non-heating season.

In dirt crawlspace areas ground cover sheets consisting of heavy plastic is needed to help reduce humidity in the home and the crawlspace area. Access: Upgrades recommended; the in-home access hatch is in the laundry room, where it is blocked by the water pump and pressure tank. Recommend installing a second access hatch, as the exterior access is too small to enter.

Ventilation: Not Present Joists: Serviceable where visible; inspection limited due to access restrictions Beams: Serviceable where visible; inspection limited due to access restrictions Support Posts/Columns: Serviceable where visible; inspection limited due to access restrictions Insulation: Consider upgrades: recommend insulating the perimeter of the crawlspace, as the presence of water lines means the crawlspace should stay warm. . . Due to access restriction, this crawlspace could be insulated by digging down to expose the foundation on the exterior . . .

Comments: Some staining present, or evidence of seasonable moisture. Some of the crawlspace floor has been covered with plastic, but the plastic is not sealed at the joints or the perimeter. [ 72 ] On page 21 of the Home Inspection Report, Inspector Davis sets out his observations of and comments about the plumbing: Our focus in the plumbing portion of the inspection is directed at identifying visible water damage and/or problems. We may not always mention common faults such as stuck stoppers or dripping faucets. If considered important, you should check these items independently. . .

The water supply system is tested (when possible) for its availability to deliver functional water pressure to installed plumbing fixtures and the condition of connected piping that was visible. Drain Waste Lines & Vent Pipes: Serviceable where visible; ABS Sump Pump(s): Not present [ 73 ] Inspector Davis states the septic tank was beyond the scope of the Home Inspection Report and that due to the inaccessible nature of the water system, only the above-ground equipment could be reviewed. [ 74 ] Dr.

Daibo obtained the Home Inspection Report on August 25, 2015, but not before he signed an Inspection Agreement (Exhibit 6) which states: This is a limited visual examination of certain readily accessible systems and components . . . using normal operating controls and opening readily openable access panels. The purpose of the inspection is to provide you with information about the condition of certain systems and components of the home at the time of the inspection. . . . A written inspection report will be provided describing the following systems and components.

Structural components (including foundation and framing) exterior, roof system, plumbing system, electrical system, heating system, installed central and through wall air conditioning systems, interiors, insulation & ventilation and fireplaces and solid fuel burning appliances. The report will identify the following (

a) which systems and components designated for inspection herein are, in the professional opinion of the inspector, significantly deficient or near the end of the service lives; (

b) why the inspector deems the system or component significantly deficient or near the end of its service life; (

c) whether further evaluation, correction or monitoring is needed, and (

d) and why it was not inspected. [ 75 ] The Inspection Agreement excludes responsibility for inspecting inaccessible systems or components or for discovering or reporting the presence or absence of mould or mildew: Exhibit 6. [ 76 ] After Dr. Daibo received and reviewed the Home Inspection Report, the Claimant removed the subject conditions and finalized the contract. The purchase and sale of the Property completed on September 8, 2017. [ 77 ] Inspector Steve Davis did not testify at the trial. [ 78 ] There is no evidence of Dr. Daibo making any further inquiries or investigation subsequent to receiving the Home Inspection

Report. [ 79 ] The only time Dr. Daibo or Dr. Nelson met or discussed the condition of the Property with Mr. Maryon was in mid-August 2015, prior to engaging Gordon Shanks and viewing the Property on August 22, 2015, or receiving the Home Inspection Report. [ 80 ] The purchase and sale closed on September 8, 2015. Although the Property was registered in the Claimant’s name, it was intended as a seasonal recreational home for Dr. Daibo and Dr. Nelson. Shortly after taking possession of the Property, Dr. Daibo and Dr. Nelson discovered numerous defects and deficiencies for which the Claimant now seeks compensation.

Over the ensuing year, Dr. Daibo attempted to contact Mr. Maryon to discuss these defects. Finally, on August 8, 2016, Dr. Daibo sent Mr. Maryon the correspondence marked Exhibit 4 providing notice of the Claimant’s intention to seek compensation for breach of contract. The Claimant received a response from Mr. Maryon’s legal counsel to the effect that caveat emptor prevails. Discovery of defects and deficiencies after closing Problems with the Water System [ 81 ] Shortly after the Claimant took possession of the Property, Drs.

Nelson and Daibo had difficulties with the system installed to draw water from Francois Lake. The jet pump did not seem to hold its prime. Dr. Nelson waded out into Francois Lake up to her chest and examined the entire water line, then checked and cleaned the foot valve. Dr. Nelson dismantled the pump and discovered it was clogged with gunk and rust. Photographs of the jet pump are found at pages 12, 13 and 14 of Exhibit 9. Because the pump was no longer manufactured, Dr. Nelson could not obtain parts for its repair. [ 82 ] While the pump was dismantled, Dr. Nelson had to pack water up from the lake.

She did this until the Claimant purchased a new pump, fittings and lines. Exhibit 8 includes Sego Industries Inc.’s invoices totalling $1,058.60 for these items and components. Problems with the sanitary sewage system [ 83 ] After taking possession of the Property, Drs. Daibo and Nelson discovered the plumbing in the eastside bathroom was dysfunctional. When they flushed the toilet, it immediately overflowed and water in the bathtub did not drain. They assumed the lines were clogged but their attempts to clear them were unsuccessful. As Mr. Willson was scheduled to winterize the Property, Dr.

Nelson asked him to look into the problems with the eastside bathroom. [ 84 ] Mr. Willson attended at the Property on October 11, 2015. He said that he tried to plunge and unplug the lines, albeit without success. He concluded there must be an issue with the sewer line. Mr. Willson returned on October 27, 2015, with an auger. He removed the toilet and attempted to auger the sewer line, repeatedly. The auger came to a complete stop, and then returned with dirt and gravel. [ 85 ] Having no success with the auger, Mr.

Willson returned to the Property on November 4, 2015, with Reiner Stoker who operated a sewer camera and line locator service. Mr. Willson and Mr. Stoker discovered the sewer line from the eastside bathroom ended abruptly in the carport. They hand dug in the area of loose gravel until they found the top of the sewer pipe. [ 86 ] Mr. Willson again returned to the Property on November 7, 2015, with Gary Goertzen and a small excavator. They excavated in the gravelled area of the carport where they had located the top of the sewer pipe.

They discovered the sewer pipe came to a dead end and, in one section, filled with dirt and gravel. The pipe was not connected to the main septic sewage system or any viable septic tank. Exhibit 8 includes invoices from Willson’s General Plumbing & Heating Ltd. for these and other services totalling $1,770.30. [ 87 ] In 2016, Carl Weller discovered what appeared to be the remains of an old collapsed wooded septic tank system in the carport area.

He confirmed the sanitary sewage system for the eastside of the house was not connected to the main septic system which services the westside of the House. [ 88 ] It appeared to Mr. Willson and Mr. Weller the site of this derelict septic system had been previously excavated in the area of the carport where the concrete had been replaced with gravel. [ 89 ] Mr. Willson said it is unnecessary to install a new septic tank to service the eastside of the House. He estimates it would take a tradesman about one day to jackhammer the concrete and offset the eastside sewer line to the main septic system. Mr.

Willson estimates the cost of connecting the eastside sewer pipe to the main west side septic system would be $1,200 to $2,000. [ 90 ] Drs. Daibo and Nelson share the view the problem with the eastside sanitary sewer system can only be rectified by the installation of a new system which complies with Northern Health’s rigorous criteria for onsite waste water systems. The estimated cost of installing a new system by a registered onsite waste water professional is approximately $27,300.

Exhibit 8 includes an estimate for installing a new sewer system from Barry Oliver of Bear Wood Excavating Ltd. in the amount of $25,000. In addition to the installation cost, the Claimant would have to purchase an SA approved chambered septic tank in the amount of $1,450 and pay Northern Health’s $600 filing and registration fees. [ 91 ] The Claimant has neither installed a new system nor attempted to connect the eastside sewer pipes to the westside septic tank. Problems with the plumbing system [ 92 ] Drs. Daibo and Nelson discovered problems with the westside toilet. Dr.

Nelson heard the toilet running all night. When she removed the lid from the toilet, Dr. Nelson found the water tank was filled with sludge. Moreover its flapper valve mechanism was inoperable and the refill tube had been jerry-rigged in place with black electrical tape: Exhibit 9, pp. 16 & 17. Dr. Nelson cleaned the water tank and tried to replace the flapper mechanism but was unable to do so because the extensive corrosion. Eventually, Dr. Nelson retained Mr. Willson to replace the flapper mechanism. Exhibit 8 includes Mr. Willson’s invoice for this service.

[ 93 ] Upon taking possession Drs. Daibo and Nelson discovered that all the faucets on the house leaked and require fixing: Exhibit 9, p. 15. They also discovered an ABS sewage line in the crawl space that was cracked and leaking: Exhibit 9, pp. 6 & 7. [ 94 ] Dr. Nelson replaced the faucet cartridges on four leaky faucets at a cost of $25. The Claimant estimates the cause for replacing the cracked and leaky ABS pipe is $200. Problems with rotting joists and columns [ 95 ] After taking possession of the Property, Dr. Daibo discovered an accumulation of moisture in the crawlspace.

He retained Carl Weller, a local tradesman, to investigate. Mr. Weller described the crawlspace as very small, perhaps 15 inches high. He said it was miraculous that he was able to fit into it. [ 96 ] Mr. Weller observed the joists and timbers in the bathroom in the eastside of the House were rotting and need to be replaced. He estimates the cost of labour and materials for removing the rotten joists and replacing the bathroom floor and fixtures is $12,022.50. [ 97 ] The Claimant put into evidence photographs of the affected areas: Exhibit 9, pp. 1 to 4. To Drs.

Nelson and Daibo, it is apparent the problem of water seeping into the crawlspace is longstanding. They cite the following features as evidence of someone’s half-baked attempt to remedy the situation: a. a joint in the ABS line is mended with duct tape; Exhibit 9, p.6; b. there is a piece of tin foil in the crawlspace which was likely used to catch a drip: Exhibit 9, p. 5; and c. there are plastic wood pellet bags buried in the vicinity of the exterior washing machine drain pipe: Exhibit 9, pp. 9 and 10. These bags were obviously used to prevent water from infiltrating the foundations.

Problems with moisture and mould in the crawlspace [ 98 ] After taking possession of the Property, Dr. Nelson discovered evidence of mould in the eastside of the house where the joists had rotted. She has asthma and is particularly susceptible to this type of allergen. [ 99 ] Drs. Daibo and Nelson submit it was obvious Mr. Maryon was aware of the mould because when they viewed the Property with him in mid-August 2015, all the windows were open, although it was not a particularly warm day. Removal of the wood stove [ 100 ] Drs. Nelson and Daibo testified that when they viewed the property with Mr.

Maryon in mid-August 2015, there were at least three wood stoves on the property, one in the kitchen of the westside of the House, one in the sauna and one in the mini-apartment in the back of the Shop. When the Claimant took possession of the Property on September 8, 2015, there was no longer a wood stove in the mini-apartment in the back of the Shop. [ 101 ] They did not testify whether there were three woodstoves on the Property when then viewed it on August 22, 2015.

L egal Framework General Principles [ 102 ] The doctrine of caveat emptor , “let the buyer beware”, features prominently in real estate transactions. Buyers are responsible for determining the state and condition of the property they intend to purchase. It is for this reason the prudent buyer seeks specific contractual provisions from the seller as to the condition of the property. This is often done by importing into the contract of purchase and sale the seller’s property disclosure statement. [ 103 ] Nixon v.

MacIver , 2016 BCCA 8 is the governing authority in this province on cases involving the purchase and sale of a residence where the contract incorporated a property disclosure statement. In Nixon v. MacIver , the seller represented in her property disclosure statement the residence in issue had been built six years previously, which was only partly true. The six year old construction had incorporated a pre-existing cabin, similar to the House in this case. The new portion of the house had a new roof but the older portion did not.

The buyer assumed the entire house had a new roof as part of the six year old construction and sued the seller for misrepresenting the age of the house and its roof. [ 104 ] The issue before the Court of Appeal was whether a seller has a positive obligation to include comments about the property beyond those contained in the property disclosure statement. Justice Smith, for the appellate court, summarized the principle of caveat emptor as it applies to real estate transactions: [47] In

summary, the doctrine of caveat emptor remains very much alive in the context of real estate transactions in BC . . . In general, purchasers bear the risk of defects in the quality of a property. Liability for this risk may shift to the vendor where there is established: (

i) a breach of contract; (ii) active concealment (i.e., fraud); (iii) non-innocent misrepresentation; or (iv) an implied warranty of habitability in the case of newly-constructed homes. Liability for this risk may also shift where latent defects are established that render a property dangerous or uninhabitable. In short, a vendor has a common law duty to disclose: (

i) a latent defect that is not discoverable through a reasonable inspection or through reasonable inquiries; and (ii) the latent defect renders the property dangerous or unfit for habitation. If a defect does not render a property dangerous or uninhabitable, caveat emptor applies regardless of whether the defect in question is patent or latent. [ 105 ] With respect to property disclosure statement, the Justice Smith went on to state at para. 48 : [48] Information contained in a disclosure statement that is incorporated into a contract of purchase and sale may be a representation

upon which a purchaser can rely . . . However, a vendor is only obliged to disclose his or her current actual knowledge of the state ofaffairs of the property to the extent promised in the disclosure statement and need say “no more than that he or she is or is not aware ofproblems” . . . In other words, the vendor must correctly and honestly disclose his or her actual knowledge, but that knowledge does nothave to be correct. A vendor is not required to warrant a certain state of affairs but only to put prospective purchasers on notice of anycurrent known problems.

The purpose of a disclosure statement is to identify any problems or concerns with the property, not to givedetailed comments in answer to the questions posed. [Citations omitted] [106] In Hamilton v. Callaway, 2016 BCCA 189, the Court of Appeal considered when a representation on a property disclosurestatement constitutes an actionable misrepresentation. At paragraph 44, Justice MacKenzie cites with approval the following passagefrom Justice Joyce’s decision in Hanslo v.

Barry, 2011 BCSC 1624: [96] Based on these authorities, it is my view that in this case, the incorporation of the [property disclosure statement] into the contractdid not turn the representations contained in the [property disclosure statement] into contractual warranties. There was no warranty thatthe circumstances referred to in the questions, which were answered in the negative, did not exist. They are representations as to the truestate of knowledge of the vendor and may support a claim in breach of contract if the statement was untrue and did not accord with thevendor’s true belief at the time.

It is my view that insofar as a claim is based on breach of contract, it is not necessary that therepresentations relate to latent defects that are dangerous or that render the premises uninhabitable. It is sufficient if there is a breach ofcontract which caused damage. [107] In this case, the Claimant has not articulated a specific cause of action in its pleadings. I glean from the evidence andsubmissions the Claimant alleges Mr. Maryon deliberately or recklessly or negligently concealed from them problems of which he wasaware or ought to have been aware with respect to: (

a) the water system; (

b) the eastside sanitary sewer system; (

c) the plumbing system;(

d) the presence of moisture and mould in the crawl space; and (

e) the House was unfit for habitation. The Claimant alleges Mr. Maryonalso deliberately removed or allowed to be removed the RSF woodstove in the mini-apartment at the back of the Shop. [108] With respect to the issue of disclosure, the Claimant asserts: a. Mr. Maryon lied or exaggerated when he told Drs. Daibo and Nelson in mid-August 2015, that everything was fine; b. Mr. Maryon knowingly and untruthfully or recklessly answered question 2(B), 2(F), 3(G), 3(K), 3(

O) and 4(

B) of the PropertyDisclosure Statement incorrectly; c. the Claimant relied on Mr. Maryon’s personal assurances and on the Property Disclosure Statement in deciding to purchase theProperty and at what price; and d. as a result, the Claimant paid $220,000 for a property that was actually worth less. [109] In essence, the Claimant’s claim is one of misrepresentation. In Shaughnessy v.

Sidhu, 2016 BCPC 308, at paras. 89 and 90,Judge MacCarthy described misrepresentation as follows: [89] Misrepresentation is a false statement of fact, made in the course of negotiations or in an advertisement that has the effect ofinducing a reasonable person to enter into the contract.

The principal remedy is rescission . . . whereby the contract is set aside and theparties are restored to their original positions. [90] Statements made in the course of negotiations for a contract can be put on an ascending scale of significance, from mere puffery toinnocent misrepresentations, negligent misrepresentations, and fraudulent misrepresentations : Pacific Playground Holdings Ltd. v.Endeavour Developments Ltd., 2002 BCSC 126 . [110] In real estate transactions, there is no right of recovery for innocent misrepresentation: Nixon v. MacIver, 2016 BCCA 8, McCluskie v. Reynolds, (BC SC).

Accordingly, I will consider the Defendant’s potential liability for: (a)fraudulent misrepresentation; (

b) negligent misrepresentation; and (

c) breach of contract. [111] As this is a civil cause of action the Claimant must prove its case on a balance of probabilities: F.H. v. McDougall, 2008 SCC53 . Fraudulent Misrepresentation [112] An allegation of fraudulent misrepresentation is an allegation of deceit. As with all civil claims, the Claimant must provefraudulent misrepresentation on a balance of probabilities. Nevertheless, because it is so pejorative, fraud must be strictly proven. InAnderson v.

British Columbia (Securities Commission), 2004 BCCA 7, Justice MacKenzie, for the unanimous court, stated at para. 29: [29] Fraud is a very serious allegation which carries a stigma and requires a high standard of proof. While proof in a civil or regulatorycase does not have to meet the criminal law standard of proof beyond a reasonable doubt, it does require evidence that is clear andconvincing proof of the elements of fraud, including the mental element. [113] Recently, in Ban v.

Keleher, 2017 BCSC 1132, Justice Dorgan reviewed the law of fraudulent misrepresentation in thecontext of the purchase and sale of a residential property. Citing Van Beek v. Dodd, 2010 BCSC 1639, at para. 42, Dorgan J. set outwhat a claimant must prove to succeed in a claim for fraudulent misrepresentation: a. the defendant made a representation of fact to the claimant; b. the representation was false in fact; c. the defendant knew that the representation was false when it was made, or made the false representation recklessly, not

knowing if it was true or false; d. the defendant intended for the claimant to act on the representation; and e. the claimant was induced to enter into the contract in reliance upon the false representation and thereby suffered a detriment. [114] In Hanslo v. Barry, Justice Joyce discussed fraud in the context of a residential real transaction that went awry: [72] What constitutes fraud in this context seems to be something of an elastic concept.

The classic and most obvious form of fraud iswhere the vendor positively misstates to the purchaser facts, which he knows to be false, for the purpose of deceiving the purchaser. Butthe concept of fraud has been extended to apply to other situations involving the active non-disclosure or concealment of latent defects. [115] In Ban v. Keleher, Justice Dorgan notes at para. 20: It should also be noted that where a misrepresentation is properly characterized as being fraudulent, the doctrine of caveat emptor willnot apply (Hanslo, at para. 71). For example, this exception to the doctrine was applied in Aldred v.

Colbeck, 2010 BCSC 57, where theseller failed to disclose to the buyer the presence of an underground storage tank. [116] In Shaughnessy v. Sidhu, Judge MacCarthy reviewed and summarized the law on fraudulent misrepresentations at paras. 91 to95: [91] A fraudulent misrepresentation is a representation of fact made without any belief in its truth, with the intent that the person towhom it is made will act on it, and actually causing that person to act on it . . . [92] The plaintiff must prove fraud strictly; allegations will not be lightly accepted . . .

The plaintiff must show a positive statement offact; facts must be differentiated from opinion . . . [93] There must be evidence of dishonesty, or such recklessness as to the truth as is tantamount to dishonesty . . .

The plaintiff mustshow evidence of knowledge that the representation was untrue, and of an intent to defraud or the absence of an honest belief in the truthof the representation . . . [94] The court also must be shown that the misrepresentation was relied upon by the plaintiff in entering the contract . . . [95] In some circumstances, conduct that does not amount to fraud may be construed by the court to be negligence. . . [Citations omitted] [117] Where a claimant proves fraudulent misrepresentation, the court may order rescission or damages or both.

In this case, theClaimant has affirmed or adopted the Contract and seeks damages. The court ordinarily calculates damages on the basis of the losssuffered through the deceit, so as to place the claimant into the position it would have been but for the fraud: Shaughnessy v. Sidhu,paras. 96-98. Negligent Misrepresentation [118] Negligent misrepresentation is a tort, the proof of which entitles the claimant to damages for negligence: Hedley Byrne & Co.v.

Heller & Partners Ltd., [1963] 2 All E.R. 575 (H.L.). [119] In order to succeed with a claim of negligent representation, the claimant must prove the following five elements set out inQueen v.

Cognos Inc., (SCC), [1993] 1 S.C.R. 87: a. there was a duty of care based on a special relationship between the claimant and defendant; b. the defendant made a representation which was false, inaccurate or misleading; c. the defendant acted negligently in making the representation; d. the claimant reasonably relied on the representation; and e. in consequence of that reliance, the claimant suffered damages. [120] In a real estate transaction the law presumes a “special relationship” between a buyer and seller, and the seller owes thepurchaser a duty of care (Hanslo v. Barry; at paras. 117-118).

A misrepresentation in a property disclosure statement is capable ofgiving rise to a claim for damages for negligent misrepresentation: Hanslo v. Barry, para. 109.

In certain circumstances, the absence of astatement can be a negligent misrepresentation: McCluskie, at para. 67. [121] In determining whether a misrepresentation is negligent the court applies the same standard used in every negligence action –that of the hypothetical “reasonable person”: McCluskie, para. 70. [122] Upon proving negligent misrepresentation, a claimant is entitled to be put in the position he or she would have been in had themisrepresentation not been made: Rainbow Industrial Caterers Ltd. v. Canadian National Railway Co., (SCC).

Theclaimant bears the burden of proving on a balance of probabilities what that position would have been: Shaughnessy v. Sidhu, para. 104. Breach of Contract [123] Although different legal principles sometimes apply in determining whether liability exists for breach of contract or for

negligent misrepresentation, no such distinctions arise where the property disclosure statement is incorporated into the contract ofpurchase and sale. The defendant’s representations set out in the property disclosure statement are representations upon which theclaimant is entitled to rely: Roberts v. Hutton, 2013 BCSC 640 , at para. 77 citing Ward v. Smith, 2001 BCSC 1366 atpara. 31; Kiraly v. Fuchs, 2009 BCSC 654 at para. 46; and 413255 B.C. Ltd. v. Jesson et al, 2006 BCSC 1070 .

Issue #2: What are the statements of fact upon which the Claimant can rely? [124] The Contract excludes any representations, warranties, guarantees, promises or agreements other than those expressly set outtherein and to any representations contained in the Property Disclosure Statement: Exhibit 2, p. 4, para. 18. In this case, any oralstatements Mr. Maryon made to Drs. Daibo and Nelson in mid-August 2015 as to the condition of the Property were not incorporatedinto the Contract. [125] Both the Contract and the Property Disclosure Statement refer to “representations”: Exhibit 2, p. 4, para. 18 and Exhibit 3. Mr.

Maryon’s responses in the Property Disclosure Statement are therefore representations, not warranties: Nixon v. MacIver, at para. 48and Hamilton v. Callaway at para. 43. [126] It bears reiteration that Mr. Maryon’s representations in the Property Disclosure Statement were statements of his actualknowledge of the condition of the Property at the material time. The main purpose of the Property Disclosure Statement was to providethe Claimant with information with respect to known problems. Mr. Maryon was only required to disclose his “current actualknowledge” at the time. Mr.

Maryon was not required to say anything more than he was not aware of problems. He was not required toprovide detailed comments in answer to the questions posed in the Property Disclosure Statement: Nixon v. MacIver, at para. 48. TheProperty Disclosure Statement would have to be far more detailed if it was meant to do more: Zaenker v. Kirk (1999), 30 R.P.R. (3d) 9(B.C.S.C.), appeal dismissed [2001] B.C.J. No. 1149. [127] Because representations are not warranties, their breach attracts different remedies.

In this case, the Claimant seeks damagesfor the investigation, replacement and repair of the items in issue as though the defects or deficiencies resulted from a breach ofwarranty. Generally, damages for negligent misrepresentation in the sale of real property reflect the difference between the priceactually paid for the property and that which should have been paid if the impugned representations were true: Roberts v. Hutton, atpara. 158. [128] In the present case, the Claimant commissioned a professional to conduct a home inspection before finalizing the Contract:Exhibit 5.

This does not automatically shift the Claimant’s reliance from the Property Disclosure Statement to the home inspectionreport. Inspector Davis’ inspection was a visual inspection of limited scope. The Claimant was entitled to rely on both the homeinspection report and Property Disclosure Statement: Hanslo v. Barry, para. 127. Issue #3: What is meant by “problems” in the Property Disclosure Statement? [129] Mr. Maryon represented he was not aware of any problems with the water system, the sanitary sewer system, the buildingstructure, moisture or mould in the crawl space.

This begs the question as to what constitutes a “problem”. [130] In Nixon v. MacIver, at para. 47, the Court of Appeal discusses the seller’s common law duty to disclose latent as opposed topatent defects. In Kiraly v. Fuchs, Mr. Justice Metzger, at paras. 49 and 50, describes patent defects as those discoverable by conductinga reasonable inspection of the property and making reasonable inquiries into its qualities.

Latent defect, on the other hand, are ones thatcould not have been identified by a purchaser upon a reasonable inspection of the property. [131] In this case, the Defendant’s Property Disclosure Statement was incorporated into and became part of the contract. In myview, the Claimant was entitled to rely on Mr. Maryon’s representations contained in the Property Disclosure Statement, whether theyrelate to latent or patent defects. Nevertheless, I am mindful of Justice MacKenzie comments in Hamilton v.

Callaway (at para. 43), thata property disclosure statement only asks for the seller’s awareness, and awareness is “inherently subjective.” Application of the law to the circumstances in this case [132] There is no contest that Mr. Maryon made the representations set out in the Property Disclosure Statement. He does notdispute the Claimant experienced the problems alleged. Clearly the Property harboured some defects which could be characterized aseither patent or latent. What is contentious is Mr. Maryon’s level of awareness of these problems before the sale completed.

Mr.Maryon also denies wrongfully removing the RSF stove from the mini-apartment in the Shop. Assessing Credibility [133] In order to determine the matters in issue, I must assess the credibility of witnesses who appeared before me at trial. Thisexercise engages the oft-cited test described by Mr. Justice O’Halloran in Faryna v. Chorny, (BC CA), at p. 357, theBritish Columbia Court of Appeal stated: . . .

In short, the real test of the truth of the story of the witness in such a case must be its harmony with the preponderance of theprobabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions . . . Issue #4: Is the Defendant liable to the Claimant for defects to water system? [134] The water supply to the Property was drawn from Francois Lake. It consisted of a jet pump, pressure tank, water lines andfittings: Exhibit 5, p. 7. [135]

Section 2(

B) of the Property Disclosure Statement asks the seller to indicate whether he was aware of any problems with thewater system. “Do not know” was not an available option. Mr. Maryon initialled “No”, thereby representing that as of March 19, 2015,he was not aware of any problems with the water system.

[ 136 ] The Claimant asserts this representation was untrue. After taking possession of the Property, Drs. Nelson and Daibo found the jet pump and water lines problematic. Because the pump would not hold its prime, Dr. Nelson dismantled and cleaned it. Unfortunately, it was an old pump and no longer manufactured. Dr. Nelson could not obtain the necessary parts to repair the pump so she replaced it with a new one. [ 137 ] Dr. Nelson says a properly functioning pump needs to be primed only once at the beginning of the season.

The fact the screw top to the primer appeared stripped indicated to her that the pump had been malfunctioning for some time and had required constant priming: Exhibit 9, p. 11. [ 138 ] Mr. Maryon says he lived on the Property for 13 years, and even after he moved to Kimberly in the spring of 2015, he returned every two weeks. He denies having any problem with the jet pump or water lines. Eight years ago, Mr. Maryon installed a new jet pump, pressure tank and piping.

He only had to prime the pump every nine or ten months; however, he did have to “bleed air” out of the system from time-to-time because when the jet pump pulled water from the lake it sometimes created air bubbles. [ 139 ] By the end of the trial, I had the distinct impression that Mr. Maryon and Drs. Nelson and Daibo adhere to different standards of home maintenance and repairs. Dr. Nelson, in particular, is pro-active in maintaining and repairing household equipment and systems. This explains her skill at dismantling water pumps, clearing water lines, replacing flapper valves and repairing faucet cartridges.

Mr. Maryon, on the other hand, has never “stripped down” a jet pump as Dr. Nelson had done: Exhibit 9, pp. 13 and 14. He was untroubled by the sludge or electric tape in the westside toilet. I gather Mr. Maryon repaired or replaced items when they stopped working. [ 140 ] I find Mr. Maryon did not share Drs. Daibo and Nelson’s view there was a problem with the water system. Mr. Maryon had techniques he employed to keep the jet pump and water system working, which included bleeding the air from the lines. The issue before me is not whether Mr.

Maryon exercised a reasonable standard of care in maintaining his water system, but whether he honestly believed it was not a problem. I conclude that Mr. Maryon did not believe the water system was a problem. [ 141 ] In my view the defect to the water system was a patent rather than latent defect. Drs. Nelson and Daibo spent hours inspecting the Property before finalizing the Contract. They did so firstly with Mr. Maryon and subsequently with two different realtors. They retained Steven Davis to conduct a home inspection. The water system was obviously dated. There is no suggestion that Mr.

Maryon refused any request to demonstrate the water system was operational. I find the defects to the water system were discoverable through reasonable inspection and inquiry. Dr. Nelson was obviously capable of assessing whether the water system operated satisfactorily. I do not find the defects to water system at the material time constituted an exception to the doctrine of caveat emptor . [ 142 ] With regards to the water system in the House on the Property, I find Mr.

Maryon: a. made no warranties, express or implied to the Claimant as to its condition; b. did not conceal anything with respect to the its functionality; c. did not make any fraudulent or non-innocent misrepresentations as its functionality; d. did not breach his contractual obligations to disclose what he perceived to be a problem with the water system; e. did not breach his duty to disclose a latent defect that rendered the House dangerous or unfit for habitation; and f. was not reckless as to the truth or falsity of statements relating to the fitness of the House for habitation as a result of defects of the water system. [ 143 ] In sum, I do not find Mr.

Maryon liable to the Claimant for defects to the water system arising from a either a breach of the Contract or a breach of his common law duty to disclose a latent defect. Issue #5: Is the Defendant liable to the Claimant for defects to the sanitary sewage system? [ 144 ] The Property is rural and has an onsite septic sewage system. Mr. Maryon represented on

section 2(

F) of the Property Disclosure Statement he was unaware of any problems with the sanitary sewage system. [ 145 ] According to Mr. Willson, the main septic system on the property was relatively new, in good shape and functional. I do not understand the Claimant to be alleging any defects to the main sanitary sewer system. [ 146 ] The sanitary sewage system in issue is that servicing the eastside of the House. Drs. Daibo and Nelson said that immediately upon flushing the toilet in the eastside washroom, it overflowed. The bathtub would not drain. No amount of plunging or auguring cleared the line. Mr.

Willson investigated the problem and discovered the sewer pipes in the eastside were not connected to a viable septic system. Mr. Weller also excavated the carport area where the sewer pipes terminated and discovered the remains of a derelict wooden septic tank. [ 147 ] In my view the defective sewer system in the eastside of the house was a latent defect that would pose a danger or affect the habitability of the Property. It was a defect that Mr. Maryon was obligated to disclose had he been aware of its existence. [ 148 ] The Claimant submits Mr.

Maryon had to be aware of the problem to the eastside sewer system based on the condition of the carport cement overlying the defunct septic tank. The fact the concrete in the affected area of the carport had been replaced with gravel indicates Mr. Maryon had been excavating in that locale and would have discovered the problem. [ 149 ]

Section 2(

F) of the Property Disclosure Statement asks the seller to indicate whether he was aware of any problems with the sanitary sewer system. The form crossed off “Do Not Know” as an option. Mr. Maryon initialled “No”, thereby representing that as of

March 19, 2015, he was not aware of any problems with the sanitary sewer system. [ 150 ] Mr. Maryon says that he had no inkling the sewer pipes on the eastside of the House were not connected to the main septic sewage system. Although he lived principally in the westside, people did occasionally use the eastside. He was not made aware of any problems. Mr. Maryon did not say how long ago it was that he or anyone used the washroom or kitchen facilities in the eastside of the House. [ 151 ] I cannot find on the evidence before me that Mr.

Maryon was aware the eastside sanitary sewage system was not connected to the main septic tank, or for that matter, to any septic tank. He said that eight or nine years before selling the Property, he removed the broken concrete in the carport and filled in the depression with gravel. He did not excavate in this area and did not know the depression marked the location of a collapsed wooden septic tank. He assumed the broken concrete resulted from movement to the dirt substratum as was evident in other areas of the carport. [ 152 ] Mr.

Weller estimated the wooden septic tank he unearthed in 2016 was over 20 years old. Mr. Maryon testified Mr. Cowan poured the carport concrete over dirt in the 1980s. There is nothing implausible about Mr. Maryon’s professed ignorance of the existence of this derelict septic system. After all, the Claimant only learned of its existence with the assistance of skilled tradesmen using augers, a sewer line camera and excavators. As Mr.

Maryon lived in the westside of the House, I accept he would not invest that much time, money and effort, investigating the drainage issue in the eastside of the House. [ 153 ] What I do find implausible, however, is Mr. Maryon’s professed ignorance of any drainage problems on the eastside of the House. Dr. Daibo said immediately upon flushing the toilet it overflowed. Although I do not find Mr.

Maryon knew why the toilet or bathtub in the eastside bathroom did not drain, I do find that it was more probable then not he was aware there was a problem. [ 154 ] I make the following observations and findings with respect to the eastside sanitary sewer system: a. The problem with the eastside sanitary sewer system was a hybrid patent/latent defect. The drainage problem would have been immediately discoverable with simply flushing the toilet or running the water tap. The reason for the problem was not discoverable without significant investigation; b.

The eastside of the House was intended to be a separate living space. The defect to its sanitary sewage system would render it dangerous or unfit for habitation; and c. Mr. Maryon made a non-innocent misrepresentation as to his awareness of a problem with the sewer drainage on the eastside of the House. [ 155 ] With respect to the sanitary sewage system on the eastside of the House, I do not find that Mr.

Maryon: a. actively concealed its functionality; b. made fraudulent misrepresentations as to its functionality; c. knew the origins or severity of the problem; d. breached his duty to disclose a latent defect that rendered the eastside of the House dangerous or unfit for habitation; or e. was reckless as to the truth or falsity of statements relating to the fitness of the House for habitation. [ 156 ] Because the Property Disclosure Statement was incorporated into Contract, the Claimant was entitled to rely on it as a true statement of Mr. Maryon’s awareness of any problems with the sanitary sewage system.

The fact the Claimant also obtained a House Inspection Report, did not deprive the Claimant of the right of relying on Mr. Maryon’s representations. As set out in Exhibits 5 and 6, Inspector Davis was limited in his ability to discover and report on latent defects because some systems or components were inaccessible. [ 157 ] I am satisfied that the Claimant established Mr. Maryon made a representation of fact in the Property Disclosure Statement, in which he failed to disclosed the drainage problems in the eastside of the House. As the seller, Mr. Maryon owed the Claimant a duty of care.

The Property Disclosure Statement presented an inaccurate and misleading picture of the state of the eastside sanitary sewage system. I find Mr. Maryon acted negligently in failing to disclose his awareness of the problems with that system. I also find the Claimant reasonably relied on Mr. Maryon’s negligent misrepresentation in entering into the Contract, to its detriment. [ 158 ] In sum, I find the Claimant has proven on a balance of probabilities that Mr.

Maryon misrepresented his awareness of a drainage problem with the sewage system on the eastside of the house and in doing so, acted negligently and breached the Contract. [ 159 ] The Claimant is therefore entitled to damages, which I will later address. Issue #6: Is the Defendant liable to the Claimant for defects to the plumbing system? [ 160 ] On his Property Disclosure Statement Mr. Maryon represented in

section 3 (

O) he was unaware of any problems with the plumbing system. The Claimant says the defects to the westside toilet, the leaky faucet and the ABS pipes represent defects to the plumbing system of which Mr. Maryon was aware and liable. To the extent the Claimant may have considered the problems to the eastside facilities a plumbing problem, I have dealt with this defect under the rubric of problems with the sanitary sewer system. [ 161 ] The plumbing problems with the leaky faucet and westside toilet are patent defects readily discoverable on reasonable inspection and inquiry. Mr.

Maryon denies any knowledge of the leaky ABS pipes in the crawlspace, and the Claimant has not proven otherwise. In any event, none of these are latent defects which could render the House dangerous or uninhabitable.

[ 162 ] Although I accept the plumbing system was poorly maintained, I do not find that Mr. Maryon considered it a “problem”. From his perspective, the westside toilet and faucets were functional. He did not regularly use the eastside of the house, so the leaky faucets did not come to his attention or impress him as a problem. As to the westside toilet, Mr. Maryon said it was Mr. Cowan who jerry rigged the flapper valve mechanism with electrical tape. [ 163 ] I am not convinced that leaky faucets and the defective flapper valve constitute noteworthy plumbing problems in a House of this vintage.

The House inspector did not consider leaky faucets sufficiently significant to address them in his report. Whether or not he ought to have addressed them, is not something I have to decide. [ 164 ] If I am wrong, and Mr. Maryon ought to have disclosed to the Claimant the leaky faucets and the westside toilet mechanism, I find the Claimant did not rely on these representations. [ 165 ] The Claimant hired a professional house inspector who produced a report opining the kitchen and bathroom faucets were serviceable.

The only identifiable problem with the toilets was the one on the westside was loose and needed to be rebolted to the floor. Upon receiving and reviewing the Home Inspection Report, Dr. Daibo believed the plumbing system in the House was functioning properly. [ 166 ] Mr. Davis was not a party to these proceedings and he did not testify at trial. It is clear that Dr. Daibo felt misled by the Home Inspection Report, but this does not shift his reliance to Mr. Maryon.

Issues #7: Is the Defendant liable to the Claimant for moisture, rot and mould in the eastside crawlspace? [ 167 ] On his Property Disclosure Statement Mr. Maryon represented in

section 3 (

G) he was unaware of any structural problems and in 3(

K) he was unaware of any moisture and or water problems in the walls, basement or crawl space. Yet, after the Claimant took possession of the Property, Drs. Daibo and Nelson discovered moisture, rot and mould in the crawlspace in the area of the eastside bathroom. Some of the floor joists and support columns are so rotten then need replacing. Mr. Maryon does not dispute these defects, but denies having any prior knowledge of their existence. Mr.

Maryon said he could access the shutoff valves to the outside water lines without having to go into the crawlspace, so he never did. [ 168 ] The Claimant urges the Court to reject Mr. Maryon’s evidence he has never been in that area of the crawlspace and points to recently repaired ABS sewer lines and the presence of tinfoil in the crawlspace. [ 169 ] The Claimant further argues the presence of plastic garbage bags in the vicinity of the washing machine drain is indicative of someone’s half-baked attempt to stop water from the leaky drain pipe seeping into the foundation. [ 170 ] Dr.

Nelson said the odour from the mould in the crawlspace is overpowering. The fact all the windows were open at the time she walked through the House with Mr. Maryon, strongly suggest he was aware of the mould problem. She asserts the open windows were an attempt to conceal the presence of the mould. [ 171 ] I do not find the Claimant has proven on a balance of probabilities that Mr. Maryon was in the crawlspace recent to the creation of the Contract or aware of the moisture, mould and rotting timbers. My conclusion is based on the following evidence and observations: a.

Although the Claimant submits the duct tape on the ABS lines appears recent, I have no evidence as to the deterioration rate of this product. The duct tape is on plastic pipes in a sheltered area, one of which is partially covered with dirt and debris: Exhibit 9, pp. 6 & 7; b. The tin foil to which the Claimant refers is crumpled into a small ball. As tin foil is non-biodegradable, I do not know how long it can remain in the crawlspace before showing overt signs of deterioration. Also, it is unclear to me how the small ball of tinfoil would have been effective to halt the influx of water: Exhibit 9, p. 5; c.

When Drs. Daibo and Nelson met with him in mid-August 2015, Mr. Maryon had just returned from Kimberly. I do not find it suspicious that Mr. Maryon opened the windows to air out a House in summer that had been closed up for two weeks or so; d. The plastic bags buried in the vicinity of the washing machine drain were plastic wood pellet bag. At one time Mr. Cowan owned a pellet stove which he subsequently replaced with a propane heater. This occurred prior to Mr. Maryon acquiring the Property. Although it is possible Mr.

Maryon used some old pellet bags to prevent water from entering the foundation, it is equally, if not more probable, that Mr. Cowan installed these items: Exhibit 9, p. 10; e. There was no suggestion the problems with the floor joists and support columns were apparent from anywhere other than the interior of the crawlspace. If the bathroom floor was spongy or unstable, I assume this would have come to the attention of Drs. Daibo or Nelson or their realtors or house inspector.

Although I accept the moisture, mould and structural damage collectively constituted a latent defect, I also accept it may have gone undetected to someone who had never been inside the crawlspace; f. Inspector Davis’ Home Inspection report indicates access to the crawlspace was limited because the pressure tank and water tank covered the access hatch in the laundry room. Mr. Maryon said he installed those items eight years prior to selling the property to the Claimant; and g.

The photographs appear to show a profusion of cobwebs which indicate to me that no one has been in the affected crawlspace for some time: Exhibit 9, pg. 5. [ 172 ] The Claimant had the House inspected prior to finalizing the Contract. Inspector Davis’ report is replete with warnings about moisture infiltrating the foundation and crawlspace from the perimeter slope, the proximity of the washing drain pipe, the absence of gutters and downspouts, and the absence of vents and plastic lining in the crawlspace and the presence of staining. Despite all these red

flags, Dr. Daibo finalized the Contract after receiving the Home Inspection Report with no further negotiation. [ 173 ] Dr. Nelson said the presence of mould renders the eastside of the House virtually uninhabitable. I therefore accept the moisture, mould and rotting timbers are properly characterized as a latent defect. They could render the House dangerous or unfit for habitation. I do not find, however, the moisture, mould and rotting timbers in the crawlspace were latent defects of which Mr. Maryon was aware.

Accordingly, he did not breach his duty by failing to disclose their presence. [ 174 ] In sum, I am not satisfied on a balance of probabilities that Mr. Maryon was aware of the condition of the crawlspace in the vicinity of the eastside bathroom. And in that regard, I cannot find him liable for fraudulent or negligent misrepresentation or for breach of contract. Specifically, I do not find his representations as to the defects referred to in

Section 3 (

G) or 3(

K) of the Property Disclosure Statement, untrue, inaccurate, or misleading. Issue #8: Did the Defendant wrongfully remove a wood burning stove from the mini-apartment in the Shop? [ 175 ] Drs. Daibo and Nelson testified as to the state of the Property when they met with Mr. Maryon in mid-August 2015. This initial meeting did not spawn the Contract. Neither testified as to their observation as to the presence of woodstoves on August 22, 2015, the day they inspected the Property with Mr.

Shanks. [ 176 ] Even if I accept their evidence there was a woodstove in the mini-apartment in the Shop in mid-August 2015, I have no evidence it was still present on August 22, 2015. Mr. Maryon was contractually obligated to leave behind all the woodstoves on the property when it was viewed on August 22, 2015, not at some earlier date. [ 177 ] The Claimants have failed to prove on the balance of probabilities Mr. Maryon breached the Contract by removing from the Property a woodstove which was present on August 22, 2015. Issue #9: If Mr.

Maryon is liable to the Claimant for any defect or deficiency, what are the damages? [ 178 ] I am satisfied in failing to disclose his awareness of the drainage problems on the eastside of the House Mr. Maryon is liable for negligent misrepresentation and breach of contract. The Claimant is entitled to be put in the position it would have been in if the misrepresentation or breach had not occurred. [ 179 ] I am satisfied that had Mr. Maryon disclosed his awareness of problems to the eastside sanitary sewer system, the Claimant would have still purchased the property in any event, albeit f

[…]