2015 QCCQ 11319, 2015 QCCQ 11319

Gestion C. Tsiolis inc. c. 9033-6629 Québec inc. 2015 QCCQ 11319 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL « Civil Division » No: 500-22-209052-144 DATE: November 10, 2015 ______________________________________________________________________ BY THE HONOURABLE DOMINIQUE GIBBENS, J.C.Q. ______________________________________________________________________ GESTION C. TSIOLIS INC. Plaintiff v. 9033-6629 QUÉBEC INC.

Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Plaintiff claims damages of $44,862.84 from Defendant for negligence in the inspection of a property prior to its purchase by Plaintiff in 2013. It claims that Defendant failed to identify and advise Plaintiff of the true extent of certain structural problems affecting the property and the urgency of proceeding to corrective work. [ 2 ] Defendant denies any liability towards Plaintiff.

It claims that it accurately identified and alerted Plaintiff to the structural problems affecting the property and the corrective work needed. By way of a cross-demand, it claims $12,503.54 from Plaintiff for the legal fees incurred to contest the action, which it considers to be abusive.

FACTUAL CONTEXT [ 3 ] In the fall of 2012, Plaintiff became interested in purchasing a 12-unit residential building located in Saint-Jérôme (the « Property »), listed for at $965,000. [1] [ 4 ] On October 25, 2012, the owner accepted Plaintiff’s offer to purchase the Property for $927,500, subject to a satisfactory building inspection. [ 5 ] Plaintiff retained Defendant to complete the inspection. It was carried out on November 6, 2012 by Mr. Jimmy Vathis, an engineer and Defendant’s principal, in the presence of Mr. Christos Tsiolis and his wife Mrs.

Dimitra Bakopanou, Plaintiff’s principals. [ 6 ] The inspection took approximately 3 hours to complete and every apartment was inspected. In each one, the floor was visibly sloped in the same area and there were diagonal cracks in the walls and/or ceilings in the area where the floors were sloped. [ 7 ] Mr. Vathis also inspected a crawl space in the basement where the structural components of the building were visible. He found that the load bearing structure of the building was inadequate, which resulted in the sloping floors and cracks above.

He found that modifications had been brought to a portion of the structure, but these modifications were inappropriate and required improvement. The remaining portion of the structure also needed to be solidified by adding new supporting columns. [ 8 ] There is conflicting evidence regarding what was discussed during the inspection. [ 9 ] On the one hand, Mr. Vathis explained that Mr.

Tsiolis and his wife were preoccupied by the sloping floors and diagonal cracks and questioned him at length about the cause of these defects and what could be done to fix them and he explained his conclusions to them. [ 10 ] On the other hand, Mr. Tsiolis claims that although he saw the sloping floors and diagonal cracks in the walls of the apartments, he was not alarmed because Mr. Vathis made no mention of these defects during the inspection. Mr. Tsiolis admits, however, that after inspecting the crawl space, Mr.

Vathis advised him that the structure of the building would have to be solidified by adding new supporting columns and by improving existing modifications. [ 11 ] After the inspection, Defendant completed a written report entitled Property Condition Assessment (the « Inspection Report ») [2] containing the following comments regarding the structure: “ STRUCTURE Description and observation; The structure is composed of a conventional wood frame, brick and metal veneer on a poured concrete foundation. The building features an accessible crawl space area where the interior structural components are visible .

The concrete foundation walls and footings are not visible. The floor framing is composed of conventional joists, observed as 2 x 8 lumber although not visible on the superior floors . […]

Recommendations and priorities; [...] From the interior, it is observed that the floors are sloped slightly in similar areas within all dwellings. There are fissures which appear in the drywall at the locations of the slope. Fissures in the drywall and slightly sloped floors are indicative of floor structure deflection . In the crawl space area, the configuration is such that the main load bearing support is by load bearing partitions. The joists, identified as 2 x 8, are assembled with long spans. This resulted in sagging and consequently sloped floors.

The rear half of the buildings floor structure area has been modified. Intermediate beams and posts have been installed. The installation and materials used is inappropriate and does not conform to accepted standards and practices. The remaining half of the floor area should be solidified and the existing modifications be improved. Columns require footings and beams be appropriately sized . (p. 3-4) […]

Summary of Short term Repairs or Actions • Rectification of the roof and ventilation components……….$18,000-$20,000 • Rectification of the floor structure, main components………$13,000-$15,000 • Repair of the brick sills or replacement……………………$2,000-$3,000 […]” (Emphasis added) [ 12 ] Mr. Vathis met with Mr. Tsiolis a few days after the inspection to discuss the Inspection Report. According to Mr. Vathis, the structural issues were again explained extensively to Mr. Tsiolis during this meeting, but this is denied by Mr.

Tsiolis. [ 13 ] On the basis of the Inspection Report, Plaintiff was able to negotiate a reduction of the purchase price of the Property from $927,500 to $905,000 on the following terms: “M 4.3 – Following the pre-purchase inspection performed by Jimmy Vathis Eng. of the firm Mount Royal Consultants on Nov 6 2012, the parties agree that the purchase price shall be reduced to nine hundred and five thousand dollars ($905,000.00) to account for the work to be performed to replace the roof and repair the structural components of the building described in the inspection report .” [3] (Emphasis added) [ 14 ] Plaintiff purchased the Property on January 28, 2013. [4] [ 15 ] Shortly afterwards, Mr.

Tsiolis contacted Mr. Vathis to discuss the repairs needed to the structural components. Mr. Vathis offered to prepare plans and specifications for the work at a cost of approximately $2,000, but Mr.

Tsiolis told him to hold off until he called him back to confirm the mandate. [ 16 ] On March 6, 2013, a fire ignited in the hot water tank of apartment #9 of the Property and members of the Service de la sécurité incendie of the City of Saint-Jérôme (the « Fire Department ») were called on site. [ 17 ] The fire was quickly extinguished, but inspectors from the Fire Department inspected the Property and noted the sloping floors and cracks in the walls of the apartments.

After inspecting the crawl space, the Fire Department inspectors concluded that the building was a major security risk due to critical structural damage and ordered its evacuation. [5] Tenants were taken to a local hotel, under the direction of the Red Cross. [ 18 ] Mr. Tsiolis was immediately advised and was told by the Fire Department to have the structure of the building assessed by an engineer and obtain a report confirming that the building was structurally ound before the tenants could be allowed back in. [6] [ 19 ] Mr. Tsiolis in turn called Mr.

Vathis and asked him to prepare the engineering report requested by the Fire Department. Mr. Vathis refused because he was told that the Fire Department required that the drywall in each of the apartments be opened to inspect the structure and he was not equipped to do this type of work. He provided Mr. Tsiolis with names of other engineers employed by contactors who would be better equipped to provide the needed report. [ 20 ] Plaintiff retained the engineering firm of Galion to assess the structure and provide the report requested by the Fire Department.

Galion’s report was not adduced into evidence and it is unclear when it was provided to the Fire Department or what it contained. Nevertheless, the tenants were allowed back into the Property on March 13, 2013. [7] [ 21 ] Plaintiff incurred significant costs as a result of the evacuation and, in April 2013, it tried to obtain compensation under the property damage insurance policy on the Property. In his exchange with the insurer, Mr.

Tsiolis took the position that the Fire Department had made an error of judgment when it evacuated the tenants and that Galion’s investigation had confirmed that the building was safe. [8] [ 22 ] The claim was denied by the insurer [9] and the insurance coverage on the building was eventually cancelled. [10] [ 23 ] In June 2013, Plaintiff sent Defendant a letter of demand holding it responsible for the loss suffered as a result of the evacuation. [11] [ 24 ] It filed suit against Defendant in October 2013, claiming damages of $63,970.00, which it reduced at trial to $44,862.84.

This includes $10,000.00 for the trouble and inconvenience suffered and the following costs : “ Galion $7, 760.82 Expertise structurale : $5,173.88 Plans et devis : $2,586.94

Ville de Saint-Jérôme $100.00 Accommodation for tenants $2,201.78 (Super8 St-Jérôme) 5 tenants : 4 nights (March 9 to 12) 1 tenant : 2 nights (March 11 and 12) Loss of rental income $2,320.00 (2 months for apartments 8 and 9) Food compensation $1,674.20 Construction Rénovation Sirard inc. $10,228.73 Inspection + renforcir murs : $10,228.73 Restaurer logement 9 : $6,177.61 Sylvain Landry et fils $0 Chauffe-eau Services Yvon Moisan $6,978.01 Plâtre et peinture : $2,832.10 + $1,811.33 Renforcer solives existantes : $2,334.27 Jean-Pierre Belisles $517.50 Travaux peinture Martin Baron $397.00 Rona $2,684.80 TOTAL: $34 862.84 ” [12] QUESTIONS IN ISSUE [ 25 ] These facts and the position of the parties call for the resolution of the following questions:

a) Did Defendant accurately identify and alert Plaintiff to the structural problems affecting the Property?

b) Does the action constitute an abusive proceeding and if so, is Defendant entitled to the damages claimed? ANALYSIS

a) Did Defendant accurately identify and alert Plaintiff to the structural problems affecting the Property? [ 26 ] Plaintiff claims that Defendant’s conduct falls short of the conduct expected from a reasonably diligent inspector in the context of the pre-purchase inspection of a property. [ 27 ] It argues that Defendant should have concluded that the structural problems affecting the Property were so serious that they represented an immediate security risk and required immediate corrective action and should have alerted Plaintiff accordingly. [13] [ 28 ] The Court disagrees for the following reasons. [ 29 ] The contract between the parties is a contract for services governed by articles 2098 and 2100 of the Civil Code of Québec (« C.C.Q. »), which read as follows: 2098.

A contract of enterprise or for services is a contract by which a person, the contractor or the provider of services, as the case may be, undertakes to another person, the client, to carry out physical or intellectual work or to supply a service, for a price which the client binds himself to pay to him. 2100. The contractor and the provider of services are bound to act in the best interests of their client, with prudence and diligence.

Depending on the nature of the work to be carried out or the service to be supplied, they are also bound to act in accordance with usage and good practice and, where applicable, to ensure that the work carried out or service supplied is in conformity with the contract. [ 30 ] It is generally recognized that an inspector who completes the pre-purchase inspection of a property is held to an obligation of means. [14] The inspector is expected to act prudently and diligently and to use all reasonable means to identify apparent defects and inform the client of any such defects. [15] [ 31 ] It is also generally recognized that where minor apparent defects may indicate a more serious problem, the inspector is expected to look more closely into the matter and, if necessary, refer the client to a specialist, in order to determine the extent of the problem, its cause and the corrective work needed. [16] [ 32 ] These obligations are echoed in the description of Defendant’s mandate contained in the Inspection Report:

“ Mandate […] The purpose of the PCA is to identify and report major physical deficiencies that cannot be remedied by routine maintenance . It also provides a professional opinion based on the accessible and visible areas of the building. The report provides a

summary of immediate, short-term and potential repairs, and also gives a broad cost estimate for most items .” [17] (Emphasis added) [ 33 ] The Court must consider Defendant’s conduct in light of these principles. [ 34 ] It is uncontested that Mr. Vathis proceeded to a careful and thorough inspection of the accessible and visible areas of the Property on November 6, 2012 and that he identified all apparent defects in the Property. [ 35 ] On a balance of probabilities, the evidence also shows that Mr.

Tsiolis was specifically alerted to the fact that the sloped floors and cracks were caused by a serious structural problem and that short-term corrective action was needed. Although Mr. Tsiolis testified that the sloped floors and cracks were not discussed at all with Mr. Vathis during the inspection, the Court does not find this credible given that such defects would appear serious to anyone visiting the Property and would in all likelihood be discussed. [ 36 ] The Court prefers Mr. Vathis’ testimony that Mr.

Tsiolis and his wife were preoccupied by the cracks and sloped floors and that he provided detailed explanations during the inspection about these defects, including their cause (the inadequacy of the load bearing structure of the building) and the corrective action needed (solidifying the structure of the building by adding new supporting columns and improving the modifications in place). [ 37 ] In any event, the Inspection Report clearly alerted Plaintiff that the Property was affected by a serious structural defect and recommended corrective action: [18] “Recommendations and priorities; [...] From the interior, it is observed that the floors are sloped slightly in similar areas within all dwellings.

There are fissures which appear in the drywall at the locations of the slope. Fissures in the drywall and slightly sloped floors are indicative of floor structure deflection . In the crawlspace area, the configuration is such that the main load bearing support is by load bearing partitions. The joists, identified as 2 x 8, are assembled with long spans. This resulted in sagging and consequently sloped floors. The rear half of the buildings floor structure area has been modified. Intermediate beams and posts have been installed.

The installation and materials used is inappropriate and does not conform to accepted standards and practices. The remaining half of the floor area should be solidified and the existing modifications be improved. Columns require footings and beams be appropriately sized . (p. 3-4)

Summary of Short term Repairs or Actions • […] Rectification of the floor structure, main components….$13,000-$15,000 (p. 11) ” (Emphasis added) [ 38 ] Plaintiff argues that this was insufficient and that a reasonably diligent inspector would have concluded, as the Fire Department did on March 6, 2013, that the structural problems were so serious that there was a risk of collapse and that immediate corrective action was needed. [ 39 ] The evidence, however, does not support this contention. [ 40 ] No expert evidence on this key issue was offered by Plaintiff, who relies entirely on the Fire Department’s decision to evacuate.

This decision, however, is not conclusive evidence of an immediate risk of collapse or that immediate corrective action was needed. [ 41 ] Indeed, the inspector from the Fire Department involved in the decision to evacuate admitted during his testimony that his department was acting preventively and on the basis of the preliminary opinion of inspectors who are not engineers or experts on the structural integrity of buildings.

This is why they required that an engineer assess the structure of the building and confirm that it was sound, as was apparently done because the tenants were allowed back into the Property within days of the fire. [19] [ 42 ] By contrast, Defendant’s Mr. Vathis, who is a qualified engineer, provided the Court with detailed and credible explanations regarding the nature and extent of the structural defects affecting the Property and the corrective action needed. Mr.

Vathis maintains that the Property did not constitute a security risk in November 2012 or in March 2013 and that the Fire Department should not have ordered its evacuation. [ 43 ] Moreover, Mr.

Tsiolis himself took the position that the Fire Department had made an error of judgment when it evacuated the Property in his exchanges with the insurer of the Property. [20] [ 44 ] On a balance of probabilities, the evidence shows that Defendant accurately identified the structural problems affecting the Property and advised Plaintiff of the extent of these problems, their cause and the corrective action needed. [ 45 ] Defendant therefore fulfilled its obligations towards Plaintiff.

b) Does the action constitute an abusive proceeding and if so, is Defendant entitled to the damages claimed? [ 46 ] By way of its cross-demand, Defendant claims from Plaintiff damages of $12,503.54 to compensate for the legal fees incurred to contest the action. It argues that the action is “incredulous, manifestly unfounded and unreasonable” [21] and constitutes an abuse of proceedings.

[ 47 ] Defendant relies on the provisions of articles 54.1 and following of the Code of civil procedure and, more particularly, the following provisions: 54.1. A court may, at any time, on request or even on its own initiative after having heard the parties on the point, declare an action or other pleading improper and impose a sanction on the party concerned . The procedural impropriety may consist in a claim or pleading that is clearly unfounded, frivolous or dilatory or in conduct that is vexatious or quarrelsome.

It may also consist in bad faith, in a use of procedure that is excessive or unreasonable or causes prejudice to another person, or in an attempt to defeat the ends of justice, in particular if it restricts freedom of expression in public debate. 54.4. On ruling on whether an action or pleading is improper, the court may order a provision for costs to be reimbursed, condemn a party to pay, in addition to costs, damages in reparation for the prejudice suffered by another party, including the fees and extrajudicial costs incurred by that party , and, if justified by the circumstances, award punitive damages.

If the amount of the damages is not admitted or may not be established easily at the time the action or pleading is declared improper, the court may summarily rule on the amount within the time and under the conditions determined by the court. (Emphasis added) [ 48 ] The principles developed by our Courts prior to the coming into force of these provisions continue to govern the possibility of obtaining compensation for extrajudicial fees in case of abusive proceedings. [22] As is now well established, such an award should only be granted where, clearly, a party’s use of the right to take legal proceedings is abusive. [23] [ 49 ] The right to take legal proceedings may be considered abusive : • “(…) si, dès le départ, la contestation judiciaire est de mauvaise foi, soit en demande ou en défense; consciente du fait qu’elle n’a aucun droit à faire valoir, la

partie se sert de la justice comme si elle en possédait un; • si, bien que de bonne foi au départ, une

partie réalise son erreur en cours de dossier et s’enferme dans sa malice de poursuivre inutilement le débat judiciaire; ou • lorsqu’une

partie multiplie les procédures et poursuit inutilement et abusivement le débat judiciaire. » [24] [ 50 ] The Court must be careful not to conclude that a proceeding is abusive only because the theory of the case put forth by a party is weak, in the absence of a demonstration of abuse. [25] [ 51 ] Although the Court has concluded that Plaintiff’s action must be dismissed, it has not been shown that Plaintiff was aware that it had no right of action and hat it took or continued the proceedings in bad faith or multiplied proceedings in an abusive way. [ 52 ] Consequently, the Court sees no reason to make an exception to the general rule that each of the parties must support the extra- judicial fees paid to their attorneys.

FOR THESE REASONS, THE COURT: DISMISSES the principle action, WITH COSTS ; DISMISSES the cross-demand, WITH COSTS . __________________________________ DOMINIQUE GIBBENS, J.C.Q. Dates of hearing: April 29 and 30, 2015 Me Christophe Dimakos DIMAKOS LAW GROUP Attorney for Plaintiff Me Laurent R. Kanemy NELSON CHAMPAGNE Attorney for Defendant