2015 QCCQ 10494, 2015 QCCQ 10494

Ceasar c. Michalakopoulos 2015 QCCQ 10494 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-32-138671-138 DATE: July 16, 2015 ______________________________________________________________________ PRESIDED BY THE HONOURABLE DAVID L. CAMERON, J.C.Q. ______________________________________________________________________ ADLAI CEASAR […] Pointe-Claire, Qc […] and HELEN LAN […] Pointe-Claire, Qc […] Plaintiffs v.

THEODOROS MICHALAKOPOULOS […] Dollard-des-Ormeaux, Qc […] and Penny Alexandres Panagiota […] Dollard-des-Ormeaux, Qc […] Defendants ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] The Plaintiffs, Mr Ceasar and Mrs Lan, purchased a home at […], Pointe-Claire, from the Defendants, Mr Michalakopoulos and Mrs Panagiota, in 2012. [ 2 ] The Bilateral Promise to purchase, consisting of a series of offers and counter-offers and modifications, was made between May 10, 2012 and June 7, 2012. [ 3 ] The Deed of Sale was received before a notary on June 12, 2012. [ 4 ] The Plaintiffs sue the Defendants for $ 7,000 alleging defects to the electrical system of the house that they only discovered upon carrying out certain repairs. [ 5 ] The Plaintiffs allege that more serious repairs were found to be necessary, valued at $ 6,781.22. [ 6 ] In the Application, they also allege the cost of removing and replacing drywall in the basement and other repairs, for a total of $ 5,172.12. [ 7 ] The Plaintiffs only made evidence on the electrical problem, the costs alleged being almost at the limit of the Small Claims Division, which was $ 7,000 when the matter was commenced. [ 8 ] The Defendants’ contestation alleges that the Plaintiffs had seen and examined the house before the sale, to their satisfaction, and had had a pre-purchase inspection done, and that there were no problems with the electrical panel box or electrical wiring. [ 9 ] The Contestation goes on to allege that the Defendants had done major renovations to the house and everything was in perfect condition; that if there is any problem, it was caused by the Plaintiffs.

[ 10 ] Defendants were not present at the hearing and the case proceeded without them. [ 11 ] Despite their absence, it was necessary for the Court to hear the Plaintiffs’ evidence to determine whether there is a valid claim for in respect of the warranty of quality, in so far as the electrical panel and wiring are concerned. [ 12 ] When a defect in a building is alleged as a latent defect, affecting the property when sold, the principles concerning the warranty of quality, as set out in the Civil Code of Quebec , provide that a defect, in order to give rise to a reduction of price or other remedy such as resolution of the sale, must be serious to the extent that the purchaser would not have paid so high price had he known of them. [ 13 ] They must not be apparent from a normal inspection, without the assistance of an expert. [ 14 ] The Plaintiff must not know of the defects when he agrees to the sale. [ 15 ] There are also requirements that the vendor be given notice of the defect when it is discovered, so that he can have the opportunity to inspect and carry out the repairs at his own costs, to avoid the law suit. [ 16 ] There is also the principle that if the seller knows or is deemed to know of the defect, and fails to disclose it to the purchaser prior to the sale, the Plaintiff can claim, in addition to a reduction of price, damages for all prejudice suffered. [ 17 ] In the matter at hand, the Plaintiffs had the benefit of a pre-purchase inspection that was carried out May 18, 2012, by Mico Spec & Technologies Inc. (Michel Cordeau). [ 18 ] There is a 28-page report (P-14), consisting of findings on all aspects of the building.

There are preliminary finding instructions on how to read and understand the report, and there are numerous pictures. [ 19 ] The Plaintiffs extracted pages 22 and 23 of the report (P-10), concerning electricity. [ 20 ] There is nothing under preliminary findings in the report rather than a brief description of the methodology and the probable age of the building, constructed, according to the owner, in 1978, but according to the inspector, more likely to have been constructed in 1975. [ 21 ] The inspection took place in the presence of the parties and their real estate broker on May 18, 2012 but the written report was only given later, according to Mr Ceasar, approximately two weeks later. [ 22 ] The inspection was carried out as a result of the accepted counter-offer dated May 12, 2012. [ 23 ] On performing the inspection, the inspector spoke to the Plaintiffs, but the written report only came later. [ 24 ] Mr Ceasar believes that he was told of two problems: one was a small amount of aluminum wiring that was combined with copper wiring and had to be removed and replaced, because there it was a fire hazard. [ 25 ] He says there was also a problem with soffits and that Mr Michalakopoulos agreed to correct that problem, having a value of approximately $ 2,800. [ 26 ] Mr Ceasar believed that it was necessary to replace the wiring in order for the house to pass an inspection required for insurance, which was a condition of the financing being approved. [ 27 ] He agreed to pay for the replacement of this wiring, and produced an invoice (P-4) from Alex Electric (Vincent Walrond) for $ 569.12. [ 28 ] The invoice refers to the replacement of 42 feet of aluminum wire and the removal and restoration of fixtures in the bathroom with new fixtures, and the replacement of 1 GF box.

These are apparent defects, and the Plaintiffs agreed to pay for them. [ 29 ] The accepted counter-offer provided for a closing on July 31, 2012. This date had to be changed because of a “lien” (legal hypothec) that had been placed by Manulife Insurance on the property.

The debt had to be paid by June 30, or there would be foreclosure. [ 30 ] It was agreed, therefore, that the property would be transferred earlier, on June 12, in order to permit the vendor to use the proceeds of sale to pay this creditor. [ 31 ] The vendors would stay in possession until August paying, as rent, an amount equal to the first two months of the Plaintiffs’ mortgage payments. [ 32 ] Mr Ceasar admits that at this point, he had the written inspection report on hand, but he did not really read it carefully. [ 33 ] He recalls that someone from an insurance company inspected the building and he had made the commitment to carry out the repairs that were mentioned in the invoice P-4 dated June 27, 2012.

He obtained the financing. Therefore he thought that the electrical system had “passed inspection”. [ 34 ] Mr Ceasar testifies that when his electrician, Vincent Walrond, was carrying out these repairs, he walked through the house with him and was shown numerous serious problems in the electrical system that required attention. He had already closed the sale. [ 35 ] There is an estimate dated June 29, 2012 (P-5) for $ 6,781.22. [ 36 ] The works were extensive and they involved removing and restoring a lot more aluminum wiring, replacing all sorts of plugs in

the basement and redirecting wiring and switches, reconstructing the main panel, and distributing electricity from outlets to two main control panels (this exhibit is also P-7). [ 37 ] During the period of two months after the closing, the Defendants continued to reside in the property, paying the Plaintiffs’ mortgage, and Mr Walrond only began doing the corrective work after his clients took possession. There is an invoice dated October 13, 2012, for $ 1,800. [ 38 ] Mr Walrond presents (P-11), the estimate given June 29, 2012, for $ 5,172.12 as the invoice, but this is in fact not truly an invoice.

It does however show a reasonable budget to complete the necessary work. [ 39 ] When Mr Ceasar learned of the necessity of doing these extensive works, and the estimate of their costs, he confronted Mr Michalakopoulos with the situation and the latter did not admit that there was any problem. [ 40 ] The communication was limited to a telephone call. [ 41 ] During this conversation, Mr Ceasar asserts that Mr Michalakopoulos agreed to have the matter looked at by an electrician, but he never followed through on that intention. [ 42 ] In a subsequent call, Mr Ceasar attempted to settle the matter, but this did not give rise to any result. [ 43 ] On July 16, 2012, the Plaintiffs gave a detailed letter of demand to the Defendants.

The letter calls upon the Defendants to repair a list of seven items, based on the estimate Vincent Walrond had given, and refers to any other electrical problems that might be uncovered during the process of repair. [ 44 ] Failing compliance with the letter of demand, legal proceedings will be commenced. [ 45 ] The Defendants did not comply.

ANALYSIS [ 46 ] In the present file, all of the conditions for an action for latent defect, in application of the warranty of quality, are met. [ 47 ] The defects in the wiring, which required extensive removal and replacement, were serious to the extent that the Plaintiffs would not had paid so high price, had they known of them.

Mr Ceasar and his wife were aware of what they perceived to be a minor electrical problem, that was solved for $ 569.12, which they agreed to pay, because of the Plaintiffs’ agreement to reduce his price because of another issue raised verbally by the inspector, the day of the inspection.

It is interesting to note that, in the extract from the inspection report, there is no mention of the necessity of replacing the electrical panel; though there are references to some of the work that the electrician found independently. [ 48 ] There is the general note that an electrician is required to verify the complete electrical system, and to correct all problems and hazards, but the evidence does not show that this degree of concern was made known to the purchasers orally, prior to the report being produced. [ 49 ] The Plaintiffs were under the impression that they had a limited amount of work to do to bring the property to the appropriate level of quality so that it could be insured, and they were not reasonably led to believe that there was a need for further investigations and repairs. [ 50 ] While the report is more indicative of an immediate concern, it was not provided until after the sale had become complete, so that the purchasers were not truly aware of the defect when they agreed to purchase the property. [ 51 ] The sale was final except for the arrangement that was made for an early closing with the vendor remaining in possession, paying the equivalent of the rent until the month of August. [ 52 ] The Defendants could not have detected the electrical anomalies themselves and the knowledge they gained from the preliminary verbal report was limited to a minor issue, easily resolved for insurance purposes. [ 53 ] They only discovered the true nature and extent of these defects when they were revealed by their electrician, at a time when they were not yet in possession of the property.

At that point, the deal had already been closed with the notary and there was no time to renegotiate a lower sale price based on the problems he was discovering. [ 54 ] Based on work performed and estimates, the Court is satisfied that the diminution of price is the equivalent of an amount of $ 1,800 for replacement of the panel and breakers, and extensive rewiring for an amount of $ 5,172.12. [ 55 ] The total is $ 6,972.12. [ 56 ] A sufficient notice of the defects was given to the Defendants prior to the work being carried out.

FOR THESE REASONS, THE COURT: CONDEMS the Defendants to pay to the Plaintiff, the amount of $ 6,972.12, together with interest at the legal rate and the additional indemnity provided by

article 1619 of the Civil Code of Québec , as of July 16, 2012; CONDEMS the Defendants to pay the Plaintiff’s judicial disbursement of $ 167.

__________________________________ DAVID L. CAMERON, J.C.Q. Date of hearing: April 1, 2015