2017 QCCQ 1191, 2017 QCCQ 1191

JF 1075 Letourneau c. Liu 2017 QCCQ 1191 COURT OF QUEBEC (Small Claim Division) CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL LOCALITY OF MONTREAL N° : 500-32-148173-158 DATE : February 28 th , 2017 ______________________________________________________________________ PRESENT : THE HONOURABLE JEAN FAULLEM, J.C.Q. ______________________________________________________________________ TERENCE WALTER LETOURNEAU Plaintiff v.

JIAN LIU -and- Bo Zhang Defendants ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] A few days after having taken possession of his new residence acquired from the defendants on October 15, 2014, the plaintiff noticed that the electrical boiler of the property was not working properly. [ 2 ] Alleging the presence of a latent defect, the plaintiff is originally claiming $5,027.52 from the defendant, detailed as follows: — Cost of repairs $3,966.64 — Mortgage payment $1,060.88 [ 3 ] At the hearing, plaintiff asked the Court to modify his claim to add $750 in damages for the troubles and the inconveniences suffered because of the conduct of the defendants. [ 4 ]

Article 206 of the Code of civil procedure ( CCP ) authorizes a party to amend a pleading at any time before judgment. The amendment proposed by plaintiff does not constitute an entirely new application having no connection with the original one and does not delay the proceeding.

Therefore, the Court allows the amendment. [ 5 ] By their contestation, the defendants are primarily claiming that the alleged defect does not constitute a latent defect since the electrical boiler was in good condition at the time of the sale, as it had been confirmed by the inspector hired by the plaintiff prior to the purchase of the house. [ 6 ] The defendants add that the electrical boiler must have been tempered with after the purchase. [ 7 ] Subsidiarily, at the hearing the defendants allege that the plaintiffs’ claim does not consider the depreciated value of the new electrical boiler which was installed in replacement of the old one.

I— QUESTIONS IN DISPUTE

[ 8 ] The questions of fact and the questions of law to which the Court must respond in the case under review are the following:

A) Does the defect alleged by plaintiff constitute a latent defect, within the meaning of

article 1726 of the Civil Code of Québec ?

B) If so, to what amount of damages is plaintiff entitled? II— CONTEXT AND ANALYSIS

A) The latent defect [ 9 ] On October 15, 2013, plaintiff purchased from the defendants a semi-detached house located on Georges-Vanier Street in Pierrefonds-Roxboro. [ 10 ] The sale included the legal warranty which includes the warranty against latent defects provided for in articles 1726 and following of the Civil Code of Québec ( CCQ ). [ 11 ] As soon as he took possession of the residence, plaintiff immediately had difficulties starting the electrical boiler by using the thermostat control. [ 12 ] Plaintiff notified immediately the defendants of the situation. [ 13 ] In response, the defendants inform plaintiff that they had also incurred the same problem when they owed the residence, but that they managed to find a way of starting the heating system manually. [ 14 ] To start manually the electrical boiler, the defendants explained to the plaintiff that they would shut off the breaker in the main electrical panel, set the thermostat and then go back to the main panel to switch the breaker on. [ 15 ] This way of starting the boiler was never explained to the plaintiff prior to the purchase of the property. [ 16 ] The inspector, Charles Cobden, who had inspected the house on September 12, 2014, noted, on page 28 of his prepurchase report, that the components of the electric boiler system cannot be seen during a visual inspection, since they are located within the unit. [ 17 ] Within the meaning of

article 1726 CCQ, to be qualified as a latent defect, the defect must be prior to the sale, serious and must not have been known to the buyer. [ 18 ] In the case at hand, the malfunction of the electrical boiler could not have been detected at the time of the purchase.

There was no apparent indication that could have suggested this peculiar situation. [ 19 ] In addition, it was also admitted by the defendants that the defect existed prior to the sale since they had to start the electrical boiler system manually. [ 20 ] In his written report of November 18, 2016, the electrician Gabriel Mammone confirmed that the non-standard procedure adopted by the defendants to start the electrical boiler was dangerous. He therefore recommended replacing the boiler by a new one since it was impossible to replace any defect parts.

The expert states that the manufacturer is not in business anymore. [ 21 ] As

article 1726 CCQ indicates, the latent defect must render the property unfit for the use for which it was intended or so diminish its usefulness that the buyer would not have bought it or paid so high a price if he had been aware of the defect. [ 22 ] In his book, La garantie de qualité des vendeurs en Droit Québécois , Jeffrey Edwards, J.C.Q., writes the following: [TRANSLATION] 360— The determining criterion is set out in

article 1726 C.C.Q. Only a defect leading to a loss of use to the point “that the buyer would not have bought it or paid so high a price” is suppressed. [1] [ 23 ] It is precisely this loss of use that is in question in the case at hand. [ 24 ] There is no doubt that the electrical boiler had partially collapsed at the time of the purchase.

The expert Mammone acknowledged it in his report. [ 25 ] Moreover, the prepuchase home inspection report, obtained by the defendants when they bought the house in 2005, mentioned the necessity to replace the “electric hot water heating boiler” in the future because it was already getting old at the time. [ 26 ] This information should have been divulged to plaintiff in the defendants’ mandatory declaration given to plaintiff at the time of the sale.

Section D-10 of the vendors’ declaration states that the defendants had never noticed any problem regarding the heating system. That information does not constitute the truth per the defendants’ own testimony at the hearing.

[ 27 ] If plaintiff would have been informed of the defect of the electrical boiler prior to the purchase, he would not have paid the same price for the house. [ 28 ] By not informing plaintiff of this situation, it gives the latter the right to ask for damages in surplus of getting an adjustment of the selling price of the house, per

article 1728 CCQ. [ 29 ] The defendants hired the services of an electrician when they visited the plaintiff’s house after being notified of the boiler’s defect. [ 30 ] Unfortunately, this electrician did not want to get involve in the file and he refused to write a report and to testify in court. [ 31 ] Therefore, the Court cannot take into consideration the testimony of the defendants regarding any comments or opinion given by this electrician regarding the possibility of the electrical boiler being tempered with after the purchase of the house.

This testimony of the defendants constitutes hearsay in the absence of the electrician to confirm his statement. [ 32 ] Consequently, the defendants must indemnify plaintiff for the replacement of the electrical boiler and for the damages he suffered as a result of the defendants’ actions.

B) Value of the restoration of the selling price and of the damages suffered

i) The restoration of the selling price [ 33 ] Mr.

Mammone’s report indicates that the electrical boiled needed to be replaced entirely because the manufacturer was no longer in business. [ 34 ] It also appears from the prepurchase inspection report of 2005 that this system would need to be replaced soon. [ 35 ] The Court will thus use the value of the costs associated with the installation of the new electrical boiler system to evaluate the indemnity to be awarded to plaintiff. [ 36 ] However, the case law acknowledge that the indemnity granted a buyer who is the victim of the presence of a latent defect must not represent a source of gain regarding the defect. [2] [ 37 ] Depreciation of the property must thus be considered in establishing the indemnity. [3] [ 38 ] Lastly, to determine the indemnity, the Court must take into consideration all the circumstances of the case. [4] [ 39 ] Plaintiff paid $3,966.64 for the replacement of the electrical boiler. [ 40 ] The Court considers that a reduction of 80% of the sum paid for the new boiler represent an adequate depreciation in the circumstances described here above. [ 41 ] Therefore, plaintiff has the right to obtain a sum of $793.33 for the restoration of the price paid to acquire the house. ii) Damages [ 42 ] As for the indemnification claimed by plaintiff for the troubles and inconveniences suffered by the latter resulting from the actions of the defendants, his testimony and the documentation file in the court’s docket are sufficient, in conformity to articles 2803 and 2804 CCQ, to grant him a compensation of $750 for the injury suffered. [ 43 ] However, as regard to the plaintiff’s claim to be indemnified for the payment of his mortgage prior to the replacement of the electrical boiler, the Court must decline it.

Article 1613 CCQ states that damages include only what constitutes an immediate and direct consequence of the non-performance of the obligation of the debtor in contractual matters.

The payment of the mortgage as detailed in TD Canada Trust’s letter dated May 6, 2015, does not constitute a direct and immediate consequence of the electrical boiler defect. [ 44 ] Moreover, the factual elements administered at trial do not prove the impossibility for plaintiff to reside in the house prior to the reparation of the boiler. [ 45 ] Considering all the above, plaintiff is entitled to a total compensation of $1,543.33, namely as a restoration of the selling price ($793.33) and as an indemnity for the suffered damages ($750). [ 46 ] To this amount of $1,543.33 is added interest at the legal rate and the additional indemnity provided for in

article 1619 CCQ, calculated from June 29, 2015, that is, the date the formal notice expired. [ 47 ] Finally, per sections 339 and 340 CCP, the Court grants plaintiff reimbursement of the court’s costs and fees of $171 paid for the filing of the claim. [ 48 ] FOR THOSE REASONS, THE COURT: [ 49 ] CONDEMNS the defendants to pay plaintiff $1,543.33 plus interest at the legal rate and the additional indemnity provided for in

article 1619 of the Civil Code of Québec , calculated from June 29, 2016;

[ 50 ] CONDEMNS the defendants to pay plaintiff the legal costs of the claim, fixed at $171. __________________________________ JEAN FAULLEM J.C.Q. Dates of the hearing: November 21 th , 2016