DEAN PONTO v. CHARLENE DAVIES, 2003 SKPC 91

2003 SKPC 91 37 /2003 IN THE PROVINCIAL COURT OF SASKATCHEWAN AT REGINA SASKATCHEWAN SMALL CLAIMS DIVISION BETWEEN: DEAN PONTO AND CHARLENE DAVIES Plaintiffs - and - GERALD SVEINBJORNSON AND CHERYL SVEINBJORNSON Defendants Trial Date: April 2, 2003 Counsel: Plaintiffs appeared on their own behalf Mr. Terry Jordan for the defendants REASONS FOR DECISION BOGDASAVICH, P.C.J. The Claim [ 1 ] The plaintiffs purchased a house from the defendants. They claim that the defendants misrepresented the condition of the house in the Property Condition Disclosure Statement and that it will cost $4757.40 to repair the defects.

The Facts [ 2 ] On September 18, 2002, the plaintiff, Charlene Davies, made an offer to purchase (Exhibit P-3) a house owned by the defendants at

7606 Venture Road, Regina, Saskatchewan. The offer was open to acceptance by the defendants up to 11:00 p.m. September 18, 2002. The offer to purchase contained the following term: “1. The said Offer being subject to the following conditions: (b) -SUBJECT TO SATISFACTORY (TO BUYER) PROPERTY COND. DISCLOSURE WHICH FORMS PART OF THIS OFFER” The offer to purchase stated that the Property Condition Disclosure Statement was to be provided to the purchasers by September 25, 2002. The defendants accepted Ms. Davies’ offer to purchase prior to its expiration. [ 3 ] Charlene Davies testified that her Realtor, Mr.

Wayne Medwid, brought the required Property Condition Disclosure Statement to her and the plaintiff Dean Ponto, shortly after September 18, 2002. It was signed by both defendants. The Property Condition Disclosure Statement (Exhibit P-4) was a printed form which contained the following statements on the back: “ SELLERS are responsible for the accuracy of the answers in this Disclosure Statement . SELLERS should answer “Do not Know” or “Does Not Apply” if the SELLERS are not certain of the correct answer.

It is important that SELLERS do not answer “Do Not Know” or “Does Not Apply” if, in fact, they know the answer. Each answer must provide all relevant information known to the SELLERS.

The SELLER may be held legally responsible to the BUYER for the accuracy of his answers in this Disclosure Statement if: 1. this form is incorporated in the Contract of Purchase and Sale (see suggested wording below); “ The Property Condition Disclosure Statement also contained the following statement: “ BUYERS SHOULD MAKE THEIR OWN INQUIRIES BUYERS are strongly urged to make their own inquiries after receiving a Disclosure Statement, keeping in mind that: 1. the SELLER’S knowledge of the property may be incomplete or inaccurate;”. [ 4 ] In the plaintiffs’ statement of claim they allege (paragraphs 3 and 4) that “the vendor warranted that the house was free of all defects” and “that the premises did contain defects” in that the shower in the master bedroom leaked and that the fireplace was not useable.

The plaintiffs allege the defendants are in breach of the Contract of Purchase and Sale in the following respects. First, as to the leaking shower, the Property Condition Disclosure Statement, paragraph 3.e), provides: “Are you aware of any problem with any of the following systems or any equipment associated with such systems: plumbing, electrical, heating, central air conditioning, ventilation, humidification and air purification?” The defendants placed a check mark under the “NO” column as well as their initials. Paragraph 3.

g) of the Disclosure Statement further provides: “Are you aware of any roof leaks or moisture or water problems or unrepaired water damage in the dwellings/improvements?” Again, the defendants placed a check mark under the “NO” column as well as their initials. For both these questions the defendants had only three possible responses: “Yes”, “No”, or “Does not apply”. Second, with respect to the fireplace, the Property Condition Disclosure Statement, paragraph 3.k),provides:“Do the fireplace(s)/woodstove(

s) and the chimney(

s) work?” The defendants placed a check mark in the “YES” column as well as their initials. Paragraph 3.

l) of the Disclosure Statement further provides : “Are you aware of any deficiency or defect in the fireplace(s)/woodstove(

s) and the chimney(

s) including with respect to fire insurance requirements?” The defendants placed a check mark under the “NO” column as well as their initials. For both these questions the defendants had the following choices available to them with respect to their answers: “YES”, “NO “, “DO NOT KNOW “ and “DOES NOT APPLY”. As noted above, the plaintiffs allege that the above questions and answers constituted a warranty by the sellers that the fireplace was useable and that the shower did not leak.

As the shower leaks and the fireplace is not useable because of a defective chimney, the defendants are in breach of the Contract of Purchase and Sale and are liable to the plaintiffs for that breach. The plaintiffs do not allege that the defendants are liable for negligent misrepresentation. [ 5 ] With respect to the defective condition of the shower in the master bedroom, the plaintiffs entered two photographs (Exhibit P-1) illustrating that in the basement beneath the shower, there was discoloration of the wood on the “subfloor” and on a supporting 1 x 4.

In addition to the testimony of both plaintiffs with respect to the discoloration, there was an admission by the defendants in their testimony that they too had noticed the discoloration in the wood. The plaintiffs had done a “walk through” of the defendants’ house prior to the

purchase on at least two occasions. Both the plaintiffs testified that they did not see the discoloration which would have lead them to suspect water leaking from the shower in the master bedroom. Dean Ponto testified that shortly after the plaintiffs took possession of the house on October 25, 2002, they noticed that the shower was leaking badly. They contacted their Realtor, Wayne Medwid, who contacted the sellers Realtor, and the plaintiffs were advised to obtain a number of quotes respecting the cost of having the shower leak fixed.

The plaintiffs were advised that the shower problem was brought to the defendants attention at that time. [ 6 ] The plaintiffs called Mr. Andy Robinson to testify as to the cause of the shower leak and the cost of repairs. He is a general contractor and operates Roblin Home Improvements Ltd. Mr. Robinson testified that he found a leak at the bottom corner of the shower stall. As the shower was constructed of tiles, it was his opinion that it would be a “never ending job” to repair the leaks and that it would be cheaper to simply cut out the old shower and install a new one.

He submitted an estimate to remove the existing shower and replace it with a new shower in the amount of $1108.00 plus GST (Exhibit P-8). The estimate is dated October 31, 2002. [ 7 ] Charlene Davies testified that the plaintiffs relied upon the Property Condition Disclosure Statement respecting the condition of the fireplace and chimney at the time of the purchase of the house from the defendants. If they had known of the problems with the chimney they would have used that information to negotiate a lower purchase price.

However, Dean Ponto, testified that because he was concerned over the safety of his family, he felt it was necessary to have the fireplace and chimney inspected prior to it being used. He contacted Top Hat Chimney Sweep of Richardson, Saskatchewan, to do the job. [ 8 ] Mr. Terry Sereda, the owner of Top Hat, was called as a witness. He inspected the fireplace and chimney on November 27, 2002. He is a certified inspector, having received ”Wood Energy Technical Training”. He testified that there was severe damage to the chimney due to excessive heat and that the chimney was badly buckled.

In his written report (Exhibit P-7) he stated as follows: “The complete chimney is badly damaged due to extreme heat and must not be used. Chimney is 12 ‘ of 7" by 30" Oliver McCloud which is no longer available. A new gas or wood insert and liner would have to be installed Approx. cost $2500-$3500.00 + Tax”. Mr. Sereda also testified that while the chimney was not that easy to inspect, the problems were clearly visible and could be identified by a home owner but only by shining a bright light either down from the top of the chimney or up through the fireplace.

He also stated that it would be possible for the fireplace to be used, although the owners might not know of the problem until the chimney itself caught on fire. [ 9 ] The plaintiffs called Michael Harazny as a witness. He is employed by the City of Regina as a fire inspector. He testified that after reviewing the Top Hat Chimney Sweep Inspection report, he ordered the plaintiffs not to use the fireplace until the damaged sections of the chimney had been replaced. His order (Exhibit P-6) provides that the “heat damaged sections may cause the chimney to collapse sending smoke and gases into the home.

This problem may expose the insulation to extreme heat causing a chimney fire”. Mr. Harazny also noted that although the plaintiffs could not purchase a new chimney any more, “the chimney sweep may come across some used sections”. He also suggested the plaintiffs could convert the chimney “to a natural gas or wood insert connected to a new chimney liner”.

In cross-examination he offered a guess as to the cost of new chimney sections at between $100.00 and $125.00 each plus labour, but it was unlikely the sections were available as Oliver McCloud was “out of business”. [ 10 ] The plaintiffs called Paul Lawrence as a witness with respect to the cost of repairing the chimney. He is employed with Northern Fireplace and his firm provided a written estimate (Exhibit P-9) of $3571.84 (taxes included) with respect to the cost of repairs. He stated that the estimate included a few extras wanted by the plaintiff Charlene Davies. These extras total $246.00. (plus tax).

He also testified that the existing chimney in the house was at least 10 years old as the manufacturer, Oliver McCloud, quit making the fireplace in question approximately 10 years ago. In cross- examination Mr. Lawrence testified that “used chimney sections” could be available. However, there was at least a one year waiting period before such material could be obtained by his firm. He estimated that four to five sections of chimney were needed to do the repairs and that each

section would cost approximately $60.00. In addition his firm charges labour costs of $55.00 an hour and that it would take approximately 4 to 6 hours of labour to complete the repairs. [ 11 ] The defendants called their real estate agent, Brent Matchuk, as a witness. He testified that when he first visited the property the shower in the master bedroom was full of boxes and that he asked the defendants to clean it out in order that he could show the home. He testified there was nothing unusual about the shower and he was not aware of any leaks. There was no visible mold in the shower.

With respect to the fireplace, he noted that there was an “electric insert or log” and that it was in the fireplace on the three or four occasions he was in the home. He testified that when he was advised by the plaintiffs’ Realtor, Mr. Medwid, of the leaking shower, he visited the home. The plaintiff Charlene Davies showed him the shower. He stated that on his initial visit he believed there was silicone around the base of the shower and that on his visit on this occasion the silicone had been removed. He further testified that he had no knowledge of any problem with the fireplace or the chimney.

He had advised the plaintiffs of their obligation to tell the truth in the Property Condition Disclosure Statement but that no problems were brought to his attention by the defendants with respect to either the shower or the fireplace/ chimney. [ 12 ] The defendant, Gerald Sveinbjornson, testified that he and his wife had lived in the Venture Road home for just over 3 years. He testified that they had never used either the shower in the master bedroom or the fireplace in the entire time they owned the home. He

stated that as he was a “shift worker” and frequently got home after midnight, his wife did not want him using the shower in the bedroom because it would wake her up. She also hated cleaning the showers and accordingly, restricted the family to the shower in the main bathroom. As a result, he and his wife simply used the shower to store boxes, toilet paper, and gifts at Christmas time. He testified that as a result, he never saw the shower leak but he had noticed the discoloration in the bottom of the floor beneath the shower which was visible from the basement.

He did not consider the “black stains” on the wood to be “damage”. He was not concerned with respect to the discoloration as it was not significant, and there was no evidence of rot. He further stated that the fireplace was never used as they had an “electric insert” which they had purchased in approximately 1992. It had been used in their previous home as well as in the house sold to the plaintiffs. Counsel for the defendants entered two photographs (Exhibits D-2 and D-3) illustrating the “electric fireplace” in both the defendants’ previous home and in the house sold to the plaintiffs. Mr.

Sveinbjornson testified that the electric insert had been purchased many years ago when they had an incident with a log rolling out of a fireplace and damaging the floor. Mr. Sveinbjornson also testified that he told Mr. Ponto and Wayne Medwid on their first visit to the home that the defendants had never used the fireplace. Mr. Ponto denied this statement in his testimony. [ 13 ] The defendant Cheryl Sveinbjornson testified that she was present when her husband told Mr. Ponto and Mr. Medwid that they had never used the fireplace. She also testified that the shower had never been used.

Sometime after they had moved into the home a strong smell was coming from the shower. Her husband advised her that she would have to pour water down the shower hole, in order to fill the drain trap, and that would prevent odors from entering the shower stall. She testified that she did this regularly the three years they occupied the house. With respect to the fireplace, she testified that when she and her husband purchased the home, the previous owners had provided a Property Condition Disclosure Statement (Exhibit D-1) that indicated the fireplace and chimney were in working order.

As they never used the fireplace they had no reason to disbelieve this statement of the previous owners. As well, when they first took possession of the house there was some wood stored in the yard and that both she and her husband assumed that the previous owners had been using the fireplace. When questioned by her counsel with respect to whether she had seen any silicone on the base of the shower, she indicated that in fact she had cleaned some silicone off the bottom of the shower.

Legal Issues [ 14 ] The issue for the court to determine in this case is whether the defendants are liable for breach of contract respecting the statements made in the Property Condition Disclosure Statement as to the condition of the shower in the master bedroom and the fireplace/ chimney. The plaintiffs do not allege that the defendants are liable for negligent misrepresentation.

Conclusion [ 15 ] The Contract of Purchase and Sale (Exhibit P-3) expressly provides that the Property Condition Disclosure Statement would form part of the Offer to Purchase and therefore was incorporated into the Contract of Purchase and Sale. The plaintiff, Charlene Davies, testified that she relied upon the accuracy of the statements contained in the Property Condition Disclosure Statement. If the defendants had disclosed the defects to the shower and fireplace, she would have lowered the purchase price offer on the house. [ 16 ] With respect to the leaking shower, Ms.

Davies relies upon the answers given by the defendants to questions 3.

e) and 3.

g) to support her allegation of breach of contract. I find that the defendants’ answers to these questions do not constitute either a warranty or a condition of the Contract of Purchase and Sale, as to the shower. The questions are too general to do so. Furthermore, as noted above in paragraph 4, both questions begin with the phrase: “Are you aware of any ...”. No evidence was presented to the court by the plaintiffs that the defendants in fact knew that the shower leaked at the time they answered these two questions.

I accept the evidence of both defendants that they were not “aware” of the defect respecting the shower. As a result, the defendants are not liable to the plaintiffs for breach of contract respecting the leaking shower.

The defendants knowledge of the discoloration of the “subfloor” and the supporting 1 x 4 is not sufficient evidence for the court to conclude that the defendants were aware of the condition of the shower at the time of the sale of the house. [ 17 ] The plaintiffs further allege that the defendants are liable for breach of contract with respect to the statements made respecting the fireplace/ chimney. They rely on the answers given by the defendants to questions 3.

k) and

l) set out above in paragraph 4. I accept the evidence of the defendants with respect to their lack of knowledge of the defects in the fireplace chimney. Accordingly, no liability arises pursuant to the answer given to question 3.

l) which begins with the phrase: “Are you aware of any deficiency or defect ...”. I find that the question as worded, does not constitute either a warranty or a condition of the Contract of Purchase and Sale with respect to the fireplace chimney. However, question 3.

k) is worded differently. It does not require any knowledge on the part of the defendants. The question is as follows: “Do the fireplace(s)/ woodstove(

s) and the chimney(

s) work? To this question the defendants answered “YES”. I find that the plaintiff Charlene Davies relied upon this statement in her decision to proceed with the purchase of the house from the defendants at the price set out in the offer. The evidence of Terry Sereda the chimney inspector, and his written report (Exhibit P-7), constitute compelling evidence that the chimney was not useable.

[ 18 ] Counsel for the defendants submitted that the word “work” in paragraph 3.

k) is not synonymous with the word “useable”. This submission is not tenable. I find that the defendants’ answer to question 3.

k) constitutes a warranty that the fireplace/chimney was in working order. It was not. As a result, I find that the defendants are liable to the plaintiff Charlene Davies for damages. I find that the plaintiff Dean Ponto was not a party to the Contract of Purchase and Sale and therefore the defendants are not liable to Mr. Ponto. [ 19 ] Counsel for the defendants relied on the decision of this court in Proznick v. Kjargaard (2000) 2000 CanLII 19640 (SK PC) , 201 Sask. R. 150 . In that case the purchasers of a home sued the vendors for numerous deficiencies discovered after they took possession of the house.

The plaintiffs alleged that the sellers had misrepresented the house’s condition in the property condition statement. However, in that case the property condition statement specifically provided that the representations in question were not binding on the sellers. It stated: “In this part the sellers shall not be liable for any error, inaccuracy, or omission if the sellers have no personal knowledge of that error, inaccuracy, or omission”.

That case is not applicable to the facts in this action where the representations in the Property Condition Disclosure Statement were expressly made part of the contract and there was no similar limitation. Counsel for the defendants also referred to the decision of the British Columbia Supreme Court in Zaenker v. Kirk (1999), 27 B.C.T.C.141. However, in that case the disclosure statement again simply required the vendors to disclose problems of which they were aware.

As stated by Lamperson J. : “Although the property condition disclosure statement forms part of the agreement for a purchase and sale, it is not necessarily a warranty. It’s main purpose is to put purchasers on notice with respect to known problems ... It merely indicates that the statements therein are true according to the seller’s current actual knowledge”. I agree with the principles of law stated by Lamperson J. in the case and accordingly I found, as noted above, that those questions requiring knowledge on the part of the sellers do not create a warranty by the sellers.

In order to succeed the plaintiffs would have to establish, on a balance of probabilities, that the defendants made either negligent or false representations in the Property Condition Disclosure Statement. The defendants were not aware of the leak in the shower. For that reason, I concluded that the defendants had no liability to Charlene Davies for the cost of repairs to the shower. [ 20 ] I turn now to the question of damages. As noted above, evidence was heard from Paul Lawrence, Michael Harazny and Terry Sereda as to the cost of repairing the fireplace/chimney. Based on the evidence of Mr.

Lawrence, the replacement cost of a basic gas fireplace, without the extras Charlene Davies requested, would be $3358.36 (taxes included). Mr Lawrence testified that the existing fireplace had been manufactured by Oliver McCloud, and that it was one with a small fireplace box. He testified that the chimney for that fireplace cannot be interchanged with any other type of chimney. Chimney sections from another type of fireplace would not be compatible with the existing chimney and it would be a breach of the fire code to attempt to install such chimney sections.

He testified that his firm maintains a waiting list for chimney sections of this type and that it would take about a year before “parts” would become available. He testified that 4 to 5 sections of chimney would be required and each

section would cost approximately $60.00. Mr. Harazny, the City of Regina fire inspector, testified that there was 12' of damaged chimney and he guessed 4 chimney sections would be required to replace the chimney. Each

section of chimney new would cost between $100.00 to $125.00 plus the labour cost to install them. The estimate by Mr. Lawrence of $60.00 per

section of chimney was not for new chimney sections, but rather for “used parts” that may become available. In cross-examination Mr. Lawrence was asked the life expectancy of wood burning fireplace chimneys. He indicated that while new chimneys usually last 10 to 20 years some may last 30 to 40 years. The life expectancy of such chimneys is not measured in years but rather in frequency and type of use. For example, one huge fire in a new fireplace could damage a chimney yet someone burning only a single fire log could see a chimney last 50 years.

The size of the fire and the heat generated are the factors that damage chimneys. Mr. Lawrence indicated that because the Oliver McCloud fireplace was one of the small versions, it would be very difficult to find a new wood insert and in fact none were available at his business. The only viable option to the plaintiffs was to convert the fireplace to a “gas insert”. The existing firebox and chimney would not have to be replaced in such a conversion.

Terry Sereda of Top Hat Chimney Sweep had estimated the cost of repairs to the chimney between $2500 and $3500.00. [ 21 ] I find that it is not reasonable for the plaintiff Charlene Davies to have to wait one year for such repairs when she relied entirely on the statements of the defendants in the Property Condition Disclosure Statement that the fireplace was useable. The option of repairing the chimney by converting to gas is reasonable in the circumstances. However, the existing fireplace/chimney may have been 17 years old.

The MLS listing (Exhibit P-2) for the house at the time of sale indicated that it was built in 1985. Mr. Lawrence testified that the fireplace had to be at least 10 years old as that is when this particular Oliver McCloud fireplace was discontinued. As the plaintiff Charlene Davies is receiving a new gas fireplace, rather than the existing one that is between 10 and 17 years old, the liability of the defendants for the replacement cost should be reduced by an amount that is equitable.

Having regard to the age of the existing fireplace, the life expectancy of a fireplace, and the fact the plaintiff Charlene Davies is receiving a new upgraded gas fireplace, I award her damages of ½ the cost of the gas replacement fireplace as estimated by Mr. Lawrence. [ 22 ] The plaintiff Charlene Davies shall have judgment in the amount of $1679.18 together with pre-judgment interest as and from October 25, 2002, the date the plaintiff took possession of the house. She shall also have $20.00 costs in this matter. The defendants are jointly and severally liable for this judgement.

Dated at the City of Regina in the Province of Saskatchewan the 7th day of April 2003. D.Bogdasavich Judge of the Provincial Court