Kelvin Carl Hodel - v. -, 2014 SKPC 56

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2014 SKPC 056 Date: March 26, 2014 Small Claim #: 67/2012 Location: Swift Current, SK _____________________________________________________________________________ Between: Kelvin Carl Hodel - and - Cindy Walkey and Vicki Aadland, Executors of the Estate of Darcy Aadland, deceased Ms. Lindsay A. Gates For the Plaintiff Ms. Cindy Walkey For the Defendant DECISION L.A. MATSALLA , J [ 1 ] The plaintiff’s claim alleges a breach of a term of a contract entitled “Residential Contract of Purchase & Sale”.

The contract is set out on a standard form provided to realtors by the Association of Saskatchewan Realtors. In this case, the property in question had been listed with a realtor for sale and, using the standard form, an offer was made by the plaintiff which was then accepted by the Executors on behalf of the Estate. Since the date of possession, a difficulty arose respecting the condition of the home. There is little, if any, dispute as to the facts. In his claim, the plaintiff seeks the sum of $10,495.75 in damages and, at trial, he claimed a substantial

amount for living expenses incurred by him as a result of the breach. Facts [ 2 ] Mr. Darcy Aadland owned residential trailer #11 at 701 - 11 th Avenue N.W. in this city. He had lived in the trailer until his death in January of 2012. He had kept two dogs in the trailer when he was at work and, after his retirement, he continued to care for the animals during the next seven years until he passed away. [ 3 ] After Mr. Aadland’s death, the Executors of the Estate (who reside in Alberta) disposed of his belongings and they saw the need to sell the trailer.

In January there were problems with the heating system and so arrangements were made to conduct necessary repairs to the furnace. Evidently, thereafter the system was in order. In preparation for a sale, they attended at the trailer in February and arranged to have it cleaned privately. According to one of the Executors, she was informed by the persons who had cleaned the trailer that they had vacuumed the heating ducts. The Executors were not aware of any problems with the heating system.

They were aware of the circumstances described above respecting the dogs however, other than arranging to clean the carpets, there is no evidence that any other special steps were taken by them to address the smell or to deal with any other issues respecting the presence of the animals in the trailer. Such was the state of the trailer during the latter part of June. [ 4 ] Mr.

Hodel was looking to buy a mobile home and, on June 28, 2012, he was shown the trailer at which time he observed that it (including the carpets) appeared to have been cleaned although he did detect an odour which he described as a “rotten or offensive odour”. He was told that the previous owner had kept pets in the trailer even after he had been hospitalized so he anticipated that it might cost him about $5,000.00 to replace the carpet to get rid of the odour and he took that into account when, that very day, he made an offer to the vendors. He did not examine the duct work.

He was prepared to pay $24,500.00 for the mobile home subject to satisfactory electrical, furnace and chimney inspections to be conducted by July 10. Possession was proposed to be given on July 24. The offer was open for acceptance to July 2, however it was accepted on June 29. By agreement, possession was advanced to July 11. The inspections were positive and a Bill of Sale was promptly prepared by a lawyer and the transaction was completed. [ 5 ] The contract outlined the terms of sale. The following provisions were set out under a heading entitled “Warranties And Representations”.

For the purposes of this action, the pertinent paragraphs are the following (the emphasised words are as they appear in the original): 6.2 Unless otherwise stated herein, the Seller represents and warrants to the Buyer that: (

c) the attached and unattached goods included herein, are owned by the Seller and conveyed to the Buyer under this contract and are in normal working order and are free and clear of all encumbrances and shall be and remain as is at the date of acceptance of this contract until completion date.

The Purchase Price shall include land, buildings and attached goods, unless otherwise stated herein, and including the following unattached goods: [a number of appliances are specifically listed and other items in the form are noted as being “not included” or “included”]. 6.3 All of the warranties contained in this contract and any attached schedules are made as of and will be true at the Completion Day, unless otherwise agreed to in writing. 6.4 The Seller and the Buyer acknowledge that, except as otherwise described in this contract, there are no other warranties, representations or collateral agreements made by or with the other party, the Seller ’ s Brokerage and the Buyer ’ s brokerage about the property, any neighbouring lands and this transaction, including any warranty, representation or collateral agreement relating to the size/measurements of the land and buildings or the existence of any environmental condition or problem and the Buyer hereby agrees to purchase the above described property as it stands at the price and terms and subject to the conditions above set forth. [ 6 ] He expected that the residence would be liveable however, in mid-July when he removed the heating vent covers, he noticed an unpleasant smell and a significant amount of fecal matter in the vents.

In one vent in the living room (located within five feet of the front door) he estimated that the offending material was about one inch thick. As a result, he called in a firm that conducts work to restore property in cases in which water damage or mould are an issue. On July 23, an employee of the firm (who I shall refer to as the “restorer”) went to the trailer and he could smell cat urine from the back door. By this time, the flooring had been removed from about one-half of the residence and he could see stains from cat urine on the sub-floor.

When he removed the register from a heating vent he discovered the fecal matter. He also found similar material in two or three other vents including vents in the bedroom. He then cut a hole

in the middle of a run of duct work and he found the duct full of fecal matter. He advised Mr. Hodel that the furnace was useable but that it was not advisable to operate it in light of the condition of the ducts. [ 7 ] The plaintiff filed an estimate from the firm for the removal and replacement of the duct work, the removal and replacement of sub-floor in the living room and back entrance and the application of an anti-bacterial agent. The cost for the work was to be $10,495.75.

It was the opinion of the restorer, based upon his experience as a journeyman carpenter and as an employee of the firm, that it was necessary to replace the sub-floor and the duct work rather that attempt to remove the offending material. [ 8 ] Mr. Hodel was of the view that the residence was unfit to live in and he continues to live in another residence at 435 2 nd Avenue N.E. The work has not been completed and he cannot do much of the work himself due to a workplace injury for which he has had back surgery.

He uses a morphine pump and he told the Court that he receives less than $2,000.00 per month from Workman’s Compensation. As I understand it, he has some type of arrangement whereby he is responsible for mortgage payments of $400.00 monthly although someone else is actually making the payments. For property tax purposes, the assessed owner on the Notice of Assessment is shown to be Ledoh Holdings Ltd. He told the Court that he is indebted to whomever is making the payments. There is no evidence respecting whether he purchased or is leasing the premises.

It seems doubtful that he has purchased yet another residence and so I suspect that someone else is the owner of the property (perhaps a family member) and the payments may be more in the nature of rent. He is also claiming monthly payments of $94.21 for the property taxes even though he is not the assessed owner. He testified that he is responsible for the payment of electrical and sewer and water bills for the same residence although the bills have been directed to and have been paid by an “Ellen Hodel” since February 2013, and he is claiming the cost of property insurance for the same residence.

Once again, the receipt for the payment of the insurance was made out to “Ellen Hodel/Kelly Hodel/Margaret Dyck”. He has not incurred any other expenses respecting the trailer in question. Therefore, Mr. Hodel claims the cost of restoring the trailer and for the payments made in respect of the residence in which he now lives. The Issue [ 9 ] The plaintiff bases his argument upon clause 6.2 of the agreement that requires that the attached goods be “in normal working order”.

The defendant Executors breached the contract with the plaintiff and the Estate is responsible for the damages that flowed from the breach. [ 10 ] The Executors argue that they were not aware of the extent of the contamination and that clause 6.4 applies in that the purchaser took the property “as it stands”. Analysis [ 11 ] The contract referred to above is an enforceable contract between the parties. That being so, clause 6.2 provides that the seller agreed that “the attached and unattached goods” included under the contract “are to be in good working order” on the date of completion.

The furnace is essential to enable the trailer to be fit for the purpose for which it was intended and it is a fixture. The duct work that forms a fundamental part of the heating system is a fixture as well. [1] [ 12 ] There are two parts to the estimate that was prepared by the restorer, namely the cost to disinfect, remove and replace the sub- floor and secondly the cost to remove and replace the duct work. The Sub-Floor [ 13 ] It is clear that when the plaintiff saw the trailer before entering into the agreement he was alerted to an unpleasant odour and he knew that the owner had kept pets.

He specifically took that information into account when he promptly made his offer to buy the trailer and so I must conclude that he was aware of the potential problems that could arise when pets are kept in a residence.

The Duct Work [ 14 ] The plaintiff did not inspect the vents nor did he inspect the duct work and, despite the furnace inspection that was conducted at his request as a condition of the sale, there is no evidence of fecal matter in the vents or the duct work. He had every reason to believe that the heating system was sound. The Executors, however, were aware that the deceased had kept animals in the trailer and they were aware of a foul smell.

In such a case, by cleaning the carpet only and by not taking any further steps to examine and appropriately clean the entire trailer, they did not adequately deal with a problem that they must have known could occur when animals are left in an enclosed space for a prolonged period of time. It is not sufficient to rely upon statements made by the cleaning people who advised the Executors that the duct work had been vacuumed and cleaned. The responsibility to see to it that the heating system was in proper order rested with them.

Therefore, I conclude that the plaintiff has established that the heating system was not in proper working order and there was a breach of

section 6.2(

c) of the contract. The Estate takes the position that the property was purchased as it stood. However

section 6.4 provides that the buyers purchased the property “as it stands” except “as otherwise described in this contract” and, in this case, the seller in

section 6.2 does represent that the attached goods are to be in proper working order. [ 15 ] There is yet another reason why I must find in favour of the plaintiff. The liability of the seller of a residence in which defects were discovered after the date of possession can depend on whether or not the defect was patent or latent. A buyer is expected to use ordinary vigilance when purchasing a property such that the principle of caveat emptor (or “buyer beware”) applies.

A defect that is not readily apparent during an ordinary inspection is considered a latent defect and if such a defect is known and actively concealed the principle of caveat emptor does not apply and the defendant may be liable in damages [2] . [ 16 ] There is no direct evidence to indicate that the defendant in this case intended to conceal or mislead the plaintiff respecting the condition of the heating system. Madame Justice Wilkinson in Thomas v. Blackwell [3] referred to Gronau v.

Schlamp Investments Ltd. [4] in which it was said: ... any active concealment by the vendor of defects which would otherwise be patent is treated as fraudulent, and the contract is voidable by the purchaser, if he has been deceived thereby. Any conduct calculated to mislead a purchaser or lull his suspicions with regard to a defect known to the vendor has the same effect. The Court, at paragraph 18, said this: I accept that the defendants had no intention to conceal or mislead when they effected repairs. But it is knowledge that is material for the purposes of this action, not intention.

The defendants had knowledge of a problem with the east wall and of the repairs performed and did not impart that knowledge to the plaintiffs. Failure to disclose, or silence, is

an act of concealment of a material fact that has the same effect as an express misrepresentation. It was known by the defendants that the panelling and the exterior repairs in fact concealed the condition of the east wall regardless of the fact there was no intention to do so. That knowledge, and the failure to disclose it, is sufficient to attract liability.

At paragraph 23 the Court said that “there were sufficient indicators of a problem and of the defendant’s awareness of a problem that the plaintiff should have been made privy to the information”. [ 17 ] In this case I conclude that in the case of the vents and duct work, what may have been considered a patent defect became a latent defect as a result of the knowledge that the Executors had acquired. The Executors were aware:

a) that the deceased had pet dogs for some time,

b) that for a time when he was working he kept animals in his residence,

c) that for at least seven years after his retirement he kept the animals,

d) that a urine smell from the animals was evident in the premises, and

e) a smell prompted them to take steps to clean the carpet. Furthermore, it seems unlikely that there would not have been a need to have the vents cleaned unless the Executors were concerned about the need to do so. I must conclude that, at the very least, the Executors were aware of the significant damage done to the premises by the animals and they only attempted to rectify the problem in a superficial manner. The defendants should have brought the nature of

the problem to the attention of the buyer before the contract was signed. [ 18 ] I conclude that the buyer was aware and put on notice in respect of the problem with the flooring but that the extent of the problem with the heating system could not have been discovered by him by inspection and ordinary vigilance. Therefore, the plaintiff has established that the defendant was in breach of contract respecting the state of the heating system. The plaintiff has not established that the defendant was in breach respecting the state of the flooring. I must now determine the damages arising from the breach.

Damages [ 19 ] The plaintiff is entitled to recover from the defendant such damages as may be required to place him in the position he would have been in had his contractual rights not been violated. In this case the plaintiff is entitled to have the defects remedied to conform to the requirements imposed upon the seller in the contract [5] . However there is an onus on the plaintiff to mitigate his loss or to avoid reasonable losses.

In this respect, the Supreme Court of Canada has posed the question to be determined as follows: “has the plaintiff taken reasonable steps to avoid their [that is, his losses’] unconscionable accumulation.” [6] The onus is on the defendant to show, on balance, that the plaintiff has failed to take all reasonable steps to mitigate his loss. [7] [ 20 ] In this case the plaintiff argues that due to his limited means he did not and apparently still does not have the money to have the restorer do the necessary work to the duct work to make the trailer liveable.

The cases have said that a plaintiff’s impecuniosity will not relieve him of the duty to mitigate unless the loss was reasonably foreseeable by a defendant who was aware that the plaintiff had limited means.

In any event, the plaintiff can be relieved of responsibility if it is unreasonable to expect him to do anything or if what the defendant alleges he ought to have done was totally unreasonable. [8] [ 21 ] Here, the plaintiff, either on his own or with the assistance of others, started to remove some of the sub-floor apparently intending to replace the carpet and underlay when he became aware of the condition of the duct work which, at that point, made the premises unliveable.

He suggests that he entered into an arrangement to live at another residence on 2 nd Avenue although the details of the arrangement are scant. All indications are that he did not purchase such a residence. He claims payments that have been made by someone else whom he intends to repay. Mr. Hodel negotiated the purchase price of the trailer at $24,500.00 knowing that he would have to incur the cost to replace the carpeting. There is no indication that he financed the purchase of the trailer and so he evidently had the money to buy it.

As I will point out later, the cost to put the duct work in useable condition although significant was not unmanageable. While I do believe that Mr. Hodel had to live somewhere while the trailer was repaired, I believe that he could have taken steps to retain the restorer to complete the necessary work so that he could take possession of it. On the evidence, the defendant was not aware of the plaintiff’s financial position. I am satisfied that, on balance, the plaintiff did not take steps to mitigate his losses.

Damages [ 22 ] If it has been determined that a party has breached a term of a contract and damages have resulted but it is difficult to assess those damages, the defendant is required, nonetheless, to compensate the plaintiff and the Court must assess damages as best as it can based upon the information available. [ 23 ] Respecting the sub-floor, as far as I can determine the restorer has provided an estimate for the replacement of the entire living room and back entrance flooring. I have no evidence to indicate that the entire sub-floor had to be replaced to repair the duct work.

As I understand it, the restorer concluded that it was necessary to cut into the floor in order to gain access to the duct work that was situated under the floor. The cost to remove the offending material, remove and replace the duct work and to apply disinfectant would amount to $2,957.95 and the cost to remove and replace the sub-floor in the living room and back entrance is estimated to be $5,372.00. In addition to the foregoing, an amount for overhead, profit and GST is to be added. Almost one-half of the total estimate relates to the sub-floor.

[24] Therefore, the defendants shall be liable to the plaintiff for the cost of disinfecting, removing and replacing the duct work on themain level at a cost of $2,957.95. The plaintiff shall be compensated for the cost of removing and replacing the sub-floor where theremoval was necessary to access the duct work which I fix at one-third of the total cost which amounts to $1,790.66. Therefore, the costwould be $4,748.61 and, in addition, the restorer calculated overhead and profit at 10% each which I calculate at $949.72. Goods andservices tax is payable on the goods and services which I calculate to be $284.91.

The total cost to restore the premises is $5,983.24. [25] Mr. Hodel would likely have replaced the sub-floor and carpet before moving into the trailer. But for the condition of the ductwork, he would probably have taken possession during the third week of July. It seems to me that it would have been possible for therepair work to the duct work to be done over a period of one month. In the circumstances, the defendant is responsible to the plaintiff forthe payment of his living expenses during that period of time.

For lack of any better reference and using the costs actually incurred byhim, I calculate the living costs to be $400.00 for one month and the utility costs for the month of August which were $143.59. The totalliving expenses would have been $543.59. Conclusion [26] The plaintiff shall be entitled to judgment against the defendant estate in the amount of:

a) to repair duct work $5,983.24

b) living expenses $ 543.59

c) costs $ 100.00 TOTAL $6,626.83 ____________________________ L.A. Matsalla, J [1] Ground Engineering Ltd. v. Agra Industries, (SK KB), [1977] 6 W.W.R. 598 at 601 (Sask. Q.B.), MacDonald J. at 601. [2] Khrun v. Rimmer, [2011] S.J. No. 702 (Scott P.C.J.) at para. 36. [3] 1999 SKQB 168 , [1999] S.J. No. 769, para. 16. [4] (1974), (MB KB), 52 D.L.R. (3d) 631 (Man. Q.B.) at 636. [5] Maisonneuve v. Burley, 2001 SKQB 407 , [2001] S.J. No. 520 at para. 41. [6] R. Fridman, The Law of Contract in Canada, 6th Edition, Carswell, at 730 referring to Red Deer College v.

Michaels (1975), (SCC), 57 D.L.R. (3d) 386 at 390. [7] Saskatoon Square Ltd. v. Dunwoody & Co. (1993), 111 Sask. R. 116 (Sask. Q.B.) at para. 57 referring to MacKay Construction Ltd. v. Potts Construction Co. (1985), (SK UFC), 8 Sask. R. 178 (Sask.C.A.) at para. 188. [8] Fridman, supra at 731.