Misty Rae Irwin - v. -, 2022 SKPC 6

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2022 SKPC 6 Date: February 11, 2022 File: SC #28/20 Location: Swift Current _____________________________________________________________________________ Between: Misty Rae Irwin - and - Kevin Paul Self-Represented Plaintiff Michael W. Marschal For the Defendant _____________________________________________________________________________ JUDGMENT B.D. H ENNING, J _____________________________________________________________________________ INTRODUCTION AND PRELIMINARY ISSUES [ 1 ] This is a civil claim arising out of the sale of a residential property at 621 – 6 th Avenue NW located in Swift Current,

Saskatchewan by the defendant to the plaintiff. Possession of the house was taken on or about October 17, 2017. The claim is dated July 6, 2020, approximately two years and nine months after possession. The defendant issued a Dispute Note dated September 22, 2020. A trial occurred at Swift Current on November 8 and 9, 2021. The claim concerns an allegation that the defendant knew of significant water ingress issues with the property and fraudulently failed to disclose the same to the plaintiff purchaser with intent to promote and induce the sale of the property.

Use of the developed basement area of the house was severely limited and physical damage occurred to finishing there. Costly remediation was necessary and the plaintiff claims $27,765.00 and court costs of the action. The plaintiff does not claim damages for being unable to use the basement area for a significant period of time. [ 2 ] Exhibit P-1 are documents relating to the sale which are not challenged by the defendant.

These include an agreement entitled RESIDENTIAL CONTRACT OF PURCHASE AND SALE in a standard Saskatchewan Real Estate Commission form that was completed by the parties for the sale of the property in question on September 28, 2017.

This form is written in small print and includes significant details of the transaction including price, possession date (October 13, 2017), details of included or excluded items, and in particular, an exclusion clause at paragraph 6.4 that states “. . .there are no other warranties, representations or collateral agreements made by or with the other party, . . . 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”. [ 3 ] This transaction included a Property Condition Disclosure Statement (PCDS) that was ‘Developed & Provided by your Association of Saskatchewan REALTORS’ [ sic ] which was completed and initialed in numerous places by the defendant.

This was entered as Exhibit P-2 and is not disputed by the defendant except with respect to the reliance the plaintiff may have placed on the document. This PCDS includes the statement that the seller was not aware of any past flooding or drainage problems on the property, which the plaintiff asserts was the case throughout the period that he occupied the property, approximately five years from 2012 until the sale to the plaintiff in October 2017. That is a moot point, however.

The defendant relies on the exclusion clause referred to above and asserts that the disclosure statement is therefore of no effect having been excluded from the agreement reached between the parties. [ 4 ] Such exclusion clauses have been held to be effective in this province as well as in other Canadian jurisdictions. The defendant in his brief at paragraph 36 cites the case of Smith v Hawryliw , 2020 SKQB 169 [ Smith- QB] which deals with many of the same issues as in this action, and in particular, the effect of the exclusion clause referred to in Smith- QB, was an application for

summary judgment dismissing the plaintiff’s claim and it was appealed to a Court of Appeal chamber judge which resulted in partial reversal of the lower court decision. The appeal decision is Hawryliw v Smith, 2020 SKCA 92 [ Hawryliw -CA]. This case is cited with others for the proposition that the exclusion clause is effective against claims for negligent misrepresentation of contract or for deliberate breach of same.

I accept that proposition. [ 5 ] However, the plaintiff is a lay person and her claim is not framed in legal language, although she does assert that the defendant ‘neglected’ to disclose water issues in the house. I do not take her wording to limit her claim to that phrase only.

She gave evidence at length as did the defendant and it is clear that her claim includes the allegation that the defendant deliberately failed to inform her of a particular defect known to him, a severe problem with ground water entering to the basement, and this major defect would have affected her entry into the contract for purchase, and constitutes fraudulent concealment. The defendant was not in any doubt as to the nature of the claim being made of fraudulent misrepresentation. The defence brief addresses that issue. This category of claim cannot be negated by the exclusion clause.

At paragraph 6 of Hawryliw -CA , the appellant judge observed that such a fraudulent action might be actionable, but would have to have induced the contract.

In this case that would mean a fraudulent concealment must have induced the plaintiff to enter into the purchase which would not have otherwise occurred. [ 6 ] I conclude that the plaintiff must establish on the civil burden of proof of probability, that it is more likely than not, that the defendant knowingly and with fraudulent intent meant to deceive her, the purchaser, by failing to disclose a major water problem with the property that she discovered only after the problem clearly manifested itself. The full extent of this problem was understood only after extensive investigation.

The defendant’s wife (who was not an owner of the house and is not a party to the action) lived most of the same period with her children at the house. They assert that in the period that they lived together in possession of the house, and the longer period that the defendant lived alone there, that there was absolutely no entry of water, nor any odour which could suggest any type of problem, and consequently, no action was taken by them to conceal or camoflauge water entry or damage.

The defendant asserts that the basement drywall and flooring was exactly the same when he sold the property as when he purchased it. [ 7 ] The defence also raises a limitation period defence. The limitation period is set at two years in The Limitations Act, SS 2004, c L-16.1 [ Act ]

section 5 which provides as follows: “Unless otherwise provided in this Act , no proceedings shall be commenced with respect to a claim after two years from the day on which the claim is discovered ” (emphasis added). This issue will be considered under the next

section of this judgment where the evidence will be reviewed in some detail. EVIDENCE AND FACTUAL ISSUES [ 8 ] The evidence began with the plaintiff, Ms. Misty Irwin. She took actual possession of the house on October 5, 2017 and gave the history of her experiences there. In the Spring of 2018 she noticed some unidentified odour in the basement. She did not give any great detail regarding this odour. The house had been constructed in 1966 so it would have had a fifty-year history by the time of purchase. This odour was noted again the following year, 2019.

Neither in direct evidence nor in cross-examination, was there very much detail brought out about this odour. Ms. Irwin stated there was no sign of water or moisture apparent when she noted the odour. She had the carpet removed and found no evidence of any problem with it. She also stated that the odour abated after she removed the carpet. [ 9 ] She installed laminated flooring in the living areas of the basement in March 2019, but there were bare walls and concrete floor in the laundry room and furnace room and they remained that way.

She stated that the odour was occasional and it did not trigger any concern in and of itself. Various odours in older houses are possible from sources other than ground water from outside. Possible sources would be spills of various household or building substances, toilet or sewer overflow, washing machine leakage, pet-related occurrences, plumbing and other common problems, accidents and other occurrences over a period of decades. [ 10 ] However, on June 19, 2019 Ms. Irwin was called home, presumably by one of her children, and she came to the house and

found the basement floor ‘all wet’. It was raining outside. She stated there was about one inch or 2.8 centimeters of rain. She described the basement area which had covering over the concrete floor in all living spaces. There was a bedroom, an ‘office space’, a bathroom, some type of living area and a hallway in addition to the laundry and furnace rooms. There was significant water in the basement, most noticeably in the northwest part but also some in the southwest area. Ms. Irwin called her insurance company and an adjuster from SGI came to her house. Water was not covered by her policy.

She was told to get a backflow valve for the drain. [ 11 ] The defence has raised the question of whether this action has been barred by the limitation period set out in paragraph 6 above. I do not find that this limitation period runs from the date of possession (October 5, 2017), or from the first noting of an unidentified odour described above. In my opinion, it is not reasonable to conclude that the plaintiff had ‘discovered’ the basis for any claim until the appearance of water in the basement on June 19, 2019.

The action was commenced July 6, 2020 and the defendant served shortly thereafter being well within the two-year limitation period and I therefore conclude the action brought by the plaintiff is not barred by the Act . [ 12 ] Ms. Irwin next asked Mr. Tom Westbury, who was her plumber, for an opinion and a quote on installing a backflow valve. She began investigation of the basement in the summer of 2019 and began to open up various wall areas. She called another company and someone came to look things over, and at that time the washroom area was ‘taken apart’.

She spoke to others, and in April 2020 more walls were exposed. Ms. Irwin sought out and obtained the PCDS that the defendant would have received as part of his purchase of the property about five years before it was sold to the plaintiff. This document was never identified in such a way to be used as evidence of its contents, but it was produced in court and examined by both the plaintiff and defendant as they gave evidence. This 2014 PCDS does disclose water issues, but may be considered only insofar as the information obtained influenced Ms. Irwin’s further actions.

It was never admitted in such a way that it may be used for the truth of its contents. [ 13 ] When the walls were exposed, horizontal cracks were apparent and photographs of same were exhibited as P-3 to P-7. They were referred to by Mr. Eroll Castle of Castle Engineering LLP who inspected and assessed the actual basement walls. He is a qualified and experienced professional engineer who gave evidence with respect to the condition of the house foundation, sources of water ingress, construction methods and defects in same, landscaping measures and other issues relating to this problem. Ms.

Irwin stated she was advised by him to excavate the outside of the foundation and install weeping tile and a water barrier on the outside of the house. This work was done and forms the major part of the claim. These measures were evaluated and commented upon by Mr. Castle in his evidence. [ 14 ] Exhibits P-9A to P-9T comprise receipts for work done to remedy the water problem. Ms. Irwin did proceed to excavate the outside of the house, install weeping tile and a high-quality water barrier to the exterior of the foundation.

These were explained as part of what was required to make the basement usable in the same manner it would have been without a condition that allowed the entry of water. The costs claimed include: a. P-9A Sump pit $1,402.40 b. P-9B Installation of water barrier including Excavation costs 12,765.00 c. P-9C New flooring installation 2,801.30 d. P-9D Building Permit, City of Swift Current 65.00 e. P-9E New Drywall, paint, labour for same 3,502.05 f. P-9F New flooring and installation 3,279.99 g. P-9G Nosing on steps (part of flooring cost) 53.08 h. P-9H Stair edging (part of flooring cost) 169.97 i.

P-9I Paint 128.84 j. P-9J Concrete for back-up valve 15.52 k. P-9K Paint, basement/concrete 67.38 l. P-9L Window wells 88.80 m. P-9N Underlay (flooring) 639.87 n. P-9O Paint 152.18 o. P-9P Flooring adhesive 46.61 p. P-9Q Flooring adhesive 44.39 q. P-9R Paint 168.45 r. P-9S Flooring screws 88.70 s. P-9S Flooring screws 44.39

t. P-9T Basement Cement Filler 72.26 Total $25,596.18 Not claimed was a cost incurred after excavation around house to level the ground, $430.00. [ 15 ] The defence cross-examined Ms. Irwin. The defence sought to establish that Ms. Irwin had special knowledge and expertise with respect to residential properties. She explained her employment was as a leasing agent for commercial properties and apartments and that she has no particular knowledge with respect to houses and their physical properties. Details of the sale and relevant documents were reviewed.

It was established that she had the opportunity for a home inspection but it was not pursued. In particular paragraph 6.4 of the purchase agreement was brought to her attention. She was asked questions that called for a legal admission of waiving all liability for defects as a result of not pursing the home inspection, and she strongly resisted this proposition. The defence raised the principles of caveat emptor at several points, arguing that the plaintiff was, in effect, negligent in not taking the opportunity to have a full home inspection that might have identified potential water problems.

In particular, this argument is based upon the fact that bare concrete was visible in the laundry and furnace rooms, and an experienced home inspector such as Mr. Castle who gave extensive evidence, would have immediately identified this as a possible problem to pursue. This argument is not persuasive, in my opinion. [ 16 ] The defence brief at one point refers to number of factors affecting the entry of groundwater, and suggested that even the minor changes to landscaping (the placement of mulch which is discussed further below) could cause major water entry problems.

A water problem may or may not exist due to many factors in an older house and even where some conditions might be a possible sources, it does not mean that water is actually entering. It would not have been reasonable, in my opinion, to pursue every possible source of potential problems when the PCDS stated that there were no water issues. The PCDS, Exhibit P-2, was presented to the witness who asserted that she did sign it and rely on the statements in it.

The PCDS is not actionable, but is nonetheless an assertion of fact by the seller to the buyer under circumstances where it could be relied upon later with respect to issues with the house. As a result, the defence argument that she should have taken immediate and perhaps precipitous action before any water actually entered is not persuasive. [ 17 ] Ms. Irwin was cross-examined on the question of odours. She said she used an ozone machine to minimize the odours several times. However, she stated that the odour problem abated after she removed the carpet.

When odours had ceased, she proceeded with some renovations. In these circumstances, I do not find that she was negligent or reckless in proceeding with the renovations. She also stated that she did not find mould on any walls, but after she removed the baseboards she found mould there, but not on the walls. [ 18 ] The defence further pursued the question of changes to the exterior landscaping and it was later argued that those changes could have affected the behavior of groundwater from rain or snow melting.

She did not give very much detail of the ‘landscaping’ changes, and that term is probably an exaggeration of the changes that she made which appear minimal. One detail, however, came out through some text messages obtained by the defence that the plaintiff identified. They indicated that she used 15 bags of ‘mulch’ around the house. This was suggested as a change that was a significant inducement to inflow of groundwater, but it was also considered by the professional engineer who gave evidence to the contrary on that question. Photos of the ‘landscaping’ were introduced as Exhibit D-3.

Other than the addition of some material around the foundation of the house, the photographs do not suggest significant changes. Ms. Irwin said she did remove some trees from the front of the house as well. ‘Landscaping’ changes will be considered further below in light of Mr. Castle’s evidence. The defence argument on this point is that these changes were very significant and altered the property sufficiently to cause groundwater that hitherto had not been a problem to enter the basement. No evidence on this point was called by the defence. [ 19 ] The next witness for the plaintiff was Mr.

Eroll Castle who established his qualifications and professional status as a professional engineer practicing in Swift Current at Castle Engineering LLP. He had been licensed as a surface water consultant since 2010 and was also a qualified building inspector. His qualifications were not challenged by the defence and he gave opinion evidence in those areas of expertise. [ 20 ] Mr. Castle attended to the premises in question on April 15, 2020 and examined the structure of the house to determine the source of the water issue.

He readily concluded that the water was entering through horizontal cracks in the basement walls. He saw water dripping and concluded that when it rained, water would seep into the soil and then enter through the wall cracks. He immediately diagnosed the problem and was of the opinion that the foundation needed to be waterproofed. This would be done by excavation and then power washing of the exterior surfaces to remove all soil. A water-impervious covering referred to as ‘blue skin’ would then be installed that was ¼ inch thick and fixed with adhesive to the exterior foundation walls.

He felt that all four sides of the foundation would have such cracks even though the water was coming through the walls in only two places at the time of the inspection. Other water entry points cannot, in my opinion, be discounted and to make the entire foundation waterproof was prudent and reasonable in my view to fully remediate the problem. [ 21 ] Mr. Castle explained how water entry would occur and that it could result from any water source in addition to rain such as a garden hose or poor eavestroughing that would increase the effect of rain water. It is apparent from Ms.

Irwin’s evidence that the source of water was rain at the times in question and no other source was identified other than by conjecture. I accept that the source of water was the result of a significant rainfall.

Whether water entry would be minimized by better eavestroughing is not a relevant issue, in my opinion, as the question is whether there was a groundwater entry problem with the house in the condition that it was sold, and whether that was known to the defendant, regardless of the state of eavestroughing or drainage. [ 22 ] There is no evidence of any other water source in the period under consideration, and other possibilities are entirely a matter of conjecture or theory.

The legal question is whether such information regarding water entry from rain, a common and naturally occurring event, was deliberately withheld from the buyer’s knowledge. If this is established as well as the materiality and significance of that information in inducing the sale, it might be concluded there was a fraudulent concealment of a major defect in the house done for financial advantage, that is, the sale. If so, then the plaintiff is entitled to receive a sum of money sufficient to put her into the same position as the contract contemplated – a water-leak free house basement. [ 23 ] Mr.

Castle observed there was no buckling of the walls and he proceeded to explain in some detail how the horizontal cracks

would occur. He explained that at the time this house was constructed, rebar reinforcement of concrete was not used in house construction, and further, cement was not poured in one continuous operation or ‘pour’, which is now accepted practice and has been for quite some time. This is permitted by large capacity concrete trucks as opposed to many smaller batches of concrete mixed on site at earlier times. Multiple pours of concrete result in the cement not bonding fully at the point between the batches poured. This would prevent the cement from curing into one integrated cement wall.

He referred to these poor bonding lines between particular cement pours as ‘cold joints’. There would be inherent weakness in such a wall where the batches of concrete did not bond fully resulting in horizontal cracks in the concrete walls. Over time these lines or cold joints would become cracks through which water could enter. [ 24 ] It is apparent from Mr. Castle’s evidence that these cold joints could and would occur and result in the horizontal cracks observed through which the water in question entered.

This construction method was an inherent weakness in this particular house and in houses built in that era. The source and cause of the water entry is significant in this case as it suggests a long-standing state of affairs, and hence, a long-standing water problem unless it is established that there were changes made in the property by the plaintiff that exacerbated a potential problem into an actual problem. [ 25 ] In cross-examination it was established that the house had been built without weeping tile and a sump pit where water might be collected and disposed of. Mr.

Castle said that the grade or slope of the soil around the house could be a significant factor in whether water drained away or sank down to enter the foundation. Other factors would be a layer of poly (meaning, I would infer, a water resistant layer of polyethylene) or a sidewalk adjacent to the foundation that would guide water away from it. He also noted the neighbour’s lawn was higher than the lawn around the house in question. These factors would explain the mechanism of entry of water but not change the issue before the Court.

Based upon the evidence before the Court, I do not find that the problem encountered by the plaintiff was the result of a lack of weeping tile. [ 26 ] Mr. Castle was also asked about the mulch added around the house by the plaintiff. He was of the opinion that the adding of material would not adversely affect the water drainage and might, in fact, improve it by absorbing water. He did not think that mulch material would affect the drainage around the house. Photographs were shown in court and entered as exhibits. Considering the evidence of Mr. Castle and the Ms.

Irwin, I am satisfied that no changes occurred to the house and its drainage that would have impacted the behavior of rainwater, and that it was rainwater entering through the cracks described that resulted in the basement water problems. The house condition was not changed from what Mr. Paul had sold. [ 27 ] The question still remains whether Mr. Paul knew of this problem and fraudulently concealed it from the plaintiff in order to assist and induce the sale of the property.

Caveat emptor may apply with respect to breach of contract or negligence by the defendant, but it would not apply with respect to fraud. [ 28 ] The next plaintiff witness was Ms. Cynthia Starchuk, an architectural technologist with the City of Swift Current. She had access to the city records with respect to this property. Upon checking those records, she concluded that no building permit was issued other than the original construction permit with respect to the property.

She concluded that the basement finishing must have been done without a permit and the work that was now in place should have been subject to a permit or permits. She had looked at the house and also observed that the neighbouring house was higher in elevation than this house, but she added that it was only sometime after 1966 that elevations between houses were regulated. [ 29 ] The next plaintiff witness was Mr. Tim Westbury, a journeyman plumber with 25 years of experience.

He said he had seen a lot of water issues and he spoke about weeping tile that carries water from the foundation of a house into the sewer systems, domestic and/or storm. He attended to the house when the drywall had already been cut out. The main valve for drainage was in the laundry room and there was no backup valve. He stated, however, that he advised Ms. Irwin that her water problem was not a sewer backup one. The water was outside water. [ 30 ] The defence evidence began with Mr. Kevin Paul, the defendant. He gave his present age as 33 and his occupation as ranching and oilfield production.

He indicated he purchased and moved into the house in 2012, so given the possession date for Ms. Irwin, he had lived in the property for approximately five years. He had no home inspection done when he bought the house. He stated he was not aware of any issues with the house. He identified Exhibit P-2, the PCDS for the sale to Ms. Irwin and his initials and signature on it. He had never known or talked to the owners previous to his purchase of the house. [ 31 ] Mr. Paul stated that the basement was finished when he bought the house and that he made no changes there whatsoever.

Except in the laundry and furnace rooms, all walls and floors were covered. Quite a number of photographs were tendered in the course of the trial of the house including the basement area. A set of colour photographs of the basement taken by the listing real estate agent were presented, but not all photographs were exhibited. Some exhibits may be only good quality black and white photocopies of the same colour photographs that were in court.

The Court examined both sets of photographs, and noted that the walls were white or very light colored, that there were some items attached to walls, but the walls looked absolutely unmarked. The carpet was also pristine and new-looking with no signs of wear, soiling or other indication of use over time. Mr. Paul had lived in the house for five years and his wife and two children had lived with him there most of that time.

This does not, of course, constitute evidence that the wall or floor coverings were newly installed, contrary to the defendant’s evidence, but their condition would be consistent with such an occurrence, whereas a soiled, marked or worn carpet would be consistent with Mr. and Mrs. Paul`s evidence. [ 32 ] Mr. Paul said he knew of the cracks in the walls where they were exposed in the furnace and laundry room, however, he experienced no water or odour problems of any sort. He said that he did not do any landscaping and had no awareness of any drainage problems with the property.

He said that the sole reason for selling the house was that he and his wife wished to move to a rural property near to Swift Current where he kept cattle. He strongly denied concealing any defects in the property. He stated he was entirely truthful in the PCDS. [ 33 ] Mr. Paul was cross-examined about his purchase documents and the transaction in 2012. The PCDS from that sale was marked for identification as Exhibit P-10 and Mr. Paul examined it in court. This PCDS did identify a water issue.

He stated that at the time of purchase he was young and inexperienced and paid no attention to any of the documents and signed where it was indicated for him to sign without any consideration of any terms including the PCDS. He also said clearly that if he had looked at the PCDS and knew

of water issues he would not have paid the price that he did for the property. He asserted that at no time did he avail himself of information in the PCDS, but had he done so, he admitted that it would have affected his decision. [ 34 ] Because the PCDS was never tendered in such a manner to be receivable in evidence for the truth of its contents, it is not evident before the Court that there was a known water problem prior to the purchase by the defendant. The evidence of Mr.

Castle does, however, establish that this problem was the result of a long-standing condition of the house, and it follows that the problem was also of long standing regardless of whether Mr. Paul ever saw the PCDS. [ 35 ] On re-examination it was pointed out that Mr. Paul`s signature is not on Exhibit P-10, the PCDS from 2012.

This may strengthen his assertion that he never saw or read that document or any of the other documents, whereas if a signature appeared on it, he would have had to acknowledge the document and it would have been receivable in evidence for its contents. [ 36 ] The next defence witness was Ms. Ashlyn Paul, spouse of Mr. Paul the defendant. She had moved into the house in January 2014 and lived there since that time. She stated they had married five years later and she had two children who lived there also. She gave evidence to the same effect as her husband, that there was no water issue, ever.

There was no dampness of the carpet and that the drywall and carpet were the same as when she and her children came to the house. Ms. Paul also gave a detailed history of the sale of the house that was first listed in 2016 and that they did not obtain a buyer readily. [ 37 ] A further defence witness was Mr. Bobbi Tienkamp, the real estate agent in the earlier sales transaction to the defendant. She admitted having seen about one thousand homes and been involved in many listings.

She visited the house and had some recollections about going through it, but had nothing specific to recall, except to say she was unaware of any water or odour issues, though she had seen houses with such issues. This is not consistent with the PCDS in the transaction, but she added that she did not recall giving any PCDS to Mr. Paul, even though she also said that she had no real recollections of the matter. Ms. Tienkamp presented as a witness sympathetic to the defendant, but her evidence does not add anything of significance this case.

ARGUMENT ON FACTS AND LAW [ 38 ] Some points of argument have been referred to above and dealt with. The defence gave oral arguments and filed a 24-page brief in the matter. The evidence was reviewed and it was emphasized that there was no proof that Mr. Paul had knowledge of water problems. The PCDS Exhibit P-10 for identification was referred to as never having been seen by the defendant who therefore could have no knowledge of its contents. Given that its contents are not in evidence, this point has no significance. However, the assertion by Mr.

Paul that he had no knowledge of water problems and that he did not conceal them is central to the case. [ 39 ] Counsel questioned whether Ms. Irwin received and relied upon the PCDS, Exhibit P-2. However, given that the PCDS is excluded by paragraph 6.4 of the sales agreement, it has no legal significance. Mr. Paul said that he never saw the PCDS that pertained to his purchase, and it is not evidence either. However, both Ms. Irwin and Mr. Paul stated that water issues were significant to them and would have made a difference in their decisions to purchase this property.

The importance of a house that did not have a basement water problem was understood by both and was a major factor in consideration of a house purchase. [ 40 ] It is clear that knowledge of a major water issue would have been significant to Ms. Irwin determining whether to purchase the property. That is relevant to the question of fraudulent misrepresentation by concealment. She must establish on a balance of probabilities that Mr.

Paul did know of a water issue and deliberately chose not to disclose it in order to increase the chance of a sale which might not have occurred had a water problem been identified. [ 41 ] The defence argued strongly that Mr. Castle saw the cracks in the exposed walls in the laundry and furnace rooms, and that they were apparent to the potential buyer as well. The defence seeks to establish that this is notice of a water problem with the house that ought to have been pursued, failing which, the plaintiff has no right to complain.

The defence goes further and argues that this is a complete answer to the question of fraudulent concealment or misrepresentation. I have already discussed the issues that might affect water entry and cracks in themselves are not conclusive evidence of a water problem. The existence of cracks are not notice to a purchaser of an existing water problem. [ 42 ] The defence also argues that the plaintiff was alerted to the existence of problems when she did the renovation, and particularly when mould was found on a wall. Ms.

Irwin said she saw mould only in the area revealed when the baseboards were removed as part of flooring alterations. Replacement of the flooring is one of the remedial measures claimed for. If the original flooring which appeared in good condition in the photographs had still been in place, a claim would still follow for replacement of flooring. [ 43 ] The extent of this mould was not explained in detail, nor whether it might have been caused by spillage, pet waste or other possible causes. I conclude that it was not reasonably sufficient to trigger awareness of groundwater problems to be investigated. Ms.

Irwin had also been aware of the assertion in the PCDS that there was not a water issue. The fact the PCDS is not part of the agreement for sale does not preclude the information in it from being considered for other purposes that could affect conclusions regarding the mould. The mould as stated, could come from other sources and is not of itself a sign of water issues. [ 44 ] I have concluded above that the odour was not a sufficient event to establish knowledge of a water problem and require diligent mitigation of potential damage.

I make the same finding with respect to the argument that the mould by the baseboard should have been a clear sign of water problems and be sufficient to cause her not to proceed with renovation and thereby mitigate possible damages. To proceed under those circumstances was reasonable, in my opinion. The water problem became apparent, in my opinion, only when water did enter and the extent of the problem became known only when the walls were exposed. [ 45 ] The plaintiff argument was not presented in legal language, which is understandable, and it consisted in large part as a review of the evidence.

She asserts that Mr. Paul acquired the property and became aware of the problem and passed it on to her. She essentially asserts he is not truthful in his denial of knowledge of any water problem, which he would have experienced himself, and that failure to advise of the problem and concealing its existence was a deliberate and fraudulent act to induce the sale of the property to a purchaser, the plaintiff here.

[ 46 ] In considering this central issue, there are some significant points of evidence to consider. [ 47 ] The water came in through horizontal cracks that had developed from the manner of constructing the house in 1966, and would therefore have been of long-standing. It then follows that the water problem was also of long standing and would have manifested itself during Mr. Paul’s occupancy, unless Ms. Irwin made changes that exacerbated the problem.

I have concluded above that she did not make such changes. [ 48 ] This argument is bolstered by the common prevalence of summer rain in Swift Current, or anywhere in Saskatchewan. This is a matter of common experience that the Court may take notice of, that is, that rain will occur at least occasionally and be heavy at times over a period of a year or two, and most certainly over a period of four or five years during which the defendant was in occupation. Further, Mr.

Paul stated himself that he had experienced heavy rainfall during his occupancy and had no water issues. [ 49 ] The basement walls and carpeting are pristine and show no signs of wear, scuffing, soiling or other indices of occupation by two adults and two children for five years. Further, they do not show any sign of water effects. The defendant had stated that the walls and carpet had been installed prior to his purchase and were untouched by him. That some sign of use or wear on the carpet might be expected, but also, if there was water entry at various times, marking of walls and or carpet would occur.

None of that is apparent. The absence of such conditions are not conclusive evidence of camoflauge of water damage. However, the condition of the carpet presents nothing to confirm that it was in use for years by a family or that there were water problems. The condition of basement carpet and walls is not of itself evidence of concealment of a water problem, but their state is consistent with such a concealment. It must therefore be considered with the other evidence. [ 50 ] The case is determined on a balance of probabilities, the civil burden of proof, onus for which is on the plaintiff in order to succeed.

CONCLUSIONS [ 51 ] Notwithstanding that Mr. Paul and his wife both assert there was no water problem whatsoever during their occupancy, the evidence of Mr. Castle regarding the cracks through which water readily entered during a heavy rain is entirely credible and highly significant. This condition was of long-standing and not at all recent. I have already concluded that the addition of mulch around the perimeter of the foundation did not create any change that increased susceptibility to entry of groundwater. Indeed, Mr.

Castle’s evidence which I accept is that it might have minimized water entry by absorbing moisture. I conclude that over a period of five years during which the defendant and his wife were in occupation, and given the source of the problem that exists, they would inevitably have become aware of water ingress during rain. They were in occupation for a sufficient length of time for that to happen, and I do not find their assertion that it never happened to be credible. I conclude they would have experienced the entry of water and took steps to cover any signs of the same for the motives I have stated.

I do not accept their evidence of experiencing no water problems. But for the concealment of the water issue, the plaintiff would not have purchased this property. I conclude that given the inevitability of water entry and general occupation of the house by four people, the state of the basement would not be as it was if special steps were not taken to hide water effects and wear.

I conclude this was deliberate and fraudulent. [ 52 ] As noted in Hawryliw v Smith , 2021 SKCA 53 at para 32 , reliance on a representation is an essential element of the tort of fraudulent misrepresentation and that concealment of a defect is equivalent to a representation that no such defect exists. The mere presence of a misrepresentation is not sufficient – concealment on its own is not actionable. A person must rely on the misrepresentation created by the concealment and it must cause them to act in order for an action to succeed. [ 53 ] In the instant circumstances I accept that Ms.

Irwin would not have purchased the home if she knew of the propensity for the basement to flood after a significant rainfall and that therefore, the concealment led her to reasonably conclude that the basement was not susceptible to flooding. I am satisfied that the concealment operated as an inducement to have her purchase the home and that she relied on it. On that basis she did rely on the concealment to her detriment and therefore her claim, broadly characterized as being based on a fraudulent misrepresentation is actionable and successful. [ 54 ] The measures that Ms.

Irwin has taken to address this water problem appear to be reasonable and based upon the evidence of Mr. Castle which I have accepted. It is apparent that with the covering of the exterior walls with an impervious water vapour and the installation of weeping tile that this house is now in a better state than when it was new. This, however, is not a case of betterment, as the remedial action taken was to guard against water entry that she was entitled to assume was not a problem. [ 55 ] However, it was not made clear by Mr.

Castle that the installation of weeping tile was essential to solving the problem as was the sealing of the cracks through which the water was entering. Weeping tile in his evidence was certainly desirable, but not identified as essential to the remediation of the water problem. I therefore accept the costs associated with excavation and installation of a water barrier, but not the costs associated with installation of the weeping tile, or window wells.

I also allow costs for the replacement of floor coverings, drywall, and painting which were all necessary interior remediation of the water damage. [ 56 ] To particularize, I accept the costs enumerated in the sub-paragraphs of paragraph 13 as follows, except for the amounts in brackets which are not allowed as stated above. a. P-9A Sump pit ($1,402.40) b. P-9B Installation of water barrier including Excavation costs 12,765.00 c. P-9C New flooring installation 2,801.30 d. P-9D Building Permit, City of Swift Current 65.00

e. P-9E New Drywall, paint, labour for same 3,502.05 f. P-9F New flooring and installation 3,279.99 g. P-9G Nosing on steps (part of flooring cost) 53.08 h. P-9H Stair edging (part of flooring cost) 169.97 i. P-9I Paint 128.84 j. P-9J Concrete for back-up valve (15.52) k. P-9K Paint, basement/concrete 67.38 l. P-9L Window wells (88.80) m. P-9N Underlay (flooring) 639.87 n. P-9O Paint 152.18 o. P-9P Flooring adhesive 46.61 p. P-9Q Flooring adhesive 44.39 q. P-9R Paint 168.45 r. P-9S Flooring screws 88.70 s. P-9S Flooring screws 44.39 t. P-9T Basement Cement Filler 72.26 Total allowed, (bracketed amounts excluded). $24,089.46 COSTS [ 57 ] The Small Claims Act , 2016 , SS 2016, c S-50.12

section 36 allows costs to be awarded and section 6(1)(

b) of The Small Claims Regulations , 2017 , c S-50.12 Reg 1, 43/2018 limits such costs to 10% of the amount of the claim in addition to specific issuing costs and allowable expenses. A consideration of the claim, complexity, conduct of the parties and time involved in court is all relevant. Here the case was complex, the defence made extensive legal arguments and the defendant has been found to not be credible in court and have perpetrated a fraud. The plaintiff brought a number of witnesses who were professional or trained individuals who came and gave evidence. The trial occurred over two days.

The defence did not, however, engage in delaying or other acts to frustrate the litigation. [ 58 ] I allow costs under section 36(3) in the amount of 6% of the principal sum awarded which equates to $1,445.37. The plaintiff is also entitled to any actual and reasonable fees paid to obtain the services of expert witnesses who were Mr. Eroll Castle, Mr. Tim Westbury and Ms. Cynthia Starchuk. I also award the costs of filing the claim in the sum of $100.00 under section 36(1) together with actual costs of service.

The particulars of witness and service costs are to be presented to the Court in writing within 14 days for consideration. This judgment is reserved with respect to those costs. An addendum to this judgment will be released after the Court considers the details of same. ________________________________ B.D. Henning, J