2016 QCCQ 18915, 2016 QCCQ 18915

Adkar c. Eklove 2016 QCCQ 18915 JL 4270 COURT OF QUÉBEC "Small Claims Division" CANADA PROVINCE OF QUÉBEC DISTRICT OF TERREBONNE LOCALITY OF ST-JÉRÔME "Civil Division" No. 700-32-030552-150 DATE: December 22, 2016 PRESENT: THE HONOURABLE DENIS LAPIERRE J.C.Q. MANJIRI ADKAR Plaintiff / cross-defendant v. EDWARD EKLOVE -and- FREMA SHATNER Defendants / cross-plaintiffs JUDGMENT [ 1 ] In the fall of 2010, the plaintiff became interested in an attractive house located close to a lake in the Laurentians. [ 2 ] Following an inspection conducted by a cousin of her spouse, no major problem was discovered.

The inspector, Theo Pappas, was however careful to check with the owner, Edward Eklove, that there had never been any infiltration of water into the building. [ 3 ] Eklove confirmed the declaration of the seller made by his spouse, defendant Frema Shatner, when the house was put up for sale. The couple had never had a problem with water infiltration, but had sometimes noticed dampness on one wall of the garage in the springtime.

Other episodes when water was present in the garage were mentioned, but it was specified that the underlying problems had been corrected since then. [ 4 ] On the basis of this information, the plaintiff purchased the house at the source of the litigation. [ 5 ] Just over one year later, in March 2012, the plaintiff and her spouse, the witness Nick Psihogios, found a quantity of water in the garage that exceeded the quantity described by the defendants at the time of the sale. [ 6 ] Mr.

Psihogios contacted the defendant Eklove, who told him that the problem was probably caused by the garage drain, which had to be uncovered at all times except during high water in the spring or during rainstorms, when it could overflow because of the rising water level on the nearby lake. [ 7 ] Mr.

Psihogios removed the water from the garage and was careful from that point on to check the state of the drain. [ 8 ] Despite this, in June 2012 another flood occurred in the garage (photograph P-1), leading to intervention by the plaintiff's insurer and repair costs of several thousand dollars (exhibit P-2). [ 9 ] By observing the situation closely, the plaintiff's spouse realized that the water was not coming from the drain, but from around the walls of the garage.

The defendant, contacted once again, blamed him for failing to remove the snow from around the house. [ 10 ] However, the plaintiff was not satisfied with this explanation and, on December 12, 2012, sent the defendants, via a lawyer, a notice of disclosure describing the situation and inviting them to visit the property in the following month. [ 11 ] This visit took place when defendant Edward Eklove came to the property with his friend Marc Paquet, the real estate broker who had arranged the sale.

The two men remember little from the visit, except that they doubted the seriousness of the situation and concluded that the defendants had no liability for the problems. [ 12 ] The parties agreed, however, on the choice of a competent contractor for the case, the excavation company Gilbert P. Miller &

Fils Ltée. The company was finally instructed by the plaintiff in March 2013 to carry out work in June, after a new notice was sent to the defendants (exhibit P-3) who, once again, approved the choice of contractor. [ 13 ] On the following April 24, Mr. Psihogios informed the defendants that Miller would be at his house the following Sunday to assess the work and provide a cost estimate (exhibit P-3). The defendants chose, this time, not to respond to the invitation and were not present at the meeting.

In fact, they never returned to the site, either before or during the execution of the work. [ 14 ] The excavation, which began on June 2, 2013, confirmed the opinion given to the plaintiff by Theo Pappas (exhibit P-5): no French drain had been installed around the foundations when the house was built in the late 1970s.

Photographs P-7 filed in the court record show this clearly. [ 15 ] The contractor's invoice and explanatory note, P-7, describe the work performed: excavation, waterproofing of a foundation wall, installation of a French drain and backfill. [ 16 ] During the work, it became clear that one of the foundation walls had suffered from what appeared to be lateral frost pressure.

The concrete blocks forming the foundation had to be straightened and strengthened with steel reinforcing bars and poured concrete. [ 17 ] The work, performed on June 10, 2013 was included in exhibit P-7 and detailed in the accompanying note. [ 18 ] The work cost $20,000, which the contractor divided into two parts for the two main work items.

Each invoice, with tax, amounted to $11,497.50, and was paid by the plaintiff. [ 19 ] The total amount of both invoices is being claimed by the plaintiff from the defendants, reduced to $15,000 to benefit from the jurisdiction of this Division of the Court. 1- Liability for latent defects [ 20 ] In light of the facts related above, it appears that the Court is dealing with an action for latent defects (more properly called: an action based on the seller's warranty of quality). [ 21 ] Based on articles 1726 and following in the Civil Code of Québec , the plaintiff must establish, by preponderance of evidence, [1] the existence of a significant defect, the fact that it was latent defect that could not be perceived by a prudent and diligent buyer (without the need to resort to an expert), and the fact that it existed prior to the sale. [ 22 ] This type of recourse also involves a number of other principles, such as the principle set out in

article 1739 C.C.Q., which requires a buyer who ascertains that the property is defective to give notice in writing of the defect to the seller within a reasonable time. [ 23 ] The seller's liability, although independent of his or her own knowledge of the defect, may however be more extensive if he or she was aware of or could not have been unaware of the defect. [2] [ 24 ] Last, the quantum of the claim will be influenced by the age of the defective property (normal wear does not constitute a hidden defect), by the methods used at the time the building was constructed, and by the added value that the completion of the repair work may generate. [ 25 ] From this point of view, some of the arguments advanced in defence by Ms.

Shatner and Mr. Eklove may apply. [ 26 ] Except that there is also the testimony of Mr. Yves Lemay, a neighbour of the plaintiff and a former neighbour and friend of the defendants. After the hearing of this testimony, the case takes on a new aspect. 2- The testimony of Yves Lemay [ 27 ] At the hearing, Mr. Lemay reported that he received a phone call from defendant Edward Eklove on June 6, 2013. He even specified that the phone call lasted thirteen minutes, after tracing it in his monthly phone records. [ 28 ] The defendant recognizes that he contacted his friend.

Both men agree that the primary purpose of the conversation was to know if Mr. Lemay's home was equipped with a French drain. Their testimony diverges concerning the rest of the conversation. [ 29 ] According to Mr. Eklove, their conversation was limited to that topic. [ 30 ] But Mr.

Lemay adds a new element that has some relevance to the case: he suggests that they also discussed the infiltration of water into the defendants' former home. [ 31 ] Not the infiltration of water suffered by the plaintiff and her spouse, but the repeated infiltration of water experienced by the defendants themselves when they owned the property. [ 32 ] Mr. Lemay remembers discussing this issue frequently with defendant Edward Eklove at the time. Eklove knew that his building had a major flooding problem. He talked about it extensively. It was a "big concern" for him.

It became even more of a concern when it became time to put the building up for sale. It was "a major reason for selling". The problem was so serious that that he did not know what to do. [ 33 ] Mr. Lemay himself noticed the situation on several occasions, either when he passed by the defendants' house, or after discussing it with them. [ 34 ] When he realized, on June 6, 2013, that the reason for the defendant's phone call was the problem experienced by the plaintiff, he asked him if he had declared the problem to the buyers at the time of the sale.

[ 35 ] Mr. Eklove allegedly replied "Of course not!", adding that he was not going to pay for that. He went so far as to admit he had hidden the problem from the buyer. [ 36 ] The witness was astounded. He could not believe that anyone could deceive a buyer in this way. He found it dishonest and repugnant. He discussed this briefly with the defendant the same day, but the defendant just laughed. [ 37 ] It is because this situation went against his sense of justice and fairness that Mr. Lemay took it upon himself to speak to the plaintiff and to testify before the Court.

It is also why he made the necessary effort to locate in his records the date and duration of the phone conversation. [ 38 ] Faced with this devastating testimony, the defendants simply deny the facts. Ms. Shatner who, it must be said, was not present during the conversation, confines herself to the elements of defence contained in the couple's written contestation. She adds that she was never aware of a flooding problem. [ 39 ] As for Mr. Eklove, although he admits part of the conversation with his former neighbour, he categorically refutes any allusion to an infiltration of water in the garage.

He grudgingly admits that there was water in his driveway during the spring or rainstorms, which he considers normal. For the remainder, he alleges that Mr. Lemay made it all up. 3- Analysis of the evidence [ 40 ] Which of these two contradictory versions should be preferred? [ 41 ] The Court has no hesitation in believing the testimony of Yves Lemay. He had no ties of friendship with the plaintiff or her spouse and was, on the admission of the defendants, their friend. He had no interest in making up his testimony. [ 42 ] Mr. Lemay appeared sincerely shocked by the defendants' attitude.

He gave clear, credible testimony. He was clearly not especially happy to be in court or to have to search through his documents to find his phone records. But his sense of justice was engaged and he could not fail to act. [ 43 ] The defendants can only deny the facts.

But a certain number of elements corroborate the plaintiff's position. [ 44 ] First, defendant Edward Eklove admitted grudgingly in his testimony that water regularly accumulated on his driveway. [ 45 ] Except that, first, he never revealed the situation to the buyers, either verbally or in the declaration of the seller P-8; and second, since the driveway was at the same level as the garage, a flood on the driveway could not fail to affect the garage. [ 46 ] Similarly, the Court sees in the declaration of the seller P-8 a kind of partial disclosure intended to mitigate the facts revealed.

It mentions "dampness" along a wall during some springs and the presence of water caused by problems that had since been repaired. [ 47 ] In addition, the defendants' evasive responses to the phone reports by Nick Psihogios in March and June 2012, their hypothetical reproaches concerning snow removal, and the defendants' absence during the contractor's visit in April 2013 demonstrate a wish to escape their liability and avoid the problem. [ 48 ] Last, the duration of the phone conversation with Yves Lemay, thirteen minutes, is more likely to correspond to the topics reported by Lemay than to those admitted by defendant Eklove. [ 49 ] As for the rest, everything submitted in evidence by Nick Psihogios is uncontested and corroborated by strong documentary proof. [ 50 ] From all the above, the Court concludes that this case is not one of latent defects, but instead a clear case of fraud. 4- Civil liability in a case of fraud [ 51 ]

Article 1401 of the Civil Code of Québec constitutes the basis for civil liability in a case of fraud: "Error on the part of one party induced by fraud committed by the other party or with his knowledge vitiates consent whenever, but for that error, the party would not have contracted, or would have contracted on different terms.

Fraud may result from silence or concealment." [ 52 ] In the view of the Court, the defendants' silence or concealment vitiated the plaintiff's consent and encouraged her to contract on terms different from those to which she would have consented had she received all the information. [ 53 ] The distinction between liability for latent defects and liability following fraud was examined into two separate judgments rendered by the Honourable Pierre C.

Gagnon of the Superior Court in 2006 and 2009. [3] [ 54 ] Certain passages from these judgments apply so closely to the case at hand that they deserve to be given here in full: [Translation] "[27] […] fraud does not result only from deceitful speech; failing to disclose important information at the proper time is also fraud. [28] If a seller commits fraud in connection with a latent defect in a property, the buyer may, in addition to invoking the warranty of quality on the property sold, sue for fraud. [4]

[29] Fraud may give rise to an action against the seller even in a case of apparent defect. [5] [30] A buyer who sues for fraud must prove that the seller had an intention to deceive. [6] [31] The formality prescribed by

article 1739 C.C.Q., to give notice within a reasonable time, does not exist in a situation of fraud. [7] On the other hand, a buyer who sues for fraud has an interest to act quickly, failing which the delay may constitute a ratification of consent. [8] [32] The case law highlights the fact that the principles which govern fraud are a case in which the fundamental rules of good faith in contractual matters apply, [9] and that bad faith on the part of the seller constitutes fraud." [10] [ 55 ] The case law also recognizes that a misleading declaration by the seller may make an otherwise apparent defect a hidden defect. [11] 5- Conclusion [ 56 ] From the above, the Court draws separate conclusions for each of the invoices of $11,497.50 claimed by the plaintiff. [ 57 ] Concerning the absence of a French drain, the Court recognizes that the action based on fraud by the defendants is founded. [ 58 ] In the circumstances, the Court does not need to assess the amount in dispute in light of the law applicable in the area of latent defects.

Rather, it must determine the harm suffered by the plaintiff by reason of the fraud committed by the defendants. In other words, what amount did the plaintiff agree to pay that she would have refused to pay had she been fully aware of the situation? [ 59 ] In the view of the Court, the answer cannot be in doubt. She would have considered at least the value of the repair work before agreeing to buy.

This is confirmed by the fact that her inspector, Theo Pappas, asked about this question at the time of the inspection, and received a reassuring response from the defendants. [ 60 ] The amount is therefore granted in full. [ 61 ] The response is different with respect to the other invoice submitted by the excavation firm Miller, for the consolidation of the foundation wall. [ 62 ] This time, the defendants could not have committed fraud. They were unaware of this element. It was not addressed in the declaration of the seller, or in the pre-purchase visits.

In short, no false declaration by the defendants encouraged the plaintiff to contract. [ 63 ] The Court cannot admit this invoice on the basis of the seller's warranty of quality since, this time,

article 1739 blocks the recourse. [ 64 ] This is because the evidence shows that the problem with the foundation wall was discovered at the time of the excavation work and no new notice was sent to the defendants on this subject. The previous notice and visits were connected only the infiltration of water. The problem with the foundation wall was never brought to the defendants' attention before the repairs. [ 65 ] However, the objective of

article 1739 C.C.Q. is specifically to allow the seller to be informed of the situation, in order to go to the site or send an expert to carry out independent checks and, if needed, propose solutions that are different to or less costly than those planned by the buyer. [12] [ 66 ] As a result, the argument of the defendants based on

article 1739 C.C.Q. appears well founded and must defeat this aspect of the claim. [ 67 ] In closing, the Court wishes to dispose of the defendants' argument concerning prescription of the recourse. [ 68 ] According to the evidence, the first infiltration of water occurred in March 2012. [ 69 ] However, the reassuring words of the defendants gave the impression that this was a minor problem, easily dealt with by looking after the garage drain. [ 70 ] The plaintiff therefore did not have reasonable knowledge of the existence of her right of action until after the flood in June 2012, in other words less than three years before the action was instituted in March 2015. 6- Cross-application [ 71 ] Last, in light of the Court's conclusion concerning the principal claim, the defendants' cross-application can only be dismissed.

THEREFORE, THE COURT: [ 72 ] ADMITS the claim in part; [ 73 ] ORDERS the defendants solidarily to pay to the plaintiff the amount of $11,497.50, with interest at the legal rate increased by the additional indemnity provided for in

article 1619 of the Civil Code of Québec , from the date of the summons; [ 74 ] ORDERS the defendants solidarily to pay the plaintiff's legal costs of $200; [ 75 ] DISMISSES the cross-application, without costs.

__________________________________ Denis Lapierre J.C.Q. Date of hearing: August 23, 2016