William Franks - v. -, 2011 SKPC 45

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2011 SKPC 045 Date: July 28, 2011 File: 2010-41 Location: Melfort _____________________________________________________________________________ Between: William Franks - and - Jesse Ellen Wade Mr. William A. Selnes For the Plaintiff Mr. Shawn Patenaude For the Defendant _____________________________________________________________________________ JUDGMENT B. MORGAN , J _____________________________________________________________________________ INTRODUCTION: [ 1 ] In 1981, Ms.

Wade and her husband purchased a pre-built home and placed it on a basement at their farm located approximately 15 miles from Melfort, Saskatchewan. The house came in two pieces that were then put together on the farm. An excavation was dug, and a wood basement was placed into the excavation, with the house being joined in the middle and placed on that

wood basement. [ 2 ] In 1990, due to a serious illness that Mr. Wade had, the couple decided to move into Melfort, partly to be closer to medical facilities. They had initially looked at some existing housing in Melfort, but as part of Mr. Wade’s illness led to him being easily confused, and as he was familiar with the home he had been living in, they decided to move the house from the farm into Melfort.

They therefore bought a lot in Melfort, and had an excavation dug, in preparation for that move. [ 3 ] The house on the farm was lifted off the wood basement, set aside, and the wood basement was taken out of the existing location on the farm, and placed into the excavation in Melfort. The house was then moved in one piece onto that reconstructed wood basement. [ 4 ] Shortly after that, Mr. Wade passed away. Some time later, an old friend of Ms. Wade’s re-entered her life, proposed to her, and Ms. Wade moved to the Churchbridge area. [ 5 ] Although Ms.

Wade initially decided to sell the house in 1994, and had it listed for a brief period, she took it off the market shortly thereafter, as she wanted to ensure her new marriage, and relocation to a new area, would work out. The house in Melfort was therefore rented. In 1997, Ms. Wade and her husband decided to sell the Melfort house, as it was Ms.

Wade’s intention to continue to reside in Churchbridge. [ 6 ] The Realty World listing for that house included the comment “built in 1981, place [ sic ] on new basement 1990”. [ 7 ] The property condition disclosure statement from 1994 contained the statement, under additional comments, as follows: Basement new 1990, also all plumbing, furnace, air conditioner, wall vent water heater, and water softener. Central vac new Jan. 1994. [ 8 ] Mr. William Franks, being in the process of moving to Melfort from Big River, Saskatchewan, looked at the house and was favourably impressed. In due course, William J.

Franks and June A. Franks put an offer on that home, subject to conditions, which was accepted by Ms. Wade; the date of the residential contract of purchase and sale is March 6, 1997. Conditions were removed on March 17, 1997, and Mr. Franks and, I understand, June Franks, moved into that home on May 1, 1997. [ 9 ] In November of 2006, Mr. Franks noticed the drop ceiling on the west wall of the basement was starting to buckle. This led to a number of inquiries, which culminated in Mr. Franks obtaining a detailed report that indicated a number of problems. Mr.

Franks was not aware, until making these inquiries, that in fact the house had been moved onto an existing wood basement, as opposed to what he believed had been a new basement. He therefore brought this action, originally against Ms. Wade and the City of Melfort, claiming relief under a number of heads: • Wade negligently and or deliberately misrepresented the condition of the house in the residential contract of purchase and sale; • in the alternative, that the negligent and/or deliberate misrepresentations of the condition of the house by Ms.

Wade induced the plaintiff to enter into the residential contract of purchase and sale, and that these negligent and/or deliberate misrepresentations were express and or implied terms of the residential contract of purchase and sale; • that the defendant owed a duty of care to the plaintiff not to hide any defects and to fully disclose all the defects and problems with the property including faulty workmanship in the basement. [ 10 ] The trial was initially held on May 6, 2009, with the result leading to an appeal, the matter being sent back to Provincial Court for a rehearing.

As part of that decision of the Queen’s Bench Court to return the matter, the plaintiff was allowed to amend his pleadings, if he deemed it requisite to do so, and in the amended pleadings, the plaintiff added a claim in that he alleged the house was constructed negligently by the defendant, and that the plaintiff suffered damages due to that negligence.

[ 11 ] By consent, the parties agreed that the transcript from the original trial would form part of the evidence; this became Exhibit C-1. [ 12 ] Additionally, the parties agreed that all of the exhibits that had previously been placed into evidence at the first trial could be exhibits on the new trial. [ 13 ] This trial proceeded on that basis, as well as on further viva voce evidence given by Mr. Franks and Mr. Herb Marshall; Mr. Marshall had given evidence in the previous trial and was recalled to deal with the new issue respecting negligence.

He was previously qualified as an expert in the inspection process for fabricated wood basements and in the construction of prefabricated wood basements, and he gave evidence in the same areas on the second trial. [ 14 ] The issues to be determined, then, are as follows, as set out firstly in the Written Argument of the plaintiff filed with the second trial, followed by the defendant’s position if applicable, also taken from her Written Argument filed with the second trial:

(1) Is the defendant liable for the latent defect in the basement’s construction? As the defendant has phrased it, does the rule of caveat emptor apply or is there a defect that has caused damage for which the defendant should be liable?

(2) Was the defendant negligent in the construction of the house?

(3) Did the defendant make misrepresentations about the house to the plaintiff? As the defendant has phrased it, did the plaintiff make an innocent or negligent misrepresentation such that liability should attach?

(4) Was there a fundamental breach of the contract between the parties? As the defendant has phrased it, was there a fundamental breach of the contract entitling the plaintiff to relief?

(5) What costs are available to the defendant if successful in the action? [ 15 ] I will address the issues as raised, set out the respective positions of the parties, detail the evidence as needed under each issue, and determine each issue separately.

(1) The issues of caveat emptor and patent and latent defects. [ 16 ] In very brief form, the argument of the plaintiff is that there was an active concealment of a problem with the end walls of the basement, and that the defendant either had actual knowledge of the problems the construction of those interior walls were covering, or had such knowledge through her contractor; either way, it is argued, she is liable for that act of concealment. [ 17 ] The defendant argues that the rule of caveat emptor applies, and that in any event, the plaintiff has failed to discharge his burden of establishing that the defendant was fraudulent in knowing and concealing defects from the plaintiff. [ 18 ] I start by observing that, in a civil case, the burden of proof is on a balance of probabilities. [ 19 ] As to the common law rule of caveat emptor , Latin for the adage “let the buyer beware”, that principle is of general application to any contract.

However, the doctrine’s application can vary, depending on whether one is dealing with patent or latent defects.

[20] The word “patent” means obvious. Thus, a patent defect is one that is “...apparent and easily discoverable upon inspection”(see Nowasad v. Hanson, 2005 SKQB 233). A latent defect, by contrast, is not “apparent and easily discoverable upon inspection”. [21] The correlation between the two types of defects was explained by Judge Matsalla in Volk v. Stenstrom, 2003 SKPC 48, atpara. 11, citing the decision of Gronau v. Schlamp Investments Ltd. (1974), (MB KB), 52 D.L.R. (3d) 631 (Man.Q.B.): In other words, patent defects are those readily discoverable by ordinary inspection.

Vendor is under no duty to draw attention to patentdefects which can readily be observed by the purchaser [if] he pays ordinary attention during inspection. If the purchaser fails to observepatent defects on inspection he cannot be heard to complain about such defects later and the rule of caveat emptor applies. On the otherhand, latent defects are those not readily apparent to the purchaser during ordinary inspection of the property he proposes to buy.

Iflatent defects are actively concealed by the vendor, the rule of caveat emptor does not apply and the purchaser can, at his option, ask forrescission of contract and/or compensation for damages resulting therefrom. Halsbury, supra, in para. 354, at p. 212, dealing withconcealment by vendor, states: ...any active concealment by the vendor of defects which would otherwise be patent is treated asfraudulent, and the contract is voidable by the purchaser, if he has been deceived thereby.

Any conduct calculated to mislead a purchaseror lull his suspicions with regard to a defect known to the vendor has the same effect. [22] Thus, the first question is whether or not the structural defects that the plaintiff complains of are a latent defect. If so, werethose latent defects actively concealed by the defendant? [23] Mr. Martin Kiffiak, a structural engineer with a consulting firm in Prince Albert, had done an inspection of the house, at thebehest of the plaintiff, in 2007. He was qualified as an expert in the areas of structural engineering, particularly with respect to woodbasements.

When he did his inspection, the majority of the drywall had been removed, and the areas that were uncovered were the areashe focused his attention on. He noted a host of problems, which I summarise as follows:

a) the framing of the windows in the basement was inadequate;

b) the framing of the landing for the stairway into the basement was inadequate;

c) the method used to restrain the tops of the walls was inappropriate, due partly to the method of attaching the wall to the frame, andthe spacing of the blocking;

d) the moisture barrier for the house, placed against the outside of the wall, was not properly finished;

e) the connection of the main beam of the basement, comprised of two halves put together on site, was deficient, and the hangersconnected to that beam were not properly fastened; and

f) the location of the teleposts was incorrect. In essence, the house itself was not adequately moored to the basement, and the construction of the basement was not sufficient towithstand the outward pressures of the earth pressing against the basement walls, leading to movement and inward deflection of thosewalls. In Mr. Kiffiak’s opinion, the construction of the basement of the house did not meet the requirements of the National BuildingCode or the C.S.A. standards. In his view, the appropriate way to remedy the problem was to return the basement to its originalcondition. [24] In cross-examination, Mr.

Kiffiak stated that these deficiencies were readily apparent to him, as most of the gyproc had beenremoved when he was at the house. When asked if the basement had been covered with gyproc and a false ceiling, if those deficiencieswould have been readily apparent to a lay person, he stated that “there would be certain areas where there would be notable problems”. However, without knowing how the interior was finished, he could not say if he, meaning the plaintiff, would have noticed anythingwrong with it.

He did say, however, that even if the walls were finished, two or three inches of deflection would be noticeable. [25] Mr. Herb Marshall, employed by the City of Melfort as a building official doing, among other things, residential inspections,was qualified as an expert in the areas of the construction and inspection process of prefabricated wood basements. When he went to thehouse, in June of 2007, prior to Mr. Kiffiak’s involvement, the interior basement walls still had gyproc on them.

When asked specificallyof his observations at that time, he stated that “the actual exterior of the basement wall was moving inwards which was evident by

actually the house sticking outside the basement foundation”. When he then looked at the interior of the basement, he noted a “ledgerstrip”, a piece of wood, had been nailed onto the bottom of the floor joists, tight to the basement walls, to prevent the walls from movinginward. In his view, that had been placed there originally, but had not been able to prevent the wall from bowing inward, as that ledgerstrip had started to “roll off”. He testified that he went back with the engineer, being of course Mr. Kiffiak, after the gyproc had beenremoved. He detailed many of the same things that Mr.

Kiffiak had, and also spoke of an interior wall that had been built, from hisperspective, for no apparent structural reason. This wall, effectively a second wall nailed to the wood basement, would have the effect ofconcealing problems. [26] I conclude that the condition of the basement construction that was done at the time that the basement was in effectreconstructed in Melfort is a latent defect. The evidence from each of Mr. Marshall and Mr. Kiffiak can lead to no other conclusion. [27] The question then becomes whether or not the defendant was aware of the defects.

If she was, and failed to disclose what sheknew, that failure to disclose what she knew “is

an act of concealment of a material fact that has the same effect as a materialmisrepresentation” (see Thomas v. Blackwell, 1999 SKQB 168 , [1999] S.J. No. 769). On the facts of this case, I am notsatisfied that the defendant was aware of the ticking time bomb, as it were, that she was sitting on.

My reasons for this determination areas follows. [28] Dealing with the home before it was relocated to Melfort, she and her husband lived in the house, on the farm, between 1981and 1990, and there is no evidence that there were any problems with the house at that time. [29] The more telling evidence, however, is what occurred after the decision was made to relocate the home to Melfort. I start bynoting that she and her husband had considered purchasing a new home in Melfort, but had discarded that idea, for valid reasons.

It isclear that her husband, who was then suffering from a terminal illness, one of the symptoms of which was that he was very confused,actually got lost in a home the parties were contemplating purchasing. This led to the decision to relocate the existing home. It wouldseem to me that, if there was any knowledge of a defect in the home while it was at the farm, the decision to relocate that home toMelfort would never have been made. [30] Further, once the home was moved, the defendant testified that it was her intention to live in that home permanently.

Onceshe accepted a proposal to marry, her situation changed, necessitating the need to do something with that home. She did originally listthe home for sale in 1994, at the time of her second marriage, but she took it off the market, again for legitimate reasons. The home wasthen rented for three years, before it was again listed for sale.

When it was rented, the defendant’s evidence was that she expressly toldher tenants to advise her of any problems they had with the house. [31] All of the above factors, and the actions that the defendant took, are inconsistent, in my view, with the notion that she had anyknowledge of any defects. [32] Further, when one looks at what actually happened when the house was relocated, the defendant’s actions again areinconsistent with knowledge of any defect. I note that most of the decision making respecting movement of that house fell to thedefendant, as her husband was too ill to participate.

She took the steps to get permission from the City of Melfort prior to moving thehome to Melfort, and she hired all of the contractors to do the work. From her perspective, the house was fully inspected when it wasreconstructed, and her evidence was that she received no communication from any of the contractors respecting any defects in theconstruction. She was not actually present when the house was physically moved, as she was working at her occupation as a teacher, andher evidence was that she legitimately thought that she could not move into the home in Melfort without it being fully inspected.

I noteon Exhibit P-5, the inspection record when the home was rebuilt in Melfort, that the home shows inspections at each of the stages ofexcavation, footings, weeping tile, reinforcing, foundation wall, and waterproofing. Although there are no further indications on thatbuilding permit, the defendant’s evidence was that she was of the view that inspections had been ongoing. [33] As far as the end walls that did conceal the construction of the basement, at those locations, her evidence was that she thoughtthey were placed there for purposes of insulation.

I certainly can’t conclude on her evidence that she knew there was some other reasonfor construction of those walls. In total, all of her actions, and everything she testified to, are totally consistent with an individual who,not herself being a builder, left matters up to professionals that she had hired. It is totally understandable that, at this time, with aterminally ill husband, the focus of her attention would be on his health and his situation.

[ 34 ] In conclusion, on this particular topic, I cannot conclude that the defendant had actual knowledge of any problems respecting the construction of those interior walls, or had any knowledge of a problem through her contractor.

(2) Was the defendant negligent in the construction of the house? [ 35 ] Mr. Selnes’ argument is that there is no doubt that the house was constructed negligently. He relies on the evidence at the first trial, as well as evidence called at the second trial, in which Mr. Herb Marshall, the building inspector, testified again on the negligence issue, as did Mr. Franks, the plaintiff. There is no question that the construction of the basement was shoddy, and for the purposes of this decision, I am convinced such shoddy work was negligent construction. Mr.

Marshall dealt with the deficiencies previously discussed, with respect to their relationship to the relevant building code at the time and indicated that the problems respecting the main beam, the end walls, and the drop landing in the door all failed to meet the code at the relevant times. He also indicated that the building of the inside end walls previously referred to would not provide any help with respect to insulation, unless there was some insulation placed between the two walls. [ 36 ] Mr.

Franks testified that he had taken the gyproc off the north inside wall first, and that there was no insulation on that wall, testifying as well that he did not remove any insulation. [ 37 ] The plaintiff relies on three cases to ground this claim in negligence. The first case is Chapeskie v. Lake of Bays (Township) , 3 M.P.L.R. (3d) 233, 1999 CarswellOnt 2275 , for the proposition that the owners of a home owe a duty of care to prospective buyers of that home.

Further, the plaintiff argues that it is not sufficient for the builder/owner to rely on a tradesman who had done part of the construction as an excuse for the negligent work. [ 38 ] In the Chapeskie case, there was a clear finding of fact that the husband/defendant acted as the builder of the home from the start. The case revolved around a home built by the defendants Robert and Correne Larosee, who were what was referred to as “novice owner/builders”, who had made misrepresentations to the ultimate purchasers of the house as to the quality of the water supply, as well as the quantity of the water supply.

The Court specifically found that there was a complete lack of inspection at the critical point in issue in that case and also noted that “no recognized contractor was in charge of the work despite the representation in the application to the contrary”. Further, the Court did note that the building code “and system of inspections place the initial obligation on the builder, in this case the owner builder, to comply in the construction of the home with their provisions and regulations”. The Court went on to hold that Mr. and Mrs.

Larosee “failed to exercise reasonable care in the construction of their home”. [ 39 ] In Johnstone v. Dame , [1995] B.C.J. No. 2637, 49 R.P.R. (2d) 279 , the plaintiffs brought an action against the vendors and the vendors’ agent, based on a false representation as to the age of the house (the house was presented as being three years old, when in fact it was a forty year old army hut which had been renovated).

The negligence issue was primarily levelled at the realtor, although the Court does address the argument, at paragraph 58, that the vendors/defendants were responsible for representations made about inspections and acquisition of permits. In this case, the plaintiff is arguing that it is not a sufficient defence for the defendant to argue that, although she took out the building permit, she was not involved in the construction of the basement. In Johnstone v. Dame , the proposition relied on by the plaintiff does not, in my view, assist in the present case. The argument in Johnstone v. Dame addressed Mr.

Dame’s contention that it is up to the building inspector to inspect the property, without being called upon to do so. However, that is not really the issue in this case. [ 40 ] The third case relied on by the plaintiff, Paton v. Little , [2003] S.J. No. 65, 2003 SKQB 43 , 229 Sask. R. 199, is again, in my respectful opinion, of little assistance to the plaintiff in this case. In Paton v.

Little , which was primarily a case involving a property condition disclosure statement and misrepresentation, the defendant acted as his own builder, and he actively took steps to conceal what he knew to be a problem. [ 41 ] In my view, the distinguishing factors in the cases cited by the plaintiff are all similar; in each of those cases, the negligence of the defendant was laid squarely at the feet of the defendant as the defendant was in fact the contractor. [ 42 ] The defendant relies on the Saskatchewan case of Roy v. Thiessen , 2003 SKQB 249 , 234 Sask. R. 218, and the subsequent

decision in that case in the Court of Appeal, cited as 2005 SKCA 45 , 257 Sask. R. 239. [ 43 ] The plaintiffs brought an action based on the defendant’s negligence in constructing a dwelling-house that the plaintiffs subsequently purchased. The defendant Mr. Thiessen had “no training or material experience in the development of residential buildings”, although he did act as his own “general contractor” in the construction of the house.

He arranged to have building plans drawn up by a draftsman, he hired individuals to pour a concrete basement for the house, to frame the house and to deal with some ventilation requirements during the course of framing the house, and he hired an individual to install vapour barrier and drywall. Beyond that, he and family members personally did most of the other work in construction of the home. They tarred the basement walls, installed the shingles, put on a “house wrap”, siding and soffits, the latter with the assistance of another individual. [ 44 ] The house was mostly completed in October of 1996.

There had been no architect or engineer supervising or inspecting the work performed by Mr. Thiessen, or the individuals he had hired to work on the house as building was ongoing. [ 45 ] Mr. Thiessen’s occupation as a professional hockey player took him and his wife away from the house for a considerable period of time between October of 1996 and May of 1999, the latter date being the sale date to the plaintiffs. However, during the winter months they did occupy the home, they observed two problems.

One was a gap that formed between the ceiling and the exposed beams of the ceiling, the other being that, during cold weather, drywall tape would pull away from the drywall, although it moved back into place during warmer weather. Mr. Thiessen did minor repairs on those problems himself. [ 46 ] Shortly after taking possession, the plaintiffs noted all types of moisture problems, causing them to retain experts who found that there was inadequate ventilation and/or ventilation blockage on the home, and that the insulation had not been installed properly.

Additionally, there were some problems with the venting. [ 47 ] The relevant portion of the trial and appeal judgment for the purposes of this case deals with the second issue raised at trial, being whether or not the plaintiffs had established each essential element of the tort of negligence that they relied on. The learned trial judge found 11 separate identifiable particulars of negligent acts committed by Mr. Thiessen, and ultimately found for the plaintiff. With respect to Mrs.

Thiessen, the learned trial judge concluded that her negligence “consists of her failure, as a co-owner of the house, to ensure that the construction thereof was performed having regard to the aforementioned construction standards and the safety of it for future occupants”. [ 48 ] The decision was largely upheld in the Court of Appeal. However, in examining the issue of the wife’s negligence, the Court of Appeal held at paragraph 36: However, I am satisfied [the trial judge] erred in finding there was a duty of care owed by Deanna Thiessen.

The pleadings were based on the construction of the house and not its ownership. The trial judge’s findings and reasoning on the issue of negligence went to the construction of the house not the ownership. He found the liability arose from the construction and not from the sale. Because Deanna Thiessen was not a contractor involved in the construction of the house, she could not have owed the duty of care found by the trial judge. Her appeal must be allowed. [ 49 ] In this case, the amended pleadings specifically state as follows: 20.

The plaintiff states that Wade owed a duty of care to prospective purchasers to construct the house properly and in accordance with industry standards. 21. The plaintiff states that the house constructed by Wade was constructed negligently in the ways set out in paragraph 12 above. 22. The plaintiff states that he has suffered damages as a result of the negligent construction of the basement. [ 50 ] The argument is advanced in the defendant’s written submissions that the Roy v. Thiessen case applies equally to Mrs. Wade, and I agree with that assessment, based on the Roy v. Thiessen case.

[51] As to the plaintiff’s argument that the defendant is negligent for not ensuring that building inspections were done, I cannotaccept that argument for two reasons. [52] The first is that I do not find that it is a negligent act on the part of the defendant in this case to have not monitored, moreclosely, the building permit situation. Unlike the cases cited by the plaintiffs, each of which noted that the defendant was the actualcontractor of the home, the defendant in this case had no such direct connection; she was the owner, but she was not the builder.

Assuch, I cannot find that she was in fact negligent. [53] Secondly, I am not satisfied that, as owner, she owed a duty of care to future prospective purchasers. A reading of the Roy v.Thiessen case, both at the Court of Queen’s Bench and the Court of Appeal levels, and the cases cited therein, leads me to conclude thatthe principle stated therein is that a contractor can be liable to a future purchaser, in negligence, even though there is no privity ofcontract between the contractor and future buyer.

The principle that I distill from that case is that it is foreseeable to a contractor whobuilds a house in a negligent fashion that his actions could cause loss or damage to anyone who purchases the home during the home’sexpected life span.

So whereas there may have been a duty of care owed by the individuals or companies that constructed the home toprospective future purchasers, I cannot conclude that a corresponding duty of care with respect to construction was owed to thoseprospective future purchasers, including the plaintiff in this case, by this defendant. [54] For the above reasons, I cannot and do not find for the plaintiff on the issue of negligence.

(3) Did the plaintiff make an innocent or negligent misrepresentation such that liability should attach? [55] The Canadian Law Dictionary (New York: Barron’s Educational Series, Inc., 1983) defines misrepresentation as follows: Words or conduct that convey a false or misleading impression ... AN INNOCENT misrepresentation is an untrue statement of fact madein the honest belief that it is true.

A NEGLIGENT misrepresentation is one made carelessly and with no reasonable grounds forbelieving it to be true. [56] Dealing firstly with the negligent misrepresentation, what needs to be established for such a claim to succeed is set out in R. v.Cognos Inc., (SCC), [1993] 1 S.C.R. 87, by Iacobucci J. at page 110, as follows: The decisions of this court cited above suggest five general requirements: (1) there must be a duty of care based on a “special relationship” between the representor and the representee; (2) the representation in question must be untrue, inaccurate or misleading; (3) the representor must have acted negligently in making said misrepresentations; (4) the representee must have relied, in a reasonable manner, on said negligent misrepresentations; and (5) the reliance must have been detrimental to the representee in the sense that damages resulted. [57] The plaintiff argues all five of these tests have been met.

Further, he notes the age of the house being an importantconsideration for a purchaser, noting the case of Johnstone v. Dame discussed earlier. [58] The defendant concedes that there is case law to establish that a “special relationship” exists between a purchaser and vendor,but argues that the representation did not come from the defendant. Further, the defendant argues that the plaintiff cannot be said to havereasonably relied upon that statement. Finally, the defendant argues that the plaintiff has failed to prove that his reliance on therepresentation has caused him damage.

[ 59 ] The misrepresentation referred to came to the attention of the plaintiff when he looked at the listing sheet prepared by the listing agent. Mr. Franks, who was looking for a home in Melfort with his wife, was talking to the agent, Mr. Stan Beacom, on what Mr. Franks thought was the day the house went on the market. On that listing sheet, as part of Exhibit P-7, the real estate file, it is noted “built in 1981, place [ sic ] on new basement 1990”. Mr.

Franks testified at the earlier trial that he was told the house was moved in from a farm, but his understanding was that it was placed on a new basement; he was told this by the real estate agent. [ 60 ] In the real estate file, there are two property condition disclosure statements, one dated August 29, 1994, and one dated March 1, 1997. Although generally similar, the forms are different. [ 61 ] During cross-examination, Mr. Franks was shown a property condition disclosure statement, and asked some questions on that.

Based on the difference in the forms, and the questions asked in cross-examination (see page 125 of transcript), it is clear that Mr. Franks was being cross-examined on the property condition disclosure statement of 1994; he agreed he had seen that document. He acknowledged that he saw a question “are you aware of any structural problems with the improvements”, with the response “no”, and agreed that he could have easily requested that there be a structural inspection, and he could have made the agreement conditional upon that condition. He said “it’s possible, sure.

I saw no need for it.” [ 62 ] At the bottom of that property condition disclosure statement, the comment is made “basement new 1990”. [ 63 ] At the second trial, when Mr. Franks testified, he stated that he had looked at the property condition disclosure statement, and relied on it, saying that it was important and he went through it to see if there were any problems. He testified at that trial, when asked if he was willing to buy a home that did not meet code, that he would not, that he assumed it met code.

With respect to an inspection, he stated that, unless he had been given a good reason for the second wall being built, he would have gotten the property inspected. [ 64 ] I do not place much weight on Mr. Franks’ assertion as to what he would have done had he known certain things, as stated during the second trial, as that is self-serving. To admit he wouldn’t have done anything at all, had he known of problems, would render the need for a trial moot. [ 65 ] In looking at all the evidence, I am not satisfied that an actionable misrepresentation, negligent or innocent, has been made by the defendant.

I note the following. [ 66 ] First, the statement made in the listing form, prepared by Mr. Beacom, is the source document that Mr. Franks states he first relied on in accepting that the basement was new in 1990. That is a statement made to him by the agent, both in the listing sheet, and in his verbal statement to Mr. Franks. However, the bottom of that listing sheet states “this information is from sources believed to be reliable but should not be relied upon without verification”.

The fact that the statement was made by the defendant’s agent does not absolve the defendant from liability for the accuracy; however, the clear indication in that statement that it should not be relied upon without verification should have put Mr. Franks on warning. [ 67 ] Second, although Mr. Franks, and presumably his wife, looked at the property condition disclosure statement, I am not sure which one they looked at; the one from August of 1994, or the one from March of 1997.

In either case, it is clearly marked on the bottom that “the prudent purchasers will use this disclosure statement as the starting point for their own inquiries. The purchasers are urged to carefully inspect the property and, if desired, to have the property inspected by an inspection service of their choice.” That wording is contained in the old form, and is in regular print. The same information is in bold print at the bottom of the new form, with the added words “and expense” at the end of it. In either case, it is clear that the disclosure statement is simply a starting point, and Mr.

Franks, who stated that he had purchased a number of homes, had to be aware that it would be prudent to do further investigations if he deemed it necessary. [ 68 ] Third, the disclosure statement was not incorporated into the residential contract of purchase and sale. The conditions of that contract of purchase and sale, as set out on that contract, were that the offer was to be subject to the inspection and approval of the heating and air-conditioning systems, and of the central vac system. The checking of the heating system was to be at the buyer’s expense.

Had the plaintiff wished to rely on the property disclosure statement such that reliance on that would become a condition of the offer to purchase, it would have been a simple matter to insert it into the contract itself.

[69] Fourth, the property condition disclosure statements, both the 1994 and the 1997 version, have a signing line for the vendorand purchaser each to sign, acknowledging, in the purchaser’s case, that he or they have received a copy of it. Neither one is signed bythe purchaser.

I accept that they looked at that document, but if it was so important as they claimed, they would have signed andretained a copy for themselves. [70] Fifth, the contract of purchase and sale states as follows: It is understood and agreed that there are no other representations, warranties, guarantees, promises or agreements other than thosecontained in this contract and the buyer hereby agrees to purchase the above described property as it stands at the price and terms andsubject to the conditions above set forth. [71] In all of these circumstances, I am not able to conclude that the plaintiff relied in any way on any alleged misrepresentation.

This grounds fails.

(4) Was there a fundamental breach of the contract between the parties entitling the plaintiff to relief? [72] The plaintiff argues that structural defects can be considered a fundamental breach of contract, relying on a statement made bythe trial judge in Nicholson v. Pham, 2007 SKPC 72. [73] The plaintiff argues that there is a fundamental term of the contract of purchase and sale that the house was constructed inaccordance with National Building Code standards.

He argues that the parties negotiated a price appropriate for a home built up to thestandards of the National Building Code, and that the plaintiff paid that price, but did not receive a home constructed to an appropriatestandard; in short, he did not receive what he had bargained for. [74] The plaintiff relies on the case of Murray v. Saskatchewan, (SK CA), [1987] 3 WWR 541, [1987] S.J. No.146 (C.A.), which adopted the following statement from the oft referred to case Atlantique Société Armement Maritime S.A. v.

N.V.Rotterdamsche:Kolen Centrale, [1966] 2 W.L.R. 944 (H.L.) as follows: This expression [fundamental breach] is no more than a convenient shorthand expression for saying that a particular breach or breachesof contract by one party is or are such as to go to the root of the contract which entitles the other party to treat such breach or breaches asa repudiation of the whole contract. Whether such breach or breaches do constitute a fundamental breach depends on the construction ofthe contract and on all the facts and circumstances of the case.

The innocent party may accept that breach or those breaches as arepudiation and treat the whole contract at an end and sue for damages generally, or he may at his option prefer to affirm the contract andtreat as continuing on foot, in which case he can sue only for damages for breach or breaches of the particular stipulation or stipulationsin the contract which has or have been broken. [75] The defendant counters by stating that the plaintiff cannot circumvent the exclusion clause in the contract by claiming afundamental breach of contract, relying on the case of Syncrude Canada Ltd. v.

Hunter Engineering Co., (SCC), [1989] 3 WWR 385, 57 D.LR. (4th) 321, [1989] 1 S.C.R. 426, which states at paragraph 55: The Court should not disturb the bargain the parties have struck, and I am inclined to replace the doctrine of fundamental breach with therule that holds the parties to the terms of their agreement, provided the agreement is not unconscionable. [76] The comment of Mr. Justice Dickson in the Syncrude case was a statement made in which he stated he was inclined:

...to adopt the course charted by the House of Lords in P hoto Production Ltd. v. Securicor Transport Ltd. , [1980] A.C. 823 , and to treat fundamental breach as a matter of contract construction. I do not favour, as suggested by Wilson J. requiring the Court to assess the reasonableness of enforcing the contract terms after the Court has already determined the meaning of the contract based on ordinary principles of contract

interpretation. In my view, the courts should not disturb the bargain the parties have struck, and I am inclined to replace the doctrine of fundamental breach with a rule that holds the parties to the terms of their agreement, provided the agreement is not unconscionable. [ 77 ] No matter how this problem is attacked, there being a divergence of opinion in relation to the doctrine, or at the very least, some different views as to how it should be applied, the plaintiff’s argument rests on an assumption that the house was constructed to certain standards.

However, in my view, to adopt the doctrine to the facts of this case would be to run totally against the very words of the contract itself, that being the residential contract of purchase and sale which indicates that there are no warranties, expressed or implied, other than those expressly set out in the contract. The defendant was not selling a house that was of code construction, or was of a certain size, or was of a certain age; she offered for sale a house that was seen by the plaintiff, and inspected by the plaintiff to the extent that he deemed necessary and appropriate.

To apply the doctrine of fundamental breach to this case would have the effect of making every vendor a guarantor of any property he or she sells for infinity. Further, although the plaintiff argues that he assumed the house was built to a certain standard, I think it is more accurate to say that he hoped it was built to a certain standard. Mr. Franks was not an unsophisticated purchaser; had he wanted to check certain items, he could easily have done so. [ 78 ] Further, I do not think, on the facts of this case, that there has been a fundamental breach.

The purchaser bought a home that had a basement that he thought was seven years old. In actual fact, the basement itself was 16 years old. Problems did not become apparent until nine and one half years had passed from the time the purchaser moved in. It was less the age of the basement that caused the problems than it was the method of construction and the passage of time.

(5) What costs are available to the defendant if successful in the action? [ 79 ] The defendant argues that, in light of a comment made at the case management conference that because the defendant’s request to transfer the trial to a location closer to the defendant was denied, the trial judge should consider awarding all travel and associated costs to the defendant if successful.

Section 7.1(11) generally makes the proceedings at a case management conference confidential, and comments made at such a conference, if they were actually made in the context the defendant suggest, do not bind a trial judge. The case management process, and the trial process, are two discreet processes. [ 80 ] The Small Claims Act , 1997 , speaks to costs at paragraph 31, where it states: A judge may at any time, in any proceeding before the court, award costs, other than lawyer-related costs, on such terms and conditions as the judge considers appropriate, including: (

a) the prescribed fee for issuing a summons or a third party claim; (

b) costs incurred to effect service; (

c) fees paid to a witness pursuant to

section 20; and (

d) telephone charges incurred pursuant to

section 28. [ 81 ] Generally speaking, costs are not awarded in a civil action under The Small Claims Act, 1997 , as that forum is intended to be a convenient forum for the public, one in which the concern of a losing party being saddled with a high award of costs against him or her is not normally in issue. On occasion, in the context of a completely frivolous claim or defence, the Court will award costs, but that is the exception, not the rule. The defendant relies on Brook Holdings Ltd. v. Saskatchewan Housing Corp., 2008 CarswellSask 784 and Dahnani v.

Abraha , 2008 CarswellSask 72 , in advancing this claim for costs. In this case, I do not think the plaintiff’s claim was in any way frivolous. [ 82 ] Further, in my view, for the purposes of convenience of witnesses, being as this matter dealt with real property located in Melfort, and a material witness, being Mr. Marshall, was from Melfort, Melfort is the appropriate jurisdiction for the trial.

[ 83 ] In conclusion, I dismiss the plaintiff’s claim and make no order as to costs. B. Morgan, J