IN THE PROVINCIAL COURT OF BRITISH COLUMBIA

[1]           In April of 2015, the claimants, Terrence Woods and Linda Woods, viewed the defendants’, Randall Lillies and Rhonda Lillies home and decided to purchase it.  A Contract of Purchase and Sale was drafted and a Property Condition Disclosure Statement (PCDS) formed part of the contract.

[2]           In the PCDS the defendants indicated that there were no problems with leakage or moisture and that the roof did not leak.  Also noted on the form was the following, “This form is not intended as a warranty or guarantee of any kind.”

[3]           The Contract of Purchase and Sale subsequently contained an addendum wherein the claimants’ obligation to complete the purchase was subject to certain conditions including, “receiving a Building Inspection Report satisfactory to the buyer.”  The claimants decided against retaining a building inspector and Mr. Woods decided to inspect the property himself.

[4]           The claimants took possession of the home on June 1, 2015.  On this date, Mr. Woods noticed moisture and white powder on the concrete floor of crawl space.  Then, and in November of 2015, the claimants noticed that the soffits were leaking. 

[5]           Investigation of the above issues, indicated that the concrete floor of the crawl space was poured without a vapour barrier; thus, allowing ground water to escape up and out onto the surface of the floor.  As for the roof, it was determined that the shingles had failed and that the roof needed to be replaced.

[6]           As a result of the above issues the claimants are seeking damages for monies spent investigating and remediating the problems with the floor and the roof.  They also seek monies for additional work they claim is necessary.

[7]           The defendants argue the doctrine of caveat emptor protects them from liability and the claimants have failed to establish why the doctrine should not operate in the instant matter.

[8]           The claimant, Mr. Woods, testified that he and his wife spent two years looking to purchase a home in Powell River.  According to him the search took some time because they had a specific list of things that they were looking for.

[9]           Eventually, and through word of mouth, the claimants learned that the defendants might be selling their home.  With this in mind the claimants drove by the defendants’ home and based on what they saw they decided to contact the defendants.

[10]        Mr. Woods contacted the defendants and arranged to view the home.  The claimants viewed the home and it was Mr. Wood’s impression that the home was spotless, in great condition and exactly what they wanted but for the lack of an ocean view.

[11]        When the claimants viewed the home Mr. Woods looked through every room but he did not look in the crawl space.  He recalled asking the defendants several questions about the home including if there were any issues regarding moisture.  Mr. Woods specifically recalls this being one of his first questions.  He recalls this because when he visited the home he noticed that a house up the street was in the midst of having perimeter drain work done. 

[12]        Mr. Lillies answered all questions regarding moisture in the negative.  According to Mr. Woods, if he had been aware there were moisture issues in the crawl space he would have walked away from the purchase as it was important to him that he have a home that he could move into without doing work.  

[13]        The claimants visited the home a second time before agreeing to purchase it.  On what I infer was likely the claimant’s second visit to the home, Mr. Woods looked in the crawl space.  At that time he observed a device on the wall in the west portion of the crawl space.  Mr. Woods asked Mr. Lillies about the device and he was told that it was to ventilate the area and to keep the air flowing.  This device was later identified as a humidex. 

[14]        After the second visit the claimants agreed to purchase the home for the asking price.  On April 5, 2015, the parties, who were not using the assistance of a realtor, completed a Contract of Purchase and Sale using a form available from a publishing company.  Attached to the contract was a Property Condition Disclosure Statement (PCDS) and the wording in the contract made it clear that the PCDS formed part of the contract.  According to Mr. Woods the parties sat down when the Contract of Purchase and Sale and the PCDS were completed.  With respect to the PCDS, the parties went through each item together.

[15]        On April 9, 2015, the parties attended at the claimants’ lawyer’s office where a new Contract of Purchase and Sale was completed.  The PCDS that was prepared on April 5, 2015 formed part of the new contract.  In contrast to the April 5, 2015 contract, the April 9, 2015 contract contained additional subjects that were for the claimants’ benefit.  Of significance was condition 5 which reads:

[16]        As for the PCDS, the opening paragraph states:

[17]        The last page of the PCDS reads:

[18]        Finally, and of note is paragraph 8 of the Contract of Purchase and Sale which reads:

[19]        A deposit of twenty five thousand dollars was paid and when the parties were leaving the lawyer’s office Mr. Woods heard Mr. Lillies say to him, “I got yeah.”  Mr. Woods did not follow up on these words nor did he understand their meaning.

[20]        Over the next few days, Mr. Woods attempted to retain a building inspector.  The inspector he contacted was familiar with Mr. Lillies and he was told that an inspection of the home would be a waste of money and likely result in a small job jar. 

[21]        Mr. Woods then contacted his brother, who happened to have a cabin beside the defendants’ cabin, and he was advised that the cabin was kept in impeccable shape.  With this in mind Mr. Woods decided not to hire a building inspector; rather, he obtained some advice on how to conduct his own home inspection. 

[22]        Mr. Woods then went to the home and conducted his own inspection.  Again, he noticed the fan running in the living room and that all of the closet doors were ajar.  Mr. Woods looked in the crawl space.  At that time the defendants had some of their personal items stored on the floor of the crawl space.  During Mr. Woods’ examination of the crawl space he did not see any moisture on the floor, nor did he see white powder on the floor.  When Mr. Woods finished inspecting the crawl space he went to close the hatch and he was told by Mr. Lillies to leave the hatch open as he wanted to ensure good air movement. 

[23]        As for the condition of the roof, Mr. Woods felt that it looked brand new.  From his observations he did not see any evidence that the roof leaked or that it had been damaged.

[24]        On June 1, 2015, the claimants took possession of the home and they started moving some of their belongings into the home.  On this date, Mr. Woods took some of his seasonal items to the crawl space and when he entered he noticed a dramatic change from when he had previously viewed the crawl space.  In this regard, he noticed puddles of moisture on the floor and white powder which he believed was efflorescence.

[25]        Within two weeks of taking possession of the home the claimants had a conversation with the defendants regarding the moisture in the crawl space.  During this conversation, Mr. Lillies acknowledged the following; no vapour barrier was used under the crawl space floor, he acknowledged that moisture would appear in the crawl space, that moisture spots had been in the crawl space for twenty years, the problem was water bubbling up, he slipped up by not mentioning the water in the crawl space when asked about the home, and the windows might have accumulated moisture on the odd occasion.

[26]        By September of 2015, the claimants noticed extensive condensation on the windows.  The condensation was so extreme that water would run off of the windows and pool on the floor.  The humidity became such a problem that Mr. Woods began to suffer breathing problems and as a result he was prescribed an inhaler.

[27]        In addition to the problems inside the home, by the late fall and early winter of 2015, the claimants noticed that the exterior underside of the soffits leaked in several locations. 

[28]        The claimants investigated the problems and with respect to the crawl space they were uncertain if the moisture was from the exterior drains or owing to a problem with the concrete floor.  In order to isolate the problem the claimants retained an individual to place a camera down an external drain.  The associated cost was $466.86.

[29]        After conducting a series of investigations the claimants isolated the primary problem in the crawl space to there being no vapour barrier under the concrete floor.  Based on advice they received, the claimants hired a company to install a vapour barrier over the top of the existing floor with a slab of concrete then being poured over top of the barrier, thus resulting in a vapour barrier separating the two slabs.  The company used by the claimants also made a recommendation regarding the installation of a vapour barrier on the foundation walls. 

[30]        The claimants eventually hired a company to install the vapour barrier on the floor and to have a second slab of concrete poured.  The associated expense was $6,300.00.  The claimants did not have a vapour barrier installed on the foundation walls.

[31]        Since remediating the crawl space, the claimants no longer experience moisture or powder on the floor of the crawl space.  Nor, do they have problem with excessive window condensation.  Finally, Mr. Woods’ lung issues have resolved and he no longer requires an inhaler.  

[32]        As for the roof, the claimants subsequently learned that the shingles on the roof had failed.  They therefore contacted the manufacturer and as part of the warranty coverage they received 91 bundles of shingles from the manufacturer.  The claimants then hired a roofing company to install the new shingles and as a result they incurred the associated costs.

[33]        Ms. Woods also testified and her evidence was similar to that of her husband’s.  Specifically, she confirmed they asked the defendants about moisture and were advised that it was not a problem.  As for the open closets and running fan, air flow was the offered explanation.  Finally, Ms. Woods was impressed with the home and the defendants had repeatedly assured her and her husband that the home exceeded building codes.

[34]        Mr. Lillies testified about the claimants contacting him and arrangements being made for them to purchase his home.  He confirmed that the house had not been listed on the market, but he had made arrangements for real estate agents to view the home.

[35]        Mr. Lillies testified that while discussing the home with the claimants he repeated to them that the house was being sold where is and as is.  He also encouraged them to have a good look.  Further, there were several occasions where he suggested that the claimants hire a home inspector or get Mr. Woods’ brother, who is a carpenter, to inspect the home.

[36]        As for the PCDS, Mr. Lillies testified he filled it out to the best of his knowledge and when he filled out the form he told the claimants that they had been in the house for twenty-two years without any problems and that they were selling it where is and as is.  Apparently, Mr. Lillies and Mr. Woods then shook hands.  

[37]        Mr. Lillies was questioned about the running of the fan and the open closet doors and he responded that people live differently, that he did not see the big deal with the fan on or the doors being open.  As far as he was concerned they did not have problems with moisture.

[38]        Mr. Lillies testified that there were no problems with the home when it was viewed in April and that there were no problems with the home when it was sold in June.

[39]        With respect to the comment allegedly made by Mr. Lillies at the lawyer’s office, he denied making any comments, specifically he denied saying, “I got ya.”

[40]        During his evidence Mr. Lillies confirmed he was attentive to detail and that he knew his house well and took care of problems.

[41]        On cross-examination, Mr. Lillies acknowledged he was a retired carpenter and that he had built 3-4 homes.  He testified he took out the building permits for the house in issue and that he framed the house.  He also confirmed that he knew the home did not have a vapour barrier under the concrete floor in the crawl space.

[42]        During cross-examination Mr. Lillies was asked about water permeating up through concrete and he responded that he was not a concrete expert.  On another occasion Mr. Lillies freely offered information about concrete and vapour barriers.  Similarly and during cross-examination Mr. Lillies gave evidence regarding concrete and the quality of the pour.  In doing so he did not seek protection by stating that he was not a concrete expert.  In essence, Mr. Lillies hid behind the shield of not being an expert when it suited him. 

[43]        When questioned about the statements that he made to the claimants regarding seepage or moisture permeating through the concrete slab, Mr. Lillies testified by saying he wanted to correct himself and that when he made his comments he was not thinking properly because he was so upset.  

[44]        Mr. Lillies was cross-examined about filling out the PCDS and he testified he indicated “no” to the question about moisture because he had not noticed any moisture in the home.  I find this response is contradictory to the statement he made to the claimants wherein he stated there had been moisture in the crawl space for twenty years.

[45]        I find that the claimants were credible and reliable witnesses.  Their evidence was internally and externally consistent.  Their responses in cross-examination were straight forward, direct and without minimization or embellishment.  I accept their evidence with the exception of the portion of Mr. Woods’ evidence wherein he attributed comments to Mr. Lillies being made at the lawyer’s office.  I have rejected this portion of Mr. Woods’ evidence because his lack of follow up on the comments tends to suggest that he did not clearly hear what was said and that his belief as to what was said was likely coloured by the events that followed; specifically, the finding of the moisture in the crawl space and his belief that Mr. Lillies had been less than honest in their dealings.

[46]        With respect to Mr. Lillies, I find that he was lacking credibility.  My determination is based on the following.  Portions of Mr. Lillies’ evidence were inconsistent.  Specifically, when Mr. Lillies spoke with the claimants he acknowledged knowing about moisture in the crawl space and yet he testified that he did not know about the moisture.  I appreciate Mr. Lillies explained this inconsistency to him being upset and his mind not working properly when he spoke with the claimants.  I do not accept Mr. Lillies’ explanation as the recording of the conversation does not disclose any appreciable level of upset nor is there any indication that his mind was not working properly.

[47]        A further problem with Mr. Lillies’ evidence is that, it is difficult to accept that a person who is an experienced carpenter and of fastidious character with a good understanding of their home would not have taken steps to identify the source of moisture that had been observed over the years in the crawl space.

[48]        Finally, I observe there were occasions during his cross-examination where Mr. Lillies was evasive.  For example, when he was questioned about a leaking roof he responded that his roof had leaked before.  When questioned about this comment he indicated that he was referencing what had occurred at his cabin.  From the context of the questions at the time and given the allegations it was clear that the questions related to the roof on the house in issue.  

[49]        A further example of Mr. Lillies’ evasiveness is when he was asked if there had ever been moisture on the windows and he responded with a generic answer for all homes.  Again, it was clear the question was referencing the home in issue.

[50]        The claimants argue they are entitled to an award of damages on the bases of; breach of contract, active concealment of the defects, non-innocent misrepresentation, and latent defects which made the home unfit for inhabitation. 

[51]        The defendants argue the doctrine of caveat emptor protects them from liability because the claimants have failed to prove on a balance of probabilities that, the contract was breached, that there was misrepresentation and that the defects made the home unfit for inhabitation.

[52]        This court must decide if the evidence proves on a balance of probabilities that:

[53]        A long standing legal doctrine is the doctrine of caveat emptor.  This doctrine generally stands for the proposition that a purchaser takes the property as he finds it.  

[54]        Like most doctrines the doctrine of caveat emptor has exceptions and it will not always shield a seller from purchaser claims.  The principles of caveat emptor and the exceptions are described in, Nixon v. MacIver, 2016 BCCA 8, where at paragraph 47 the court summarized:

[55]        With respect to what constitutes a latent defect, the court commented at paragraph 34:

[56]        The claimants argue the defendants breached the Contract of Purchase and Sale by failing to deliver the home in substantially the same condition as viewed on April 5, 2015.  Specifically, they argue the moisture and the leaking soffits were not present when the home was viewed on April 5, 2015 but appeared once delivery had taken place.  Accordingly the claimants assert the defendants failed to deliver the home in substantially the same condition as viewed on April 5, 2015 thereby breaching the contract.

[57]        Morrison v. Mar Lado Enterprises Inc., 2001 BCSC 1032, and Chaston v. Este, 2014 BCSC 20, are cases where it was held that the term related to delivering property in substantially the same condition was breached when substantial changes to the property occurred. 

[58]        In Morrison, the cutting of 11 trees was a substantial change and in Chason, the areas around the windows were removed and large inspection holes had been cut into the dry wall.  Essentially, there were significant changes from the time of viewing and when the purchaser took possession.

[59]        In the instant case, and considering the evidence, particularly the acknowledgement by Mr.Lillies that the crawl space had moisture prior to the home being viewed, leads to a finding that there was no substantial change in the condition of the home as viewed; rather, I find the moisture problem had always been present but only became apparent to the claimant when they took possession.  In other words, the moisture problem was present but not detected when viewed as such it cannot be said that the home was substantially different from when viewed versus when the claimants took possession and found the moisture they failed to detect earlier.

[60]        As for the roof, there is no evidence as to when the soffits began leaking.  The claimants did lead evidence of rusted roofing nails; however, the court has no information as to what conclusions, beyond at some point in time moisture contacted the nails, can be drawn from the proven fact of rusted nails.  As such it cannot be said that the leaking started between the date the property was viewed and when the claimants took possession or between the period of possession and discovery.

[61]        For the above reasons I find the claimant has failed to prove breach of contract.

[62]        The allegation of active concealment is in effect a claim of fraud: Nixon v. MacIver, 2016 BCCA 8.  An allegation of dishonesty by concealing defects is a serious allegation which must be established on a balance of probabilities with clear and convincing evidence.  

[63]        In 0895625 B.C. Ltd. v. Ascent Developments Corp., 2014 BCSC 1722, Mr. Justice Savage commented on a court’s approach to a claim of fraud.  At paragraphs17-18 he stated:

[64]        Applying the above to the instant case, I find the defendants repeatedly represented to the claimants that the house did not have moisture problems. 

[65]        I am also satisfied that Mr. Lillies’ representations were made when he knew them to be false.  The evidence taken collectively leads to no other rational conclusion.  The specific portions of the evidence are; Mr. Lillies acknowledged when he was confronted that there had been moisture in the crawl space for twenty years.  Further, Mr. Lillies was a fastidious person who knew his property, as such it is reasonable to conclude that he would have known about the problem.  Moreover, the amount of moisture that collected on the windows was to the degree that moisture dripped on the floor, this would have triggered an experienced carpenter with Mr. Lillies’ character to identify the problem.  Of further significance, Mr. Lillies was aware that there was no vapour barrier under the crawl space floor.  I find he concealed the moisture by, leaving the fan on, positioning the closet doors so they were ajar, removing the white powder from the crawl space floor and finally, either temporarily removing the moisture or strategically placing items in the crawl space, thus concealing the presence of a wet floor.  

[66]        I also find that Mr. Lillies’ comments and actions were done with the intention of inducing the claimants into purchasing the home.  In this regard, the multiple questions by the claimants regarding moisture would have made it clear that they were concerned about moisture; accordingly, the absence of moisture would induce them into making the purchase.  It is common sense that the presence of unexplained moisture would compromise a prospective residential sale, thus, to induce the claimants Mr. Lillies took action to conceal the moisture and present the home as moisture free.  There is no other rational conclusion that can be drawn from the evidence. 

[67]        Finally, I accept the claimants’ evidence that one of the reasons they purchased the home was because it did not have moisture problems and because it appeared ready to move in.  I am also satisfied that as a result of relying on the defendants’ representations that the claimants suffered a loss.

[68]        As for the soffits, the evidence falls short of establishing the leaks occurred prior to the home being purchased and therefore known to the defendants.  The same cannot be said for the crawl space because the defendant acknowledged knowing about the problem for twenty years and had taken identifiable stops to conceal the problem.

[69]        Based on my finding that the defendants knowingly made false representations regarding moisture in the crawl space with the intention of inducing the claimants into purchasing the property, it follows that the false representations were not innocently made. 

[70]        As for the leaking soffits, I am satisfied on the evidence that, if the defendants were wrong when they indicated on the PCDS that the roof did not leak, that they were not aware of any leaks and their representation in this regard was innocently made.

[71]        With respect to the crawl space and the roof, there is no evidence before the court as to what a reasonable inspection would have discovered.  I acknowledge Mr. Woods did inspect the property however there is no evidence upon which I can determine if Mr. Woods’ inspection in the circumstances was reasonable.  As such, it cannot be said that the moisture in the crawl space would or would not have been discovered with a “reasonable” inspection. 

[72]        Finally, I am satisfied that the moisture problems from the crawl space did render the home unsafe.  In this regard, I accept that the high moisture levels resulted in Mr. Woods developing lung related issues which abated upon the moisture problem being rectified.

[73]        I am satisfied that the evidence justifies an exception to the doctrine of caveat emptor.  Hence the defendants are liable to the claimants.  I award damages for the following:

[74]        I have denied recovery for the anticipated cost of placing vapour barriers on the foundation walls because on the evidence of the claimants the steps taken thus far have successfully remediated the problems, as such vapour barriers on the walls is beyond what was required to remediate the issues.

[75]        Lastly, in their written submissions the claimants seek pursuant to Rule 20 (5) of the Small Claims Rules that a penalty be awarded against the defendants.  I have considered the facts, and the principles found in High Country Outfitters Inc. v. Pitt Meadows (City), 2012 BCPC 308 (CanLII), 2012 BCPC 0308, at paragraphs 99-101 which states:

[76]        In the instant case I observe, success was divided and I am not persuaded that the conduct in the instant matter broaches that discussed above.  Accordingly, I decline to make the award sought.