Gunness v. Swedos, 2024 BCPC 48 (CanLII)
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2024 BCPC 48 |
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Date: |
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File No: |
135159 |
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Registry: |
Kelowna |
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IN THE PROVINCIAL COURT OF BRITISH COLUMBIA
SMALL CLAIMS DIVISION
BETWEEN:
BARRY GUNNESS and CYNTHIA PARMENTIER
CLAIMANTS
AND:
JACQUELINE SWEDOS
DEFENDANT
AND:
DEREK LEIPPI
THIRD PARTY
REASONS FOR JUDGMENT
OF THE
HONOURABLE JUDGE C. BURNETT
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Appearing on their own behalf: |
B. Gunness and J. Swedos |
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Counsel for the Defendant: |
C. Flannigan |
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Appearing on his own behalf: |
D. Leippi |
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Place of Hearing: |
Kelowna, B.C. |
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Dates of Hearing: |
March 7, 8, 2024 |
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Date of Judgment: |
March 20, 2024 |
INTRODUCTION
[1] This claim arises out of the purchase of a residence in West Kelowna by the claimants Barry Gunness and Cynthia Parmentier from the defendant Jaqueline Swedos in the spring of 2022. Upon taking possession of the residence, the claimants determined that most of the residence’s double-paned window seals had failed, causing the windows to become clouded. They replaced all but two of the windows at a cost of $16,947.60. The claimants seek to recover this cost from the defendant. They allege that the defendant knew the seals had failed and that she intentionally did not disclose this at the time of the sale.
[2] The defendant denies the claimants’ allegations.
[3] The defendant third-partied her realtor, Derek Leippi, as he, without her knowledge or consent, represented to the claimants’ realtor that there was nothing wrong with the seals of the windows.
BACKGROUND
[4] Ms. Swedos inherited the residence she sold to the claimants from her parents. They acquired it in 2003. Ms. Swedos moved into it in 2019.
[5] She never noticed anything wrong with the home’s windows other than a “crustiness” with the main-bedroom’s window. She believed this was due to water staining on its exterior caused by the irrigation sprinklers. Her sister Katherine Swedos, who visited the home frequently, also never observed any problems with the windows other than the same main-bedroom window. She recalled it being crusty from the time her parents resided in the home.
[6] Ms. Swedos undertook some renovations to the home after she moved in. These included replacing the flooring and installing a new hot-water tank. She made no repairs to any of the windows.
[7] In the spring of 2022, she decided to sell the residence. She retained Mr. Leippi to act as her realtor. On May 6, 2022, the day he acquired the listing, he visited the home and walked through it with Ms. Swedos. He recalled she told him about the renovations to the home, her recollection as to the age of the roof, and the problem with the main-bedroom window.
[8] On May 6, 2022, Ms. Swedos completed a Property Disclosure Statement (the “PDS”). It included the following clauses:
THE SELLER IS RESPONSIBLE for the accuracy of the answers on this Property Disclosure Statement and where uncertain should reply “Do Not Know.” This Property Disclosure Statement constitutes a representation under any Contract of Purchase and Sale if so agreed, in writing, by the seller and the buyer. . . .
The Seller states that the information provided is true, based on the Seller’s current actual knowledge as of the date on page 1. Any important changes to this information made known to the Seller will be disclosed by the Seller to the Buyer prior to closing. The Seller acknowledges and agrees that a copy of this Property Disclosure Statement may be given to a prospective Buyer.
. . .
The prudent Buyer will use this Property Disclosure Statement as the starting point for the Buyer’s own inquires.
The Buyer is urged to carefully inspect the Development and, if desired, to have the Development inspected by a licensed inspection service of the Buyer’s choice.
. . .
[Emphasis in original.]
[9] On page 5 of the PDS under the heading “General” in answer to the question: Are you aware of any latent defect in respect of the Development? Ms. Swedos marked “No”. The PDS defined a “latent defect” as a defect that cannot be discerned through a reasonable inspection of the Development that renders the Development: (a) dangerous or potentially dangerous to occupants; or (b) unfit for habitation.
[10] The PDS does not contain any questions that pertain to the condition of the windows.
[11] On June 6, 2022 at shortly after 7:00 p.m., the claimants and their realtor, Roxanne O’Keefe, attended the residence to view it. The claimants had learned that it was for sale having driven past it the previous day. They spent approximately 1½ hours viewing it.
[12] While viewing the property, they noticed an issue with many of the windows. They appeared foggy to them. They were not sure if they had a protective film on them. Ms. O’Keefe texted Mr. Leippi about the windows. She asked, “Is there a film on the windows?” He responded “Some of the more sun exposed windows have faded . . . the seals are still good”. She then responded, “Oh ok, I thought there was a reflective film on them. It looked like it to us”.
[13] Mr. Leippi never contacted the defendant about the text he received from Ms. O’Keefe. He chose to respond in the manner he did without seeking any instructions or input from his client, the defendant.
[14] The claimants liked the residence and they decided to make an offer. Ms. O’Keefe prepared a Contract of Purchase and Sale, which she presented to Mr. Leippi on the morning of June 7, 2022.
[15] The claimants’ offer, however, was not the only offer the defendant received that morning. Another purchaser had also made an offer. As a result, the claimants were invited to present a new offer. They agreed to do so and submitted a new offer with an increased purchase price. The defendant accepted their increased offer later that day.
[16] The Contract of Purchase and Sale presented by the claimants and accepted by the defendant (the “Contract”) contained a number of important clauses including the following:
3. TERMS AND CONDITIONS: The purchase and sale of the Property includes the following terms and is subject to the following conditions:
This offer is unconditional.
PDS – If approved, such statement will be incorporated into and form part of this contract. If the Property Disclosure Statement is older than 3 months, the Seller will be required to revise.
. . .
LATENT DEFECTS & STIGMATIZED PROPERTIES – the Seller represents that they have disclosed to the Buyer any and all Latent Defects (as per Council Rule 5-13(I)(a)(i)(ii) and any other issue that would stigmatize the property. These disclosures include but are not limited to unnatural deaths, drug homes, crimes, burial grounds, remediated growing operations, and illegal operations. The Buyer is advised to conduct their own investigation regarding anything else they would consider to stigmatize the property.
. . .
8. VIEWED: The Property and all included items will be in substantially the same condition at the Possession Date as when viewed by the Buyer on June 6th, yr. 2022.
. . .
18. REPRESENTATIONS AND WARRANTIES: There are no representations, warranties, guarantees, promises or agreements other than those set out in this Contract and the representations contained in the Property Disclosure Statement if incorporated into and forming part of this Contract, all of which will survive the completion of the sale.
[17] Ms. O’Keefe advised the claimants to obtain a home inspection and to make it a condition of their offer; however, she also told them that if they chose to do so, their offer would likely not be accepted. She advised them in this fashion due to the knowledge that there was a competing offer for the property. A “clean offer”, meaning an offer with no conditions, would have a better chance of being accepted by a purchaser than an offer with conditions.
[18] The claimants chose not to obtain a home inspection or make the offer conditional on receiving a satisfactory home inspection.
[19] The claimants said the condition of the windows was important to them and if they had known that the seals were damaged, they would have made an offer at a reduced price to account for the problem.
[20] No written representation or warranty regarding the condition of the windows was included in the Contract.
[21] The claimants took possession of the residence on July 22, 2022. They confirmed in their evidence that the windows appeared to be in the same condition as when they viewed the residence on June 6, 2022.
[22] The claimants soon ascertained that the reason the windows appeared foggy was due to the seals having failed. They chose to have all but two of the windows replaced. Their cost to do so was $16,947.60.
THE CLAIMANTS’ CLAIM
[23] The claimants say that the defendant must pay them for the cost of replacing the windows.
THE ISSUE
[24] The issue that I must decide is whether the faulty window seals are a latent or patent defect.
DISCUSSION
[25] The burden of proof in a civil case rests with the claimants. The claimants must prove their case on a balance of probabilities. The Supreme Court of Canada in F.H. v. McDougall, [2008] 3. S.C.R. 41, at paragraph 49, describes this burden as follows:
[49] . . . [I]n civil cases there is only one standard of proof and that is proof on a balance of probabilities. In all civil cases, the trial judge must scrutinize the relevant evidence with care to determine whether it is more likely than not that an alleged event occurred.
[26] The defendant says that the claimants have failed to meet the burden of establishing their claim. She argues that the doctrine of caveat emptor (or “buyer beware”) is a complete answer to the claim and it must result in the claim being dismissed.
[27] The doctrine of caveat emptor applies in the sale of real property unless there is something in the contract that protects the purchaser. As was stated in Fraser-Reid v. Droumtsekas, 1979 CanLII 55 (SCC), [1980] 1 S.C.R. 720, at 723:
. . . caveat emptor remains a force to be reckoned with by the credulous or indolent purchaser of housing property. Lacking express warranties, he may be in difficulty because there is no implied warranty of fitness for human habitation upon the purchase of a house already completed at the time of sale. The rationale stems from the laissez-faire attitudes of the eighteenth and nineteenth centuries and the notion that a purchaser must fend for himself, seeking protection by express warranty or by independent examination of the premises. If he fails to do either, he is without remedy either at law or in equity, in the absence of fraud or fundamental difference between that which was bargained for and that obtained.
[28] The distinction between patent and latent defects is central to a vendor’s obligation of disclosure under the doctrine. This was discussed by the trial judge in Cardwell et al v. Perthen et al, 2006 BCSC 333, starting at para. 122:
[122] . . . Patent defects are those that can be discovered by conducting a reasonable inspection and making reasonable inquiries about the property. The authorities provide some guidance about the extent of the purchaser’s obligation to inspect and make inquiries. The extent of that obligation is, in some respects, the demarcation of the distinction between latent and patent defects. In general, there is a fairly high onus on the purchaser to inspect and discover patent defects. This means that a defect which might not be observable on a casual inspection may nonetheless be patent if it would have been discoverable upon a reasonable inspection by a qualified person: 44601 B.C. Ltd. v. Ashcroft (Village), [1998] B.C.J. No. 1964 (S.C.) [Ashcroft]; Bernstein v. James Dobney & Associates, 2003 BCSC 986 [Bernstein]. In some cases, it necessitates a purchaser retaining the appropriate experts to inspect the property (see for example Eberts v. Aitchison (2000), 4 C.L.R. (3d) 248, 2000 BCSC 1103 .
[123] In Tony’s Broadloom & Floor Covering Ltd. v. NMC Canada Inc. (1996), 1996 CanLII 680 (ON CA), 141 D.L.R. (4th) 394, 6 R.P.R. (3d) 143 at para 19, the Ontario Court of Appeal noted that the plaintiff, the purchaser of contaminated industrial lands, could have determined that the land was contaminated prior to purchase:
If I am wrong and the presence of the contaminant was a defect, I agree with the conclusion of White J. (at pp. 35-37) that the defect was a patent one. It would have been readily discoverable by the appellants had they exercised reasonable vigilance in the circumstances. In deciding whether the appellants exercised reasonable vigilance, it must be remembered that the appellants were buying industrial land on which they proposed to build a residential condominium. A reasonable inspection of the property, reasonable inquiries of the respondents, reasonable inquiries of the local and provincial authorities would have put the appellants on notice of the existence of the contaminant. Indeed, had the appellants pursued the taking of soil samples with reasonable diligence after the respondents had permitted them to take those samples, they would have learned of the existence of the contaminant before closing. Instead, the appellants chose not to disclose their intended use of the property and to take no steps to satisfy themselves that the property could be used for that purpose.
[124] In Bernstein the court found at para. 9, that the rot in the structure was a patent defect at the time of sale because it was readily discoverable due to “suspicions that arose from the presence of visible cracks, discolorations, patching and staining on columns and beams on the interior of the house”. At para. 17 Stromberg-Stein J. stated:
The authority Khaira v. Nelson (2002), 2002 BCSC 1045 (CanLII), 1 R.P.R. (4th) 76 (B.C.S.C.), 2002 B.C.S.C. 1045 provides that there is no duty on the part of a vendor to disclose patent defects to the purchasers, patent defects being those which are discoverable by conducting a reasonable inspection of the premises and making reasonable inquiries into its qualities. In the case of patent defects, the rule of caveat emptor strictly applies. It is also the case that a purchaser will be held to a fairly high standard of inspection.
[125] In the Khaira case cited by the court in Bernstein, the defect complained of was a slope of some twelve inches across the width of a house of forty-eight feet. The court concluded that the defective slope was patent because it was visible to the eye on a reasonable inspection, and accordingly, the vendor was not obligated to bring it to the purchaser’s attention.
[126] In Bracic v. Prior (2003), 7 R.P.R. (4th) 262, 2003 BCSC 106 at para. 45, Warren J. found that water ingress into the basement of a home possibly caused by the lack of a perimeter drainage system was a patent defect:
The plaintiff’s claim in contract requires that she establish a defect and, once established, it must be determined whether the defect is latent or patent. There is no remedy at law for a patent defect and the rule of caveat emptor is still the law. [Citations omitted]. The defect alleged by the plaintiff is the lack of a perimeter drainage system, but the plaintiff has not proven there was no perimeter drainage system. Even if there were no such system it would not be a defect as the home did not require such a system at the time it was constructed. In any event, it was patently obvious that the down spouts emptied onto the ground and everyone, including the plaintiff and her realtor saw that. Further enquiries could have addressed any concerns the plaintiff may have had, but none were made.
[127] Latent defects ─ being ones which are not discoverable by observation and reasonable inquiry ─ are treated differently. A vendor who is aware of and fails to disclose and/or conceals or makes non-innocent misrepresentations with regard to a latent defect may well become liable to the purchaser for damages suffered as a result of that latent defect. This principle is sound because, unlike a patent defect, a latent defect is not discoverable by a purchaser on appropriate inquiries and inspection and thus, as a matter of fairness in the commercial transaction, the obligation to disclose and to not misrepresent will rest with the party who knows about the deficiency.
[29] The claimants viewed the residence only on one occasion before they decided to make an offer to purchase it. During the viewing, it was apparent to them that there may be a problem with the windows. They believed that they might have had some “film” on them. The claimants could have chosen to have the windows inspected. They could have made their offer to purchase the property subject to an inspection confirming the windows’ viability; however, the offer they presented to the defendant was an unconditional one. The claimants chose to forgo further enquiries by way of an inspection to ascertain if there was a problem with the windows.
[30] The failed window seals, I find, were a defect that would have been easily discoverable through a reasonable inspection. The defendant did nothing to conceal the condition of the windows. All of the windows were readily accessible. Anyone viewing the residence could come to their own conclusions regarding the windows’ condition. As a result, I conclude that the failed window seals were not a latent defect but a patent one.
[31] The claimants argue that the defendant was aware of the condition of the windows’ seals and that she knowingly chose not to disclose this fact. I am unable to find that this was the case.
[32] Both the defendant and her sister were of the impression that the only “problem” window was the main-bedroom window. They both believed the cause of the window’s crustiness was due to water hitting the window from the irrigation sprinklers. Her sister, a few months prior to the residence being listed, happened to take a photo from inside the residence looking out the living room to the front yard. The living-room window depicted in the picture does not appear to be flawed in any respect.
[33] The claimants point to the evidence of Ms. Fussi, the defendant’s former neighbour, who testified that the defendant, sometime in 2020, had told her she had repeatedly tried to clean the windows but she could not get them clean and that they were “faulty”. In cross-examination, however, she admitted that she could not recall the defendant’s exact words or the date upon which they spoke. In the circumstances, I cannot give Ms. Fussi’s evidence any weight.
[34] Even if I were to find the defendant was aware of the faulty seals, it would not change the result. The reason being, a vendor does not have to inform a purchaser of a patent defect. The onus, under the doctrine of caveat emptor, rests with the purchaser. A purchaser has an obligation to perform their own due diligence and must undertake the appropriate enquiries and investigations themselves.
[35] The claimants said they made reasonable enquiries by way of asking the defendant’s realtor about the condition of the windows on the night they viewed the residence. They argue that the response they received confirming that the seals of the windows were sound was a representation they relied on and that it was binding on the defendant. In light of the response, they say it was not necessary for them to undertake an inspection.
[36] I do not agree. The Contract, pursuant to clause 18, specifically excludes any representations other than those that are set out in the Contract and the PDS. The claimants did not seek to have a representation or warranty that the windows seals were intact written into the Contract and the PDS contains no reference to the condition of the windows. In the absence of anything pertaining to the windows’ condition in the Contract, any statements made by the defendant’s realtor regarding the condition of the windows cannot bind her.
CONCLUSION
[37] It is unfortunate for the claimants that they had to replace most of the windows in the residence. Had they taken the opportunity to have the residence inspected by a professional home inspector, they would have known about the defective seals. They may well have offered less for the residence or chosen not to proceed with the purchase. The condition of the windows was readily ascertainable through due diligence. Their condition was a patent defect. The claimants cannot rely on the defendant’s realtor’s statement that the “seals are still good” as there was no express written representation as to their condition in the Contract. The doctrine of caveat emptor applies and the claimants’ claim must fail.
[38] I hereby dismiss the claimants’ claim as against the defendant.
[39] Having found the defendant is not liable to the claimants, I dismiss the defendant’s third-party claim as against Mr. Leippi.
[40] I direct that all parties bear their own expenses of the litigation.
_____________________________
The Honourable Judge C. Burnett
Provincial Court of British Columbia