IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
Perzoff v. Pringle, |
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2017 BCSC 1448 |
Date: 20170817
Docket: S121523
Registry: Victoria
Between:
Lara Perzoff and Glen Plummer
Plaintiffs
And
Jordan Pringle and Suite B Contracting Ltd.
Defendants
Before: The Honourable Mr. Justice Blok
Reasons for Judgment
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Counsel for the Plaintiffs: |
D. Williams A. Broadley M. Melnyk, Articled Student |
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Counsel for the Defendants: |
R. Dumonceaux |
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Place and Date of Hearing: |
Victoria, B.C. October 4, 2016 |
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Place and Date of Judgment: |
Victoria, B.C. August 17, 2017 |
[1] In June 2009, the plaintiffs Lara Perzoff and Glen Plummer purchased a house from the defendant, Jordan Pringle. Mr. Pringle is a contractor who is the principal of the second defendant, Suite B Contracting Ltd. He had renovated the Saanich, B.C. home extensively and in doing so created a secondary suite in the basement, a feature that was important to the plaintiffs in their decision to purchase. The plaintiffs rented that suite to tenants following their purchase of the house.
[2] As part of the sale contract, Mr. Pringle represented that: (1) he was unaware of any water problems in the basement; and (2) the “entire house has been renovated to Code with permits and inspections”.
[3] In January and July 2010 the tenants noticed buckling in the laminate flooring of their suite. Water was getting into the basement through the foundation. Repairs were carried out. The tenants left because of the repairs.
[4] The plaintiffs did most of the repair work themselves because they could not afford to hire people to do the work. The repairs took a long period of time to complete because the plaintiffs have full-time jobs and had to do the work as best they could outside their working hours.
[5] Portions of foundation perimeter were excavated. These were the same areas that had been the location of Mr. Pringle’s drainage system work. While those areas were exposed the plaintiffs arranged for an inspection by engineers with the consulting firm Read Jones Christofferson (“RJC”). RJC engineers subsequently issued a report dated January 14, 2014 in which they detailed their findings. They concluded that the drainage work done by Mr. Pringle was improper and was not done to the relevant B.C. Building Code (“Code”) standard.
[6] By way of summary trial application the plaintiffs seek judgment for damages totalling about $71,000 against Mr. Pringle and his company, based on breach of contract, negligent misrepresentation and negligence.
[7] Counsel agree that the matter is suitable for disposition by summary trial. I agree, and find that I am able to find the facts necessary to render judgment in this case.
[8] Mr. Pringle deposed that he purchased the house in 2008, intending to renovate and re-sell it. During the course of the renovations there was ingress of water in the north side of the basement. Mr. Pringle addressed that problem by “modifying” the drainage system in that area. He said he did this by excavating to the foundation level in the subject area and repairing the drainage system.
[9] Mr. Pringle deposed that he consulted with Daryl Hawes, a plumber who was doing other work for him at the house, and Mr. Hawes told him a building permit was not needed for this work because it was an “urgent matter and a repair of the system” rather than an installation or replacement of the system.
[10] Mr. Hawes deposed that he told Mr. Pringle the water ingress was likely caused by a failure of the perimeter drainage system along the north wall. He advised Mr. Pringle that he could repair the system by excavating to the foundation and placing perforated PVC drain pipe along the north side. He also said that it was his understanding that no building permit is needed for the urgent repair of a perimeter drainage system. He said, however, that he did not supervise or inspect the repair work done by Mr. Pringle.
[11] Mr. Pringle said there were no further problems with water ingress in the area after that point, despite two weeks of heavy rain during the spring of 2009. He listed the property for sale near the end of April 2009.
[12] As part of the sale listing, Mr. Pringle signed a Property Disclosure Statement dated April 30, 2009 (the “Disclosure Statement”). In the Disclosure Statement Mr. Pringle indicated “no” to these two questions: (1) “Are you aware of any additions or alterations made without a required permit and final inspection?” and (2) “Are you aware of any moisture and/or water problems in the walls, basement or crawl space?” He added the following additional comment in the Disclosure Statement:
Entire house has been renovated to Code with permits and inspections. Entire electrical & plumbing systems completely replaced, new roof, windows, deck.
[13] The Disclosure Statement was incorporated into the property sale contract.
[14] The Multiple Listing Service listing similarly indicated all of the renovation work “has been completed with proper permits and inspections”.
[15] Prior to completing the purchase, the plaintiffs had the house inspected by a home inspector. The inspector noted only minor deficiencies, all of which were remedied before completion of the sale. The inspector noted “recent exterior excavation” as evidence of “corrective action” that had been taken but said this merely needed monitoring. As a limitation to his report he said “subsurface drains are not tested” and he recommended that the perimeter drainage system be checked for correct operation.
[16] After taking possession, the plaintiffs rented the suite for $1,300 per month. The tenants moved out on August 7, 2010 because they preferred to obtain alternate permanent accommodation rather than move out temporarily to allow the repair work to be done.
[17] After the plaintiffs complained to Mr. Pringle he provided them with a formal written statement in which he acknowledged having water ingress problems during his nine-month ownership of the house. He attributed these problems to an “unusually large snowfall”. In his statement he said he addressed the problem by installing a perimeter drain pipe along the north side of the house, “where there was previously nothing there”.
[18] Mr. Pringle also deposed that he told Mr. Plummer that he filled out the Disclosure Statement as he did (“Are you aware of any moisture and/or water problems in the walls, basement or crawl space?” “No.”) based on the advice he received from his realtor.
[19] As noted earlier, RJC engineers prepared a report dated January 14, 2014. In that report the engineers noted their observations of the site after excavation exposed the foundation on the north and west sides. The excavations exposed both new perforated PVC drain pipe and the original terracotta drain tile.
[20] Importantly, the engineers noted that the new drain pipe was installed eight inches above the original drain tile. Since the original drain tile was at approximately the same elevation as the basement floor the new drain pipe was situated well above it. They noted as well that the foundation wall had not been damp-proofed.
[21] The engineers also noted the following:
a) at the northwest corner of the foundation the PVC drain pipe had not been placed close to the foundation but instead it veered away from the foundation to a point more than six feet away;
b) at one particular point in that same location the PVC drain pipe sloped uphill and not downhill; and
c) on the west side of the house the original drain tile was damaged by the recent renovation in that a concrete pedestal (supporting a sun deck) was installed right through it. This inhibited effective drainage by that original drain tile.
[22] From these observations the RJC engineers concluded:
a) as the soil had been excavated along the foundation in order to replace the drain tiles, dampproofing ought to have been applied in order to meet the requirements of the Code. This would have slowed water ingress or limited the potential for water ingress;
b) the new drain pipe was not installed in accordance with the Code because:
i. drain tile or pipe ought to be installed so that the top of the tile or pipe is below the bottom of the floor slab. Here, the original drain tile was at approximately the correct elevation, but the placement of the PVC drain pipe above the original drain tile rendered it ineffective; and
ii. the “jog” in the PVC pipe away from the foundation violated the Code requirement for drainage tile or pipe to be located along all sub-grade wall assemblies.
[23] The engineers said that because the PVC pipe was located above the floor slab, hydrostatic pressure would force water through the walls or under the slab before it had an opportunity to drain away. Also, since the PVC drain pipe was installed with an uphill slope at one point, this would impede drainage and potentially direct more surface water back to the residence instead of away from it.
[24] The plaintiffs emphasize that this is not a simple vendor-purchaser case involving a property defect because here the vendor was also the builder.
[25] The plaintiffs submit that their causes of action in contract, negligence and negligent misrepresentation are all made out. The RJC report shows that the work done by Mr. Pringle was negligently done. He owed a duty of care to the plaintiffs and it was reasonably foreseeable that his lack of care would result in the very type of harm that transpired. His representations that there were no prior water problems in the basement and that all his work was done to Code, and with permits and inspections, were untrue.
[26] The defendants submit that a distinction must be drawn between the role of Mr. Pringle and that of his company. They acknowledge Mr. Pringle was the vendor but maintain it was his company that carried out the work.
[27] Subject only to certain exceptions, the doctrine of caveat emptor applies to the purchase and sale of real estate. Although there are some exceptions to that rule, none of those apply here. Moreover, through the report of the home inspector the plaintiffs were on notice about the drainage system and thus this must be taken to have been a patent defect, not a latent one.
[28] As for the claim for negligent misrepresentation arising from the Disclosure Statement, the law requires only that the vendor correctly and honestly disclose his actual knowledge, but that knowledge does not have to be correct. On this point: (1) Mr. Pringle believed the prior water ingress problem had been repaired; and (2) he understood he did not require a building permit for the repairs as they were in the nature of emergency repairs.
[29] As for the claim in negligence, the defendants submit that since the repairs were carried out by the defendant company then any liability in negligence lies with that defendant and not with Mr. Pringle. In any event, no evidence of a standard of care was led by the plaintiffs and they failed to demonstrate that the alleged deficiency caused the later water ingress.
[30] Finally, on the matter of damages the defendants submit that the plaintiffs ought to be found contributorily negligent for failing to check the perimeter drainage system as recommended by their home inspector. They also submit that the plaintiffs failed to mitigate their damages because they declined the defendants’ offer to correct the alleged deficiency. Mr. Pringle deposed that he could have done the repairs for $25,000, which is a lesser amount than the plaintiffs now claim.
[31] In reply, the plaintiffs submit:
a) there is nothing in the evidence that shows Mr. Pringle’s company did the work. To the contrary, Mr. Pringle’s affidavit evidence is that he did the work;
b) Mr. Pringle provided no basis for his stated belief in the representations he made;
c) the report of the home inspector does not put the plaintiffs on notice of any specific problem with the drainage system;
d) Mr. Pringle, in his capacity as the builder, does not get the benefit of the caveat emptor doctrine;
e) the standard of care is established through the evidence of Mr. Hawes, the plumber, who told Mr. Pringle to excavate down to the foundation, something that Mr. Pringle did not do;
f) common sense leads to the conclusion that an inadequate drainage system on the north side of the foundation led to water ingress in that same area;
g) Mr. Pringle’s estimate of $25,000 for the work ought to carry no weight. In any event, given the RJC findings, it was appropriate for the plaintiffs to reject Mr. Pringle’s offer to do the repair work.
[32] In submissions, both counsel referred to Nixon v. MacIver, 2016 BCCA 8 [Nixon], a decision involving a sale of a house where the contract incorporated a property disclosure statement. In that case there were representations to the effect that the house was built about six years prior and that the age of the roof was six years. The house had in fact been built, by a prior owner, about six years previous, but construction of the house had been effected by incorporating an older cabin from elsewhere, which formed about half of the greater structure. The new areas had a new roof installed but the roof of the older cabin was not replaced. The owner/vendor had assumed that the entire structure had received a new roof as part of the construction of the house.
[33] The issue in the Court of Appeal was whether the trial judge had erred in dismissing the purchasers’ claims for misrepresentation (including misrepresentation by omission) concerning the age of the dwelling generally and the age of the roof in particular.
[34] In dealing with the purchasers’ claim that there was a positive obligation on the vendor to include comments about the property beyond those comprised in the property disclosure statement, the Court of Appeal said:
[33] The doctrine [of caveat emptor] continues to apply to real estate transactions in this province, subject to certain exceptions: fraud, non-innocent misrepresentation, an implied warranty of habitability for newly-constructed homes, and a duty to disclose latent defects.
[34] A vendor has an obligation to disclose a material latent defect to prospective buyers if the defect renders a property dangerous or unfit for habitation. A latent defect is one that is not discoverable by a purchaser through reasonable inspection inquiries.
[Emphasis in original. Citations omitted.]
[35] The Court of Appeal later summarized the applicable principles, and in doing so expanded on them somewhat:
[47] In summary, the doctrine of caveat emptor remains very much alive in the context of real estate transactions in BC: Fraser-Reid; Cardwell CA; Wescan CA. In general, purchasers bear the risk of defects in the quality of a property. Liability for this risk may shift to the vendor where there is established: (i) a breach of contract; (ii) active concealment (i.e., fraud); (iii) non-innocent misrepresentation; or (iv) an implied warranty of habitability in the case of newly-constructed homes. Liability for this risk may also shift where latent defects are established that render a property dangerous or uninhabitable. In short, a vendor has a common law duty to disclose: (i) a latent defect that is not discoverable through a reasonable inspection or through reasonable inquiries; and (ii) the latent defect renders the property dangerous or unfit for habitation. If a defect does not render a property dangerous or uninhabitable, caveat emptor applies regardless of whether the defect in question is patent or latent.
[36] As to the legal effect of the statements made in the property disclosure statement, the Court of Appeal said:
[48] Information contained in a disclosure statement that is incorporated into a contract of purchase and sale may be a representation upon which a purchaser can rely: Ward v. Smith, 2001 BCSC 1366 at para. 31. However, a vendor is only obliged to disclose his or her current actual knowledge of the state of affairs of the property to the extent promised in the disclosure statement and need say “no more than that he or she is or is not aware of problems”: Arsenault v. Pederson, [1996] B.C.J. 1026 (QL) (S.C.) at para. 12. In other words, the vendor must correctly and honestly disclose his or her actual knowledge, but that knowledge does not have to be correct. A vendor is not required to warrant a certain state of affairs but only to put prospective purchasers on notice of any current known problems. The purpose of a disclosure statement is to identify any problems or concerns with the property, not to give detailed comments in answer to the questions posed. See Anderson v. Kibzey, [1996] B.C.J. No. 3008 (QL) (S.C.) at paras. 13-14; Zaenker v. Kirk (1999), 30 R.P.R. (3d) 9 (B.C.S.C.) at para. 19; Kiraly v. Fuchs, 2009 BCSC 654 at paras. 47, 49; and Roberts v. Hutton, 2013 BCSC 640 at para. 83.
[37] The Court of Appeal reiterated those views in Hamilton v. Callaway, 2016 BCCA 189 [Hamilton]. There, a vendor of a townhouse represented in a property disclosure statement, incorporated into the parties’ agreement of purchase and sale, that she was not aware of any problems with the plumbing system. The purchaser sued the vendor, alleging that the representation she made was a misrepresentation. The trial judge found that the vendor had an honest belief in the truth of her representation. The Court of Appeal said that this was enough and in this regard referenced para. 48 (reproduced above) from Nixon.
[38] The court also quoted with approval the following passage from Hanslo v. Barry, 2011 BCSC 1624, dealing with a claim for breach of contract arising out of a statement in a property disclosure statement (“PDS” in the following quote):
[96] Based on these authorities, it is my view that in this case, the incorporation of the PDS into the contract did not turn the representations contained in the PDS into contractual warranties. There was no warranty that the circumstances referred to in the questions, which were answered in the negative, did not exist. They are representations as to the true state of knowledge of the vendor and may support a claim in breach of contract if the statement was untrue and did not accord with the vendor’s true belief at the time. It is my view that insofar as a claim is based on breach of contract, it is not necessary that the representations relate to latent defects that are dangerous or that render the premises uninhabitable. It is sufficient if there is a breach of contract which caused damage.
[Emphasis added by the Court of Appeal in Hamilton at para. 44.]
[39] I agree with the plaintiffs that this is not a straightforward vendor-purchaser case where the analysis begins and ends with the doctrine of caveat emptor. Here, two additional aspects also must be addressed. The first is that Mr. Pringle did the work complained of. The second is that he made representations about that work that were incorporated into the contract of purchase and sale.
[40] I deal first with those representations. Mr. Pringle made three representations: (1) he was not aware of any moisture and/or water problems in the walls, basement or crawl space; (2) he was not aware of any additions or alterations made without a required permit and final inspection and, as he expressed it elsewhere, the work was done with permits and inspections; and (3) all work was done to the standards required by the Code.
[41] Nixon and Hamilton tell us that statements made in property disclosure statements need only be honest statements of belief and they do not have to be correct. They are not warranties. A statement may still support a claim for breach of contract if the statement in question does not accord with the vendor’s true belief at the time.
[42] Although Mr. Pringle’s evidence about his knowledge and belief is in some respects unsatisfactory, there is some support in the evidence on which I might conclude that the first two statements referenced above were honest disclosures of Mr. Pringle’s actual knowledge or belief. There is, however, nothing to suggest an honest belief in the third statement.
[43] As to the first two statements, Mr. Pringle deposes that he effected repairs to the drainage system and after doing so, and despite some heavy rains, there was no further water ingress while he owned the house. He does not expressly say that he believed that there were no moisture or water problems in the basement because he believed he had fixed the earlier problem, but it is an inference that could be drawn. On this point I note that in the statement Mr. Pringle provided to the plaintiffs (which was unsworn, though the statement was said to be “signed, sealed and delivered” before a lawyer), he expressly said he felt he had fixed the problem.
[44] The second statement, to the effect that work was done with all required permits, similarly suffers from an absence of any express statement that Mr. Pringle believed that a permit (and associated inspections) was not required for the drainage system work, but again one may draw that inference by reason of his assertion that Mr. Hawes, the plumber, told him one was not needed because it was an urgent repair rather than a replacement or installation of the system.
[45] There is, however, nothing in Mr. Pringle’s affidavit about any belief he might have had that the “entire house has been renovated to Code”. In fact, there is no mention of the Code at all in Mr. Pringle’s affidavit.
[46] I am satisfied that this particular statement was untrue. The RJC report makes that clear. The new drainage system did not adhere to Code requirements in several important respects.
[47] In my view, the failure of Mr. Pringle to address this point is very telling. He alone has the ability to give evidence about his belief in the truthfulness of this statement, yet he has not done so. The RJC report suggests that the flaws in the drainage system installed by Mr. Pringle were very elementary in nature, to the extent, in one respect at least, of ignoring the effect that gravity has on the flow of water. It is tempting to conclude that Mr. Pringle did not address the Code issue because he knew he had no reason to believe that he was Code-compliant with the drainage system work.
[48] In these circumstances it is fair to draw the adverse inference that Mr. Pringle did not have an honest belief that his work was done to Code. I am therefore satisfied that Mr. Pringle’s misrepresentation that all work was done to Code was a contractual term that he breached.
[49] On my interpretation of Nixon it is not necessary that I proceed to characterize the drainage system defects as either patent or latent. Nixon indicates that this characterization relates to the vendor’s duty to disclose, not to a misrepresentation that founds a breach of contract. However, in the event I am wrong in this conclusion I will make a few observations concerning this issue.
[50] The defendants say the defects were patent because the plaintiffs were put on notice by their home inspection report that they should check the functioning of the drainage system. There was, however, no suggestion that the system was in any way defective, merely that this might be a prudent thing to do. I do not consider that this makes the otherwise latent defect a patent one. Also, there is no evidence about whether the defects in the system would have been discoverable on reasonable inspection, which is a requirement in order for a flaw to be considered patent: Nixon at para. 34. If, for example, a plumber checked the system with a “snake” device it would likely have revealed the system’s piping to be clear and unobstructed. It would not have revealed that the new section was located at an inappropriate depth, that it veered away from the foundation by a substantial distance or that it required water to flow uphill at one point.
[51] For these reasons I conclude that the defect was a latent defect. I also conclude that the defective drainage system installed by Mr. Pringle rendered at least the basement area of the home uninhabitable.
[52] I reject the submission of the defendants that the claim in negligence can only be maintained against the corporate defendant. That submission is based on the assertion, unfounded in the evidence, that it was the corporate defendant that did the work. To the contrary, the affidavit evidence establishes that Mr. Pringle did the work himself. He makes no mention of doing the work on behalf of his company.
[53] Mr. Pringle argues that there is no evidence of a standard of care or of causation. I am satisfied that, in the circumstances of this case, the Code sets the standard to be met: Maplethorp v. B.C. (Assn. of Professional Engineers and Geoscientists of) (1993), 8 C.L.R. (2d) 200 (B.C.S.C.). I note as well that Mr. Hawes, the plumber, told Mr. Pringle to excavate down to the foundation, an additional indication of the standard to be met, which Mr. Pringle did not do.
[54] As for causation, I note the nature and seriousness of the flaws in the drainage system installed by Mr. Pringle. According to the RJC report: (1) the uphill slope of the drain pipe installed by Mr. Pringle would tend to direct water back towards the house, such that the drain pipe would have to fill up to an elevation above that of the basement floor in order for water to reach the drainage field; (2) the newly-installed pipe’s jog away from the foundation meant it was not located along the sub-grade wall assembly, as it should have been; and (3) the location of the new pipe above the original drain tile “renders it ineffective”. Given these circumstances, I am satisfied it is reasonable to draw the common sense inference that the subsequent water ingress to the basement of the home was caused by the failure of the defective system to drain water away from the foundation of the house.
[55] In summary under this issue, I conclude Mr. Pringle owed a duty of care to the plaintiffs, he breached that duty of care by failing to install a Code-compliant drainage system and it was reasonably foreseeable that his lack of care would result in the very type of harm that transpired. I therefore conclude that the plaintiffs have made out their claim against Mr. Pringle in negligence.
[56] Mr. Pringle submits that should he be found liable in negligence then the court ought to find that the plaintiffs were contributorily negligent for “failing to obtain a further inspection report concerning the drainage system”. As with any assertion of negligence, this must be proven on the evidence. Here, the defendants have offered no evidence that such a report would have identified the deficiencies that were discovered only after the foundation perimeter was excavated. This submission fails.
[57] Given my earlier conclusions it is perhaps unnecessary to also analyse Mr. Pringle’s potential liability for negligent misrepresentation, but I will do so briefly in any event.
[58] The law on negligent misrepresentation was summarized by Iacobucci J. in Queen v. Cognos Inc., [1993] 1 SCR 87 at 110:
The required elements for a successful Hedley Byrne claim have been stated in many authorities, sometimes in varying forms. 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 misrepresentation; (4) the representee must have relied, in a reasonable manner, on said negligent misrepresentation; and (5) the reliance must have been detrimental to the representee in the sense that damages resulted.
[59] As to the first requirement (a duty of care), I find that Mr. Pringle owed the plaintiffs a duty of care based on the special relationship he had given his role as the builder or renovator of the subject house. In this regard I rely on the same reasoning expressed in McCluskie v. Reynolds, 65 B.C.L.R. (3d) 191 (S.C.) and Sergius v. Janax Design and Drafting (1992), 64 B.C.L.R. (2d) 176 (S.C.), a case quoted in McCluskie.
[60] As to the second requirement, the representation by Mr. Pringle that all work had been done to Code was untrue.
[61] As to the requirement that there be negligence in making the representation, I find that in respect of the drainage system work Mr. Pringle had no basis on which he could have reasonably concluded his statement was true. He says nothing of any efforts to ensure compliance with the Code. His assertion was negligent.
[62] Finally, I find the last two requirements have also been met. It is clear from the evidence of the plaintiffs that they relied on Mr. Pringle’s representations that all work had been done to Code. Their reliance proved detrimental because they assumed that there was nothing to worry about with, in particular, the drainage system, and were therefore not in a position to forestall the physical damage that resulted.
[63] Accordingly, I find that Mr. Pringle is also liable to the plaintiffs for negligent misrepresentation.
[64] The damages claimed by the plaintiffs consist of: (1) $10,400 for lost rental income; (2) $25,989.17 for actual expenses incurred for contractors, tools and materials; (3) $19,902.83 (corrected from $19,634.12) for the value of their own labour equal to the estimate they obtained for the cost of repairs; and (4) $15,000 for general damages for stress, lost peace of mind, etc. The total of those figures is $71,292.
[65] The defendants say that the plaintiffs failed to mitigate their damages because Mr. Pringle offered to repair the water ingress problem but the plaintiffs declined his offer. They also submit that the claim for lost rental income is excessive because it is based on eight months of lost rent whereas Mr. Pringle’s entire renovation project took only six months to complete.
[66] I begin with a brief outline of the facts on damages. Mr. Plummer deposed that after he discovered the water ingress and removed the damaged flooring he contacted contractors about doing the remedial work. The plaintiffs obtained an estimate from Avalon Industries Ltd. in which that company quoted the figure of $45,892 for the repair work. The principal of Avalon Industries told Mr. Plummer that the work would take between two and six months to complete.
[67] Mr. Plummer deposed that they did not have the funds to have the work done by a contractor and they did not have the ability to borrow the required funds. He and Ms. Perzoff decided that they would do the work themselves in evenings and on weekends. This placed a significant burden on them in terms of time, effort and stress.
[68] Mr. Plummer kept a log of all of the time spent on these repairs. The total time recorded is 1,540 hours. He also kept a tally of all out-of-pocket expenses incurred. These total $25,989.17.
[69] I do not consider it unreasonable for the plaintiffs to have declined Mr. Pringle’s offer to repair the water ingress problem. He now deposes he would have done the necessary repairs for $25,000, but there is no evidence that the plaintiffs knew that at the time. In any event, I also do not consider it unreasonable for the plaintiffs to have declined Mr. Pringle’s offer given that he was the likely, or at least a possible, source of the problem.
[70] Furthermore, given Mr. Pringle’s direct pecuniary interest in the outcome and the singular lack of any detail or stated basis for his estimate, I am unable to give any weight to his evidence that the work should have cost just $25,000.
[71] I accept that the amount of the Avalon estimate is the most suitable measure of damages in this case. I do note, however, an apparent element of betterment insofar as the Avalon estimate includes work to replace entirely one 19’ x 14’ part of the slab that “shows evidence of deterioration”. This deterioration might well have been the result of years of water problems and not necessarily just the result of Mr. Pringle’s substandard work. There was no evidence on the point. The new slab was estimated at $1,500 but there would also have been a cost associated with the removal of the deteriorated slab. A figure for the latter work is difficult to derive given that this work is subsumed in a figure for more general preparatory work, but in all the circumstances I consider that $1,000 would be appropriate for the cost of slab removal and so $2,500 represents a reasonable total deduction.
[72] On the matter of loss of rental income, I do not accept the plaintiffs’ claim for the full eight months it took to carry out the repairs because the extended duration of the actual work was the result of the plaintiffs’ impecuniosity. I consider it reasonable to take the mid-point of Avalon’s estimate of the time needed to carry out all the work, which is four months. Damages for lost rental income are therefore awarded in the amount of $5,200.
[73] The total of the pecuniary damages is $48,592 ($45,892 + $5,200 − $2,500).
[74] Finally, I address the plaintiffs’ claim for general damages. The submissions on this issue were scant and, regrettably, the parties did not refer to the leading authorities. Several cases were cited by the plaintiffs but these all pre-dated Fidler v. Sun Life Assurance Co. of Canada, [2006] 2 S.C.R. 3, 2006 SCC 30 [Fidler], where the Supreme Court of Canada examined the recoverability of damages for mental distress in breach of contract cases.
[75] In Fidler the court said:
[44] We conclude that damages for mental distress for breach of contract may, in appropriate cases, be awarded as an application of the principle in Hadley v. Baxendale: see Vorvis. The court should ask “what did the contract promise?” and provide compensation for those promises. The aim of compensatory damages is to restore the wronged party to the position he or she would have been in had the contract not been broken. As the Privy Council stated in Wertheim v. Chicoutimi Pulp Co., [1911] A.C. 301, at p. 307: “the party complaining should, so far as it can be done by money, be placed in the same position as he would have been in if the contract had been performed”. The measure of these damages is, of course, subject to remoteness principles. There is no reason why this should not include damages for mental distress, where such damages were in the reasonable contemplation of the parties at the time the contract was made. This conclusion follows from the basic principle of compensatory contractual damages: that the parties are to be restored to the position they contracted for, whether tangible or intangible. The law’s task is simply to provide the benefits contracted for, whatever their nature, if they were in the reasonable contemplation of the parties.
[45] It does not follow, however, that all mental distress associated with a breach of contract is compensable. In normal commercial contracts, the likelihood of a breach of contract causing mental distress is not ordinarily within the reasonable contemplation of the parties. It is not unusual that a breach of contract will leave the wronged party feeling frustrated or angry. The law does not award damages for such incidental frustration. The matter is otherwise, however, when the parties enter into a contract, an object of which is to secure a particular psychological benefit. In such a case, damages arising from such mental distress should in principle be recoverable where they are established on the evidence and shown to have been within the reasonable contemplation of the parties at the time the contract was made. The basic principles of contract damages do not cease to operate merely because what is promised is an intangible, like mental security.
[Emphasis added.]
[76] Importantly, the court added that plaintiffs are still required to establish an entitlement:
[47] This does not obviate the requirement that a plaintiff prove his or her loss. The court must be satisfied: (1) that an object of the contract was to secure a psychological benefit that brings mental distress upon breach within the reasonable contemplation of the parties; and (2) that the degree of mental suffering caused by the breach was of a degree sufficient to warrant compensation. These questions require sensitivity to the particular facts of each case.
[77] Accordingly, in contract cases, damages for mental distress have generally been confined to cases involving disability or other insurance contracts, some employment contracts and contracts for such things as vacation travel, wedding photography and the like.
[78] Cases involving deficient houses or repair work have not been consistent in awards of mental distress damages. In Chamberlain v. Pro Star Mechanical Technologies Ltd., 2014 BCSC 1931, the plaintiffs were awarded $15,000 for the mental distress and loss of enjoyment of life associated with a family’s three-year struggle with a malfunctioning geothermal exchange system used to heat and cool their home. Gaul J. concluded that the contract in that case met the Fidler test because this was the plaintiffs’ “dream home” and the plaintiffs “wished to set a good example for their children and consequently they were diligent in their efforts to ensure their home was built using environmentally sensitive methods” (at para 68).
[79] Mental stress damages were also upheld in Hickey's Building Supplies Limited v. Sheppard, 2014 NLCA 43 [HBLS], although the court was divided on the point. In that case the contract in question was for the construction of a house that the plaintiffs intended to use as their retirement home. One of the plaintiffs suffered from a disabling condition that required her to use a wheelchair, or prosthetic legs together with canes, for mobility. The plaintiffs made it clear to the builder that the home needed to accommodate Mrs. Sheppard’s special circumstances, in particular her mobility challenges. Furthermore:
[82] The building contract was signed in September 2008 and the home was meant to be completed by February 29, 2009. Unfortunately construction proceeded slowly, despite the Sheppards expressing concern to Hickey’s on several occasions about the lack of progress. This concern was particularly acute for the Sheppards because they needed to move into the home shortly after Mr. Sheppard finished working in Labrador and finding suitable temporary accommodation presented significant challenges given Mrs. Sheppard’s needs.
[83] On March 19, 2010, the Sheppards moved into their home even though it was not yet finished and despite outstanding deficiencies. They did so because Hickey’s had removed insurance coverage on the home and the Sheppards were unable to get insurance coverage unless it was occupied.
[80] Problems ensued with the flooring and these presented challenges to Mrs. Sheppard’s already-limited mobility. In addition, the plaintiffs did not get the nine-foot ceilings they contracted for. The trial judge awarded the plaintiffs $15,000 for mental stress and inconvenience. On appeal, the Newfoundland and Labrador Court of Appeal was divided. The majority (Hoegg and Harrington, JJ.A.) upheld that award, stating:
[92] In summary, it was foreseeable to Hickey’s that the breaches of the contract with respect to flooring and delay were likely to result in mental distress of a compensable nature to both Mr. Sheppard and Mrs. Sheppard. The requirements set out in Fidler are therefore met.
[81] In contrast to those cases, in McVie v. Summit Steel Cladding Inc., 2010 BCSC 1025 [McVie], Ker J. declined to award general damages for mental distress. McVie involved the installation of a roof on a family home, a roof that subsequently leaked. After quoting from Fidler she said:
[217] Unlike contracts for disability insurance, I find that the contract at issue was not one where securing a psychological benefit was the subject matter of the contract, thereby entitling the plaintiffs to non-pecuniary damages arising from a breach of the contract: see Warrington v. Great-West Life Assurance Co., [1996] B.C.J. No. 1944, 24 B.C.L.R. (3d) 1 (C.A.) at paras. 19-24. The contract between the parties in the instant case is more akin to a commercial contract, it was a building contract, nothing more. Therefore, the plaintiffs’ must establish that the possibility of mental distress upon a breach of the contract was in the reasonable contemplation of both parties at the time the contract was formed. I find that the plaintiffs have not met this burden.
[82] In the present case there is nothing in the dealings between the plaintiffs and Mr. Pringle on which I can conclude the parties expected, as one of the objects of the contract, that there would be a particular psychological benefit to the plaintiffs or that the possibility of mental distress upon a contract breach was in the reasonable contemplation of both parties. Certainly there is nothing in the facts of this case as specific as there was in HBLS. Although I fully accept that the repair issues and inconvenience would have been stressful, and that the discovery of the water ingress one week before the plaintiffs’ wedding was particularly stressful, like Ker J. in McVie I find that the plaintiffs have not established that that the possibility of mental distress upon a breach of the contract was in the reasonable contemplation of the parties at the time the contract was formed.
[83] I am of course mindful that I have determined liability against Mr. Pringle in both contract and tort, and so I have considered whether damages for mental distress might be awarded in tort. In Saadati v. Moorhead, 2017 SCC 28 [Saadati], a negligence case, the court said:
[37] None of this is to suggest that mental injury is always as readily demonstrable as physical injury. While allegations of injury to muscular tissue may sometimes pose challenges to triers of fact, many physical conditions such as lacerations and broken bones are objectively verifiable. Mental injury, however, will often not be as readily apparent. Further, and as Mustapha makes clear, mental injury is not proven by the existence of mere psychological upset. While, therefore, tort law protects persons from negligent interference with their mental health, there is no legally cognizable right to happiness. Claimants must, therefore, show much more — that the disturbance suffered by the claimant is “serious and prolonged and rise[s] above the ordinary annoyances, anxieties and fears” that come with living in civil society (Mustapha, at para. 9). To be clear, this does not denote distinct legal treatment of mental injury relative to physical injury; rather, it goes to the prior legal question of what constitutes “mental injury”. Ultimately, the claimant’s task in establishing a mental injury is to show the requisite degree of disturbance (although not, as the respondents say, to show its classification as a recognized psychiatric illness).
[Emphasis added.]
[84] I conclude that the plaintiffs have not met the criteria set out in Saadati. Accordingly, they have not established a basis for an award in tort for mental distress.
[85] My research on the point reveals that general damages are available for the loss of reasonable use and enjoyment of the land where the cause of action is in nuisance, a category of loss that may include mental distress (see Medomist Farms Ltd. v. Surrey (District) (1991), 62 B.C.L.R. 2nd 168 (C.A.) [Medomist]), but the court in Medomist appears to have been at pains to distinguish claims in nuisance from claims made in negligence. The causes of action in the present case are in contract and negligence and so this case does not fall within that principle.
[86] For all of those reasons I conclude that the plaintiffs have not established a basis for awarding general damages for mental distress.
[87] Judgment is granted in favour of the plaintiffs against Mr. Pringle in the amount of $48,592. The action against Suite B Contracting Ltd. is dismissed.
[88] Unless the parties wish to address the court on costs, the plaintiffs will have their costs against Mr. Pringle on the ordinary scale. The dismissal against Suite B Contracting Ltd. will be without costs.
“Blok J.”