



COURT OF APPEAL FOR ONTARIO

CITATION:
Iatomasi v. Conciatori, 2012 ONCA 913

DATE:  20121224

DOCKET: C54073

Doherty, Goudge and Hoy JJ.A.

BETWEEN

Giuseppe Iatomasi and Gabriella Iatomasi

Plaintiffs (Respondents)

and

John Conciatori and Angela Conciatori

Defendants (Appellants)

Marc Munro, for the appellants

Robert Whitmore, for the respondents

Heard:  December 14, 2012

On appeal from the judgment of Justice Dale Parayeski of
    the Superior Court of Justice, dated June 6, 2011, with reasons reported at 2011
    ONSC 3819.

ENDORSEMENT

[1]

Mr. and Mrs. Iatomasi purchased a home from Mr. and Mrs. Conciatori.
    Within weeks of the closing, the basement leaked.  The Iatomasis undertook what
    they considered to be the necessary repairs and sued the Conciatoris for the costs
    of those repairs.  They alleged fraudulent and negligent misrepresentation as
    well as breach of contract.

[2]

The Conciatoris took the position that there were no misrepresentations of
    any kind.  They also relied on the entire agreement provision in the
    agreement of purchase and sale.  In essence, the Conciatoris maintained they
    had made no misrepresentations and that the
caveat emptor
doctrine applied
.

[3]

The trial judge found that Mr. Conciatori had made certain false
    representations to Mr. Iatomasi and that the latter had relied on those
    representations (at paras. 21-23).   He further found that the
    misrepresentations were negligent, or fraudulent, or both (at para. 29).

[4]

On the issue of damages, the trial judge accepted that the Iatomasis
    were entitled to recover the amounts paid to investigate and then remedy the
    water penetration and structural problems they encountered (at para. 25).  The
    trial judge went on to find that on the evidence the Iatomasis had overpaid for
    some of the work done.  He reduced the damage claim accordingly.

[5]

Counsel for the Conciatoris (appellants) raises several grounds of
    appeal.  We find it necessary to deal only with the arguments that address the
    findings of fraudulent misrepresentation and the damage assessment.

liability

[6]

The trial judge found that Mr. Conciatori made three misrepresentations
    to Mr. Iatomasi.  Those three can be boiled down to two for the purposes of our
    analysis.  First, the trial judge found that Mr. Conciatori had expressly
    represented that there had never been any problems concerning water leaking
    into the basement.  In fact, Mr. Conciatori knew there was a history of that
    problem.  Second, on the trial judges findings, Mr. Conciatori impliedly
    represented that the home (which he had built) had been constructed to the
    specifications shown in the plans he gave to Mr. Iatomasi during their negotiations
    and before offers were exchanged.  The trial judge found that Mr. Conciatori knew
    that the basement walls were in reality not reinforced in the manner indicated
    in the plans.

[7]

The trial judges conclusions that these misrepresentations were made
    and that they were relied on by the Iatomasis in entering into the contract of
    purchase and sale are factual findings.  This court must defer to those findings
    absent clear and palpable error.

[8]

On the first misrepresentation, Mr. Iatomasi gave evidence that in
    response to a direct question, Mr. Conciatori assured him that there had been
    no leakage problems in the basement.  The trial judge was entitled to accept
    this evidence.  In doing so, he observed, correctly we think, that there was
    some evidence confirming Mr. Iatomasis testimony.  There is no basis upon
    which we could interfere with the finding of a fraudulent misrepresentation
    based on Mr. Conciatoris representation concerning the absence of any history
    of leakage-related problems in the basement.

[9]

The second basis upon which the trial judge found fraudulent
    misrepresentation is entitled to the same deference as the first.  However,
    this finding was not based on any assessment of the evidence, but rather on the
    inference drawn from Mr. Conciatoris silence when he gave Mr. Iatomasi the
    plans.  On the evidence, there was nothing said about the plans when Mr.
    Conciatori gave them to Mr. Iatomasi.

[10]

The
    trial judge ultimately concluded, at para. 22, that:

Mr. Conciatoris silence on the point of his deviation from the
    plans would suggest to any reasonable listener that the plans had indeed been
    followed.

[11]

Considering
    that the plans were provided to Mr. Iatomasi in the context of an arms-length
    negotiation between a putative vendor and purchaser, we think the trial judges
    finding of an implied representation as to the accuracy of those plans was
    unreasonable.  Indeed, the trial judge seemed to treat this misrepresentation as
    different from the explicit misrepresentation concerning the history of any
    leaks in the basement.  The trial judge noted immediately after making the
    findings: I find all three representations were false, albeit to different
    degrees (at para. 23).  When liability is based on fraudulent
    misrepresentation, there can be no different degrees of falsity.

[12]

Even
    though we would sustain only the finding of a misrepresentation with respect to
    the history of any leakage-related problems in the basement, that finding
    suffices to uphold the trial judges determination on liability based on
    fraudulent misrepresentations.

damages

[13]

On
    the issue of damages, counsel for the appellants submits that the trial judge
    improperly used a contract measure of damages rather than a tort-based
    measure.  The trial judge did not identify the measure of damages he used.  His
    reasons are open to the interpretation put forward by counsel for the
    appellants.  They are, however, also consistent with a loss of value approach
    appropriate to tort-based liability.

[14]

The
    trial judges approach to damages is similar to that taken in
Gumbmann v.
    Cornwall
(1986), 4 A.C.W.S. (3d) 38
    (Ont. H. Ct. J.), affd [1998] O.J. No. 2239 (C.A.)
.  We think it
    was open to the trial judge to conclude that the difference between the price
    paid for the property and the actual value of the property at the time of the sale
    was equal to the amount needed to remedy the problems connected with the fraudulent
    misrepresentation concerning the ongoing leakage in the basement.  In other
    words, the difference between the actual value of a house with a leaking
    basement and the price paid was equal to the costs of the repairs needed to fix
    the existing leakage-related problems.

[15]

Even
    accepting that the trial judge used a loss of value measure of damages, those
    damages must be reassessed in light of our finding that the fraudulent
    misrepresentation was limited to misrepresentation concerning the history of
    any leakage-related problems.  In his assessment, the trial judge did not
    distinguish between repair costs associated with correcting the existing leakage-related
    problems and the costs associated with the correction of structural problems in
    the basement not related to the past history of leakage, but necessary to
    prevent future potential leaks.  This latter category was not related to the
    only fraudulent misrepresentation established on the evidence.  That misrepresentation
    was directed at the history of leakage-related problems in the basement and not
    the overall integrity of the structure of the basement.

[16]

Using
    the figures accepted by the trial judge, we would reduce the damages by
    removing the amounts paid to install angle iron and grout and to do radar
    screening of the basement walls (at paras. 25, 28).  These costs were not
    related to repairs needed to correct existing leakage-related problems. 
    Bearing in mind the deductions in these amounts made by the trial judge, our
    removal of these amounts from the award reduces the damages by $22,157.58, leaving
    an award of $48,040.62.

[17]

We
    allow the appeal to the extent of varying the damages awarded to accord with
    these reasons.  The appellants were partially successful on the appeal.  Counsel
    agreed that if the appellants were entirely successful, they should have costs
    of the appeal in the amount of $15,500.  In all the circumstances, costs in the
    amount of $10,000, inclusive of disbursements and relevant taxes, are awarded
    to the appellants.

[18]

As
    we have varied the trial judgment, the costs of the trial must be reassessed. 
    Hopefully, counsel can agree on those costs without the expense associated with
    further appearances before the trial judge.  We would, however, order the
    matter of costs of the trial remitted to the trial judge.

Doherty J.A.

S.T. Goudge J.A.

Alexandra Hoy J.A.


