



COURT OF APPEAL FOR ONTARIO

CITATION:
Biskey v. Chatham-Kent
    (Municipality), 2012 ONCA 802

DATE: 20121121

DOCKET: C53321

Sharpe, Rouleau and Hoy JJ.A.

BETWEEN

Brian Paul Biskey and Rita Marie Biskey

Plaintiffs (Respondents)

and

The Corporation of the Municipality of
    Chatham-Kent, Benedykt Kaminski, Grayna Kaminski, Peifer Realty Inc., carrying on
    business as Royal LePage Peifer Realty and Ghassan Najjar

Defendants (Appellants)

Colin Stevenson and Daniel McConville, for the appellant
    the Corporation of the Municipality of Chatham-Kent

Matthew Todd, for the respondents

Heard: October 30, 2012

On appeal from the judgment of Justice Steven Rogin of
    the Superior Court of Justice, dated January 27, 2011, with reasons reported at
    2011 ONSC 413.

B
y the
C
ourt
:

FACTS

[1]

The Biskeys, plaintiffs in the action
and
    respondents on
the appeal, asserted a claim for damages arising from
    their purchase of a property formerly owned by the appellant municipality,
    Chatham-Kent. The property had been previously used by Chatham-Kent and local
    residents as a dump. After declaring the property surplus and conducting an
    environmental site assessment in 2000 (the Jagger Hims Report), Chatham-Kent
    sold the property, zoned for agricultural use, to Mr. and Mrs. Kaminski for $35,000
    in early 2002. Ten months later, the Kaminskis re-sold the property to the
    respondents for $80,000. The Biskeys purchased the property intending to build
    their dream home.

[2]

Chatham-Kent disclosed the Jagger Hims Report to the Kaminskis but the
    Kaminskis did not disclose that report to the Biskeys and Chatham-Kent took no
    steps to bring the report to the attention of subsequent purchasers.

[3]

When the Biskeys applied for a building permit in November 2003, their
    contractor discovered problematic soil conditions related to the prior use of
    the property as a dump. Before any construction was commenced and before Chatham-Kent
    issued a building permit in November 2004, the Biskeys were given the Jagger
    Hims Report. Through a freedom of information request, they obtained the Golder
    Report commissioned by Chatham-Kent in relation to the Biskeys application for
    a building permit. The Biskeys also commissioned and obtained their own engineering
    report, the Atkinson Davies Report, to support their application for a building
    permit. As we will explain below, these reports contained detailed information
    regarding the former use of the property as a dump and its suitability as a
    building site.

[4]

In June 2004, before Chatham-Kent issued a building permit and before
    the Biskeys commenced construction, the Biskeys commenced this action. The
    Biskeys asserted a claim for $350,000 in damages, against Chatham-Kent for
    negligence, nuisance, and negligent misrepresentation, as well as $100,000 for
    aggravated, exemplary and punitive damages. The statement of claim was later
    amended, increasing the damages claim to $2 million and adding two more causes
    of action including breach of contract and breach of the
Environmental
    Protection Act
, R.S.O. 1990, c. E-19. The claim for damages was based on the
    cost of assessing the environmental condition of the property, the cost of
    clean-up, the increased costs the Biskeys would incur related to the
    construction of their home and the cost of diminution in the value of the
    property reflected by the stigma attributable to the prior use as a dump.

[5]

In September 2004, after the statement of claim was issued, the
    Kaminskis offered to re-purchase the property from the Biskeys for $80,000,
    equal to what the Biskeys had paid. The Biskeys refused that offer and decided instead
    to keep the property and proceed with construction.

[6]

The building permit issued by Chatham-Kent in November 2004 required the
    Biskeys to comply with the reports of their own engineers, Atkinson Davies.

[7]

In October 2007, after the house had been constructed, Biskeys settled
    their claim against the real estate agent and agency that had acted on the
    purchase from the Kaminskis for $100,000.

TRIAL JUDGMENT

[8]

The trial judge rejected the Biskeys evidence that, prior to the
    commencement of construction, in the course of discussion about the building
    permit, a Chatham-Kent official had undertaken on behalf of Chatham-Kent to
    cover any additional construction costs incurred by the Biskeys on account of
    the state of the site.

[9]

However, the trial judge held that Chatham-Kent was liable to the
    appellants in negligence and awarded damages in the amount of $386,142.82, plus
    prejudgment interest and costs. The damages award was based on the trial judges
    assessment of $188,459.82 for the additional cost of construction faced by the
    Biskeys on account of the condition of the property, $64,249.00 in additional
    costs the Biskeys would face to deal with environmentally related costs,
    $8,434.00 in miscellaneous costs related to the additional delay caused by the
    condition of the property and $225,000 for diminishment in the value of the
    property attributable to the stigma due to its prior use as a dump, less the
    $100,000 the Biskeys had already recovered in their settlement with the real
    estate agent.

ISSUES

[10]

Chatham-Kent
    raises three grounds of appeal. It argues that:

1.

the trial judge erred in finding that Chatham-Kent owed the Biskeys a
    duty of care;

2.

the trial judge erred in finding that Chatham-Kent breached that duty of
    care; and

3.

the trial judge erred in finding that the losses claimed by the Biskeys
    were attributable to or caused by the negligence of the appellant.

ANALYSIS

[11]

In
    the light of our conclusion with regard to the damages issue, we find it
    unnecessary to deal with the first two issues. However, for the sake of
    clarity, we make the following observations with respect to the issue of duty
    of care. The precise basis upon which the trial judge found a duty of care is
    unclear to us. It appears to rest, in part, on the proposition that in its
    capacity as owner and vendor, Chatham-Kent owed a duty to the Biskeys as
    subsequent purchasers and in part upon the Chatham-Kents responsibilities in
    relation to building permits. As the appeal can readily be disposed of on the
    third ground, we make no comment on the trial judges conclusion as to a duty
    of care and nothing in these reasons are intended to affirm the finding that
    Chatham-Kent owed the Biskeys a duty of care in negligence.

[12]

We
    now turn to the damages issue.

[13]

It
    is clear from the trial record that before the Biskeys commenced construction,
    they knew that the property they had purchased had formerly been used as a dump
    and that, as a consequence, they were bound to encounter additional
    construction costs, that other environmental issues, including methane gas,
    could involve costs in the future, and that the value of the property with a
    constructed dwelling would be diminished from what it would otherwise have been
    because of the stigma attached to the prior use of the property as a dump.

[14]

Information
    regarding the property was disclosed to the Biskeys in the Jagger Hims, Golder,
    and Atkinson Davies Reports as well as from the preliminary work done by their
    contractor. Any doubt as to what the Biskeys knew is removed by the Biskeys
    affirmative response to Chatham-Kents request to admit prior to trial and by
    the assertions they made in the statement of claim long before the commencement
    of construction.

[15]

The
    Biskeys admitted before trial that prior to the issuance of the building permit
    and prior to the commencement of construction in November 2004, they knew:

·

The Jagger Hims Report showed that the site had been frequently
    used as a waste disposal site and: that there was potential for environmental
    concerns relating to historical waste disposal, uncontrolled dumping, the
    presence of fill materials of unknown composition and origin; that the waste
    fill materials ranged to a depth of at least 1.2 m below grade and that the
    fill consisted of construction debris including concrete fragments; and that there
    was some indication that waste fill material might also occur at greater
    depths;

·

The Golder Report indicated that boreholes drilled in the fill
    area of the site showed organic material, sand and gravel, pieces of concrete,
    trace gravel, pieces of metal wire, clay tile cloth and concrete. That report
    also revealed combustible gas readings indicating the presence of combustible
    gas in the subsoil. The report concluded that the considerable quantities of
    fill and organic material made these materials unacceptable as a suitable
    founding medium, for supportive conventional building foundations;

·

The Atkinson Davies Report revealed fill and organic soils to a
    depth of 3.3 m, that there were fragments of wood, concrete, asphalt and other
    construction debris, and that due to the potential for large ongoing settlement
    all fill and organic soils had to be removed from the planned building location
    to a depth of 3.3 m and that a specially engineered pad would be required. That
    report also advised the respondents that there was a potential for the
    generation of methane gas from the film and organic soils and that soil gas
    abatement measures should be provided in accordance with the Ontario Building
    Code.

[16]

Further
    indication of the Biskeys awareness of the significant added costs they were
    bound to incur is provided by the action they launched several months prior to
    commencing construction, claiming a total of $450,000 in damages. The statement
    of claim reveals that the Biskeys were fully aware that if they were to proceed
    with the construction of a home on this site, in addition to added construction
    costs, there would be a diminution in the value the property would otherwise
    have because of the stigma affect attributable to the prior use of the
    property as a dump.

[17]

As
    we have noted, several months before the Biskeys embarked upon the construction
    of their home, the Kaminskis offered to take the property back and refund the
    entire purchase price. Mr. Biskey testified that at that point, he estimated
    his damages to be approximately $25,000.

[18]

We
    agree with Chatham-Kents submission that the trial judge erred in law by
    awarding damages for additional costs related to the condition of the site,
    added construction costs and diminution in value attributable to the stigma
    effect.

[19]

We
    fail to see how, prior to construction, the Biskeys could claim more from
    Chatham-Kent than the diminution in value of the property attributable to its
    former use as a dump, in other words the difference between the price the
    Biskeys paid for the property and the value the property actually had given
    its history and condition. The Biskeys had the opportunity to satisfy substantially
    that claim when, before construction commenced, the Kaminskis offered to take
    the property back for the price the Biskeys had paid. The $100,000 subsequently
    recovered in the settlement with the other defendants more than covered the
    Biskeys remaining claim for the $25,000 in damages sustained to that point.

[20]

When
    the Biskeys decided to reject the Kaminski offer and to proceed with construction
    in the knowledge that they were building on a dump site and that they would
    incur added costs, any causal link with the alleged negligence of Chatham-Kent
    was broken. Simply put, from that point forward, the Biskeys were on their own.
    They had no legally enforceable right to require Chatham-Kent to reimburse them
    for the risk they decided to run in constructing a home on the site they knew
    to be contaminated on account of its former use as a dump.

[21]

We
    fail to see how the negligence of Chatham-Kent, as found by the trial judge,
    could possibly give rise to the equivalent of a promise or contract-like duty
    to provide the Biskeys with the full cost and value of their dream home on this
    site as if it had never been used as a dump.

[22]

The
    Biskeys point to passages in the trial judgment where the trial judge appears
    to find that before construction commenced, the Biskeys reasonably believed
    that the added costs would be in the range of $30,000 to 40,000. In our view,
    that finding is simply impossible to reconcile with the information disclosed
    in various reports and with the claim the Biskeys themselves were advancing for
    $450,000 against Chatham-Kent before construction commenced.

DISPOSTION

[23]

Accordingly, we allow
    Chatham-Kents appeal, set aside the trial judgment and dismiss the action.
    Chatham-Kent is entitled to its costs of the appeal fixed at the agreed amount
    of $15,000 inclusive of disbursements and taxes. Chatham-Kent is also entitled
    to its costs of the trial. As agreed by the parties, we use the trial judges
    costs award in favour of the Biskeys as a guide and with a modest adjustment to
    reflect the fact that Chatham-Kent was defending the action, we fix the those
    costs at $150,000 inclusive of disbursements and taxes.

Robert J. Sharpe J.A.

Paul
    Rouleau J.A.

Alexandra
    Hoy J.A.

Released: November 21, 2012


