



COURT OF APPEAL FOR ONTARIO

CITATION:
Halliwell v. Lazarus, 2012
    ONCA 348

DATE:  20120524

DOCKET: C53309

Simmons, Armstrong and Pepall JJ.A.

BETWEEN

Glenda Halliwell and Jenifer Halliwell

Plaintiffs

(Appellants/Respondents by Cross-Appeal)

and

Joel Lazarus and Coldwell Banker Terrequity
    Realty

Defendants

(Respondents/Appellants by Cross-Appeal)

AND BETWEEN

Glenda Halliwell and Jenifer Halliwell

Plaintiffs (Appellants)

and

Westbrook
    Building Inspection Ltd.

Defendant (Respondent)


AND BETWEEN

Glenda Halliwell and
    Jenifer Halliwell

Plaintiffs

and

Westbrook Building
    Inspection Ltd.

aka Westbrook Building
    Inspections Service Ltd.

Defendants

and

Joel Lazarus and Coldwell Banker Terrequity
    Realty and Dung Ngoc Tran

Third
    Parties

AND BETWEEN

Glenda Halliwell and Jenifer Halliwell

Plaintiffs

and

Dung Ngoc Tran

Defendant

David A. Morin and Joyce M. Chun, for the appellants

Frank Csathy, for the respondent Westbrook

Sandy Robinson and Eric Sherkin, for the respondent
    Lazarus

Heard and released orally: May 4, 2012

On appeal from the judgment of Justice Margaret P.
    Eberhard of the Superior Court of Justice, dated January 18, 2011, with reasons
    reported at 2011 ONSC 390, 2 R.P.R (5
th
) 284.

ENDORSEMENT

[1]

The issues on this appeal and cross-appeal arise out of the purchase of a
    home and a home inspection conducted in preparation for the purchase.

[2]

The appellant purchaser made it clear to her real estate agent and to the
    home inspector, whom her agent recommended, that she was allergic to mould and
    wanted a dry house. The agent ensured that a condition was inserted in the offer
    to purchase allowing the appellant to abort the transaction if she was not
    satisfied with the report from the home inspector.

[3]

The inspection was conducted on March 12, 2006. The purchase closed on
    May 1, 2006 and, by July 2006, the appellant was experiencing an allergic
    reaction to mould. The parties agreed on damages of $90,000 prior to trial.

[4]

After a trial, the trial judge apportioned liability as follows: (i) the
    inspector at 50 percent; (ii) the real estate agent at 25 percent; and (iii) the
    appellant at 25 percent contributory negligence.

[5]

The appellant appeals the finding of contributory negligence and submits
    that the agent should be found 50 percent responsible. Further, the appellant
    claims her costs award should not have been reduced. The agent cross-appeals,
    arguing that he is not liable.

[6]

The trial judge found the appellant 25 percent contributorily negligent
    because the appellant failed to read the inspection report carefully and in its
    entirety. The appellant submits the trial judge erred in doing so because the
    trial judge also found that the appellant did not have the knowledge or
    experience to appreciate the warning signs for moisture problems that were contained
    in the inspection report.

[7]

We accept this submission. At para. 83 of her reasons, the trial judge
    effectively concluded that the appellant did not have the knowledge or
    experience to be able to discern the existence of a moisture problem by reading
    the inspection report. This conclusion is fully supported by the evidence at
    trial. However, the decision to hold the appellant contributorily negligent
    cannot be reconciled with this finding.

[8]

The inspector argues that the trial judges finding of contributory
    negligence was premised on the appellants failure to read the report and the
    appellants failure to recognize the need for major repairs disclosed by the
    report. The inspector submits that, in addition to potential moisture problems,
    the appellant was also concerned about obtaining a house that did not require
    repairs. Thus, he suggests, had she fully read the report, she would not have
    purchased the house.

[9]

We do not accept this submission. If the appellants desire to avoid any
    repairs was the basis for the trial judges conclusions, she neither identified
    it as such nor explained how she reached that conclusion. Moreover, had the
    trial judge reached her conclusion on this basis, in our view, on the record
    before her, it would have been a speculative conclusion.

[10]

Turning
    to the agents liability, we agree with the agents submission that the trial
    judge erred in finding the agent liable based on a failure to read the
    inspection report, review it with the appellant, and bring to the appellants
    attention the potential for moisture problems arising from the findings in the
    report.

[11]

The
    appellant did not plead the agents failure to read and review the report. More
    importantly, however, the appellant did not call expert evidence concerning the
    standard of care expected of an agent in these circumstances.

[12]

It
    was the inspectors responsibility to discover the potential moisture problem. In
    the absence of expert evidence, it was an error in law to find the real estate
    agent liable for failing to read the report, and failing to pick up indicators
    of moisture problems from the report, when the inspector, himself, failed to
    pick up on them.

[13]

In
    the result, the appeal is allowed and the finding of contributory negligence
    and the resulting reduction in the appellants costs award are set aside. Further,
    the cross-appeal is allowed and the finding of negligence against the agent is
    set aside. In the result, the inspector is 100 percent liable for the damages.

[14]

Costs
    of the appeal are to the appellant on a partial indemnity scale, fixed in the
    amount of $20,000, inclusive of applicable taxes and disbursements of $5,000,
    payable by Westbrook. Costs of the cross-appeal are to the cross-appellants in
    the amount of $10,000, inclusive of disbursements and applicable taxes, payable
    $5,000 by Westbrook
and $5,000 by the appellant.

Signed:        Janet Simmons J.A.

Robert P. Armstrong J.A.

S. E. Pepall J.A.


