COURT FILE NO: 03-CV-257386SR

DATE: 20050809

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

AUDREY LI and VICTORIA LI

Plaintiffs

- and -

BAKER STREET HOME INSPECTION SERVICES INC.

Defendant

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Richard J. Worsfold,

for the Plaintiffs

Avrum D. Slodovnick & James P. McReynolds,

for the Defendant

HEARD: February 10, 2005

DAY J.

Introduction

[1] The plaintiffs engaged the defendant to do a pre-purchase inspection of a house they were purchasing. A pop-up access hatch to the attic was not opened during the inspection as it was sealed by paint. A post-closing inspection of the attic by the purchasers disclosed serious damage to the roof joists requiring repair.

Issue

[2] Was the inspection conducted within the applicable standards?

Facts

[3] The plaintiffs were considering the purchase of real property at 38 Macdonell Avenue in Toronto. They contacted the defendant for a building inspection prior to going firm on an agreement of purchase and sale. An inspection was conducted. Victoria Li, a co-purchaser with her sister, Audrey Li, deposed as follows at paragraph 9 of her affidavit:

My sister and I had agreed that if the Building Inspection Report revealed that there were likely to be immediate repairs required, that we would not purchase the home, but, instead, would seek to purchase an alternate home where no such repairs were necessary. Alternatively, we would negotiate a reduction in the purchase price to reflect the cost of the repairs necessary.

[4] At paragraph 17, she deposed as follows:

I asked Sylvain (her sister’s fiancé) whether or not he and the home inspector had gone into the attic when they were doing their home inspection. I was advised by Sylvain and did verily believe that the home inspector did not suggest that this was necessary although the home inspector did tell Sylvain that access could easily be obtained by using an exacto knife to carefully open the pop-up hatch where it had been painted over.

[5] Within a few days after closing, Sylvain looked into the attic using the pop-up access hatch and a step-ladder. Victoria Li, herself, also looked up in the attic and observed that the roof joists were cracking and splintering. There are two invoices from Trudel & Sons Roofing Ltd. (“Trudel”). One is for $20,000 plus G.S.T. for the removal of existing shingles and the re-shingling of the roof and repair of roof joists. The second is also from Trudel dealing solely with the removal and disposal of the existing layers of flat roof and the repairs to damages of roof joists, that is excluding the re-shingling; that invoice is in the amount of $13,600 plus G.S.T. In his affidavit, Michael McGowan, project coordinator with Trudel, advised the replacement of the roof joists was at a value of approximately $4,000.

[6] Victoria Li deposed that Trudel removed eight damaged roof joists, three layers of existing tar and gravel roofing, one layer of plywood and one layer of modified roofing.

[7] At paragraph 24 of her affidavit, Victoria Li said she would have negotiated a $20,000 reduction in the purchase price or purchase a similar property at the same price which did not need repairs.

[8] The Building Inspection Report by Baker Street Home Inspection Services Inc. (the “Report”), reads towards the bottom of the first page:

I have read this report and I am aware of the limitations of the inspection process. I accept this 14-page report and supplements according to the conditions as stated herein. I am aware that the fee paid for this inspection is for professional time and is not a guarantee of present or future conditions and is not an insurance policy of any kind.

It was signed by Audrey Li.

[9] Under the SUMMARY (GENERAL COMMENTS) on the first page, the Report called for “Minor Repairs” to the Roofing.

[10] Page 2 of the Report refers to the house as being in “Fair Condition” which it describes as, “system or component is performing its intended purpose, but due to its age can fail at any time. (emphasis added)

[11] With respect to “INACCESSIBILITY” at page 2, it refers to “Basement” only. The attic is not indicated.

[12] The “METHOD OF ROOF INSPECTION” at page 3 shows it as “Fully accessed” and then “At ground level with binoculars (too steep/inaccessible)”.

[13] At page 3, under “ROOF COVERINGS CONDITION”, the “General condition of flat roof coverings” was described as “Fair”.

[14] At page 11, under the heading “ATTIC/ROOF SPACES”, and under the sub-heading, “ACCESSIBILITY”, the item “Attic/roof space has been converted into living space”, is marked. Also, under that heading is hand-printed the following: “RE-ACTIVATE SMALL ACCESS”. It is to be noted that possible consequences are not indicated. Beside the sub-headings, “VENTILATION” and “INSULATION”, is printed by hand, “NOT VISIBLE”. Beside “CONDITION OF RAFTERS/COLLAR TIES/TRUSSES/STRUCTURAL MEMBERS”, is a large handwritten question mark.

[15] On a separate page between pages 13 and 14 is the following: “YOUR MINIMUM BUDGET ALLOWANCE”; “over the first 0 – 2 years” is checked; then “$10,000 - $20,000” is checked. No mention is made of the roof or its member structures.

[16] At page 14 of the Report, the closing paragraphs are of note and they read in part as follows:

The staff of Baker Street Home Inspection Services Inc. will remain available to you over the phone, at no further expense, to address your concerns …

Should you experience any problem with the home, you must contact us immediately. We will address your concerns promptly and also help you avoid any unnecessary cost associated with the repairs. Upon request, we can revisit the property at no further expense to you. This mutual contractual obligation is an important part of the process. Please be advised that we can not provide any assistance nor accept any responsibility for damages once repairs have been effectuated or contracted.

[17] With respect to the first of the above two paragraphs, there were no steps taken to “RE-ACTIVATE SMALL ACCESS”, which the Report invited. The second of the above two paragraphs provides that once the revelations from opening the pop-up hatch came to be, there was an obligation to contact Baker Street Home Inspection Services. The plaintiffs did not. Rather, they unilaterally went ahead with the repairs while being on notice that Baker Street would not accept responsibility for repairs effectuated.

[18] In her affidavit evidence, Victoria Li advised that the purchase price was reduced by $40,000 following the inspection report. She advised that factors in the Report that reduced the price were: updating of electricals, repairs to basement, eaves tightening, laundry to the second floor, and updating of the livingroom, etc. She advised that she could not say that the $40,000 reduction was due entirely to the Report. She was not there for the inspection. The purchase price was $399,800 from a listing of $438,000.

[19] Sylvain Louis-Seize accompanied John Johnson of Baker Street Home Inspection Services Inc. as he toured the property to perform his inspection. At paragraph 3 of his affidavit he says:

In the hallway on the second floor (3^rd floor in his viva voce evidence) of the property, there was a pop-up hatch access to the attic. As we were standing in the hallway, John Johnson pointed to the attic pop-up hatch access and said, “That’s how you get to the attic”.

[20] At paragraph 4:

John Johnson did not suggest that we attempt to access the attic, however, he did say to me, “It’s very easy to get in. You should use an exacto knife to cut the dried paint so that you have a smooth edge.”

[21] At paragraph 5:

John Johnson did not discuss with me the pop-up hatch beyond that brief comment. It did not occur to me that I should insist that John Johnson view the attic area as I have no experience in purchasing or inspecting houses. I did not think to request that John Johnson request the vendors for permission to access the attic, as I was relying on Mr. Johnson to conduct a thorough inspection.

[22] John William Caverly is a founding member of the Ontario Association of Home Inspectors (“OAHI”), whose curriculum vitae displays outstanding qualifications, and was an expert in this for the plaintiffs. At paragraph 12 of his affidavit he deposed as follows:

I consider it to be of key importance that a building inspector, while inspecting any property should attempt to view the attic space as the attic space is one of the critical areas of a building where things may not be as they should be. This typically involves entering the roof space through a hatch/door system that is installed for the purpose of access.

At paragraph 14:

It is my professional opinion that where a pop-up or other hatch has been taped shut or painted, it is always prudent for a building inspector to request through the real estate agent that the vendors open the pop-up attic if it is not immediately available to be opened. Since I began doing inspections in 1975 I have never been refused such a request.

[23] Mr. Caverly provided the OAHI standards of practice provide in part as follows:

2.2 Inspectors shall:

A. inspect:

1. readily accessible systems and components of homes …

B. report:

4. on any systems and components designated for inspection in these Standards of Practice which were present at the time of the Home Inspection but were not inspected and a reason they were not inspected.

13.2 General Exclusions

B. Inspectors are NOT required to determine:

1. the condition of systems of components which are not readily accessible.

E. Inspectors are NOT required to enter:

3. the under-floor crawl spaces or attics which are not readily accessible.

The Glossary of Terms, provides the following definitions:

READILY ACCESSIBLE:

Available for visual inspection without requiring moving of personal property, dismantling, destructive measures, or any action which will likely involve risk to persons or property.

READILY OPENABLE ACCESS PANEL:

A panel provided for homeowner inspection and maintenance that it within normal reach, can be removed by one person, and is not sealed in place (emphasis added).

[24] In his letter to Richard J. Worsfold of September 17, 2004, Mr. Caverly stated at page 2, Item #2, “Where attic/access door system have been sealed with paint, tape or other means, the inspector is not required to open the area as it is not readily accessible as stated under article “13.2 [b.][1.].”

[25] The inspector, John Johnson, deposed in his affidavit at paragraph 11 as follows:

Attic Access Blocked

11. Once inside 38 MacDonnell, I found an access hatch to the small, third floor attic. I discovered that the attic hatch had been sealed with a three quarter inch bead of caulking and then had been painted over. It is not my normal practice, nor proper practice for any home inspector, to cause any damage to the vendor’s property while performing a home inspection. To force entry into a sealed space can expose the inspector and anyone with him to health and safety hazards and is likely to damage the vendor’s property. I told the Purchasers, who were standing under the attic hatch with me, that I would not open the hatch and that they had three options if they wanted to see into the attic:

a. ask the vendor directly to open the hatch (the vendor was downstairs);

b. through the agent, create access immediately with permission of the vendor; or

c. create access upon possession of the house.

12. I told the Purchasers that I would not be the one to unseal the attic. They acknowledged that I would prepare my report without looking into the attic and understood why. They did not ask the vendor, who was downstairs in 38 MacDonnell, to open the attic.

In his viva voce evidence Mr. Johnson said what he put in his affidavit is what he would say, but that he did not remember his words verbatim. But he is certain as to the accuracy of this affidavit in substance as such would have been done that way based upon the entirety of his experience.

[26] Jeff Clark, president of Baker Street Home Inspection Services Inc., in paragraph 3 of his affidavit that said: John (Johnson) has been instructed by me never to break the seal of an attic access that has been caulked shut.” He was not cross-examined.

[27] Terry Carson, President of Guardian Home Inspectors Inc., gave an expert opinion by way of letter to Solmon Rothbart Goodman LLP dated November 21, 2004. He said at paragraph 3:

3. It is not reasonable to expect a home inspector to break open an attic access which has been sealed shut. A home inspector risks unknown exposure and damage from insulation which may be over the hatch, as well as toxic animal and vermin droppings. For this reason, the Standards of Practice explicitly state that such accesses need not be opened. A home inspector uses his/her best judgment and would likely recommend accessing a sealed space if there is evidence of weakness or deterioration.

[28] David Hellyer, a professional engineer and registered home inspector, President of Hellyer Engineering Limited, gave an opinion memorandum to Jeff Clark of Baker Street Home Inspection Services Inc., dated January 2, 2004, as amended November 22, 2004. Mr. Clark asked in Question #2, as follows:

Question #2:

Would I open an attic access that was sealed shut by paint and caulking?

He answered:

Reply to Question #2:

I would not attempt to open a sealed attic hatch for a number of reasons including but not limited to the following:

• Our inspection standards are intended to respect the property rights of the current owner and leave the house in exactly the same condition as it was found. Breaking a sealed hatch would be contrary to the OAHI standards which are designed to ensure that the inspection is non-destructive.

• The hatch may be sealed for a reason. For example, loose fill insulation may have been blown in over top from a roof vent. Opening the hatch under these circumstances would again be destructive.

However, if I can not access the attic I generally offer to return once the owner or his/her agent has provided proper access. Within the short time frame of a typical pre-purchase inspection, the offer is infrequently accepted, and my customers either accept the risk or walk from the deal.

[29] In his viva voce evidence at cross-examination Mr. Hellyer said he would not take an exacto-knife to the house; if they wanted to open it up they would instruct him to do so. He said that as soon as he asked to open something up that is sealed, he is asked to act as a tradesman and he is not licensed to do that. If he had to cut with tools, then he would not do so. However, if a light tap would open it, then that would be suitable. He said that he must leave the house as he found it. When asked if he would open a sealed hatch if asked to do so, he replied that he would not.

The Law

[30] In Seltzer-Soberano v. Kogut, [1999] O.J. No. 1871, a decision of B. Wright J., states at paragraph 6:

The usual house inspection is general in nature and is performed by a visual inspection. A house inspector cannot be held responsible for a problem which is not readily apparent by a reasonable visual inspection.

Sited with approval by Gillese J. in Biggs v. Harris (c.o.b. Harris Homes Inspections), [1999] O.J. No. 4831, she went on to say at paragraph 33 of her decision:

33. The standard of care owed is that of a reasonable visual inspection done in accordance with ASHI standards but, I would add, what is reasonable is to be determined, as well, by the cost of the inspection and the known level of expertise of the inspector.

Justice Gillese in paragraph 49 referred to the Supreme Court of Canada decision in Queen v. Cognos Inc. 1993 CanLII 146 (S.C.C.), (1993), 99 D.L.R. (4^th) 626, where the Supreme Court set out five elements to be proven in the tort of negligent misrepresentation. These elements are as follows:

1. There must be a duty of care based on a special relationship between the parties.

2. The representation made by one party to the other must be false, inaccurate or misleading. [In this respect, the representation in the report refers to the condition of the flat roof covering as fair].

3. The representation must be made negligently.

4. The person to whom the representation is made must have reasonably relied on the representation.

5. The reliance must have been detrimental to that person with the consequence of his suffering damages. [The damages here as established by the roof repair bill would be $13,600, being the portion of the repair bill allocable to stripping old roofing and rebuilding roof joists.]

[31] Brownjohn v. Ramsay is a decision of the British Columbia Provincial Court (Small Claims Division) reported at [2003] B.C.J. No 43. While it is a provincial court of another province it presents some interesting perspectives:

At paragraph 17:

The broad purpose of securing a residential home inspection is to provide to a lay purchaser expert advice about any substantial deficiencies in the property which can be discerned upon a visual inspection, and which are of a type or magnitude that reasonably can be expected to have some bearing upon the purchaser’s decision-making regarding whether they wish to purchase the property at all, or whether there is some basis upon which they should negotiate a variation in price. Broadly speaking, it is a risk-assessment tool.

At paragraph 18:

In Seltzer-Soberano v. Kogut, [1990] O.J. No. 1871 (Ont. Superior Court of Justice), Justice Wright said (at paragraph 6):

At paragraph 20:

While I suggest there are obvious limitations to what one can expect from home inspections of the type undertaken in this case, one also needs to be mindful of the responsibility which is taken on by the home inspector. Persons who hold themselves out to the community as professionals prepared to provide advice for a fee – accountants, lawyers, engineers, architects, physicians, and other professionals immediately come to mind – must know that in marketing and providing their services, they invite reliance upon their advice and, in doing so, they create a risk that their client will suffer harm if the professional falls short of the standard of care which reasonably may be expected of that category of professional in the particular circumstances, and their advice is wrong.

I refer to the decision of the B.C. Court of Appeal in Zippy Print Enterprises Ltd. v. Pawliuk, [1994] B.C.J. No. 2778, where Justice Lambert said for the Court at paragraph 45:

I would apply the principle enunciated by this court in Betker v. Williams 1991 CanLII 1160 (BC C.A.), (1992), 63 B.C.L.R. (2d) 14 to the circumstances of this case. A general exclusion clause will not override a specific representation on a point of substance which was intended to induce the making of the agreement unless the intended effect of the exclusion clause can be shown to have been brought home to the party to whom the representation was made by being specifically drawn to the attention of that party, or by being specifically acknowledged by that party, or in some other way.

[32] Lastly, I would refer to Petrasthuk v. Raina, [2002] O.J. No. 492, a decision of P. Thomson J., at paragraphs 24 and 26:

24. There are also 8 “cautions” on the front page, which was signed by Mr. Ross. The limitation of liability on page 14 was never discussed or pointed out in any fashion by Mr. Tackaberry. It does not limit his liability.

26. Fair condition is defined in the Report as being “no repair is necessary within the first year; however the system or component is marginal. The system or component is performing its intended purpose but due to its age can fail at any time”. The Report does not contain a definition of poor condition. In fact, the roof was not performing its intended purpose (“protection from the elements”) and was sure to fail again within a short period of time. It was not in fair condition.

Conclusion

[33] I would agree with the conclusions of Mr. Caverly, that Mr. Johnson should have suggested to Mr. Louis-Seize, representing the purchasers, that permission should be sought by the owners to open the sealed attic. However, he did write under the heading Attic/Roof Spaces, “RE-ACTIVE SMALL ACCESS”, and under that which he printed “NOT VISIBLE” beside “VENTILATION” and “INSULATION”, and a large question mark beside the heading “CONDITION OF RAFTERS/COLLAR TIES/TRUSSES/STRUCTURAL MEMBERS”. From this I infer that Mr. Johnson alerted the plaintiffs. In this respect, I place emphasis to the extended service policy at page 14 of the Report for the client to contact Baker Street Home Inspection Services Inc. immediately if there is any problem with the home, leaving open re-visiting the property at no further expense upon request, and indicating that they would not accept responsibility for damages once repairs have been effectuated or contracted. This may seem to run somewhat contrary to the reasons in Zippy Print Enterprises, supra; however, Baker Street Home Inspection Services Inc. was not given an opportunity to address the repairs, nor, in the full context of page 11 of the Report, were they requested, and thereby given the opportunity, to re-visit the site.

[34] Most importantly, I refer to the OAHI standards of practice that a readily openable access panel is one that is not sealed in place, and that inspectors are not required to determine the condition of systems or components that are not readily accessible. It is acknowledged that the subject pop-up access hatch was sealed; it therefore was not accessible. This is supported by the opinions of Mr. Terry Carson at paragraph 3 and Mr. David Hellyer in his reply to Question #2.

[35] As stated above, the Report itself cautions at page 11 to “RE-ACTIVATE SMALL ACCESS”. It places a large question mark beside “CONDITION OF RAFTERS/COLLAR TIES/TRUSSES/STRUCTURAL MEMBERS”. The subject issue was not left unaddressed by the building inspector, Mr. Johnson. Accordingly, I find that the inspection was considered within the applicable OAHI standards.

[36] For the above reasons, the action is dismissed.

[37] If the parties are unable to come to terms as to costs, I will be available to make a determination by appointment.

___________________________

DAY J.

Date: August 9, 2005

COURT FILE NO.: 03-CV-257386SR

DATE: 20050809

ONTARIO

SUPERIOR COURT OF JUSTICE

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