IN THE SUPREME COURT OF NOVA SCOTIA
Citation: Musgrave v. Poirier, 2005 NSSC 339
Date: 20051209
Docket: SH 254780
Registry: Halifax
Between:
Cecil Musgrave and Barbara Musgrave
Appellants
Respondent by Cross-appeal
v.
Jeannette Boudreau and Daniel Poirier
Respondents
Appellants by Cross-appeal
Judge: The Honourable Justice Walter R.E. Goodfellow
Heard: December 6, 2005 in Halifax, Nova Scotia
Written Decision: December 9, 2005
Counsel: Peter D. Darling for the Appellants/Respondent by
Cross-appeal
James D. MacNeil for the Respondents/Appellants by Cross-appeal
By the Court:
BACKGROUND:
[1] Jeannette Boudreau and Daniel Poirier filed a claim in Small Claims Court for $15,000.00 (jurisdictional limit) February 14, 2005 against Cecil Musgrave and Barbara Musgrave, alleging breach of contract and alternatively; misrepresentation either negligently or fraudulently. The claim arises with respect to a real estate agreement of purchase and sale entered into by the parties January 31, 2001 which was amended and subsequently the transaction closed by warranty deed.
[2] The agreement of purchase and sale contained the usual standard clauses and within a month of closing the transaction in May 2001 Boudreau and Poirier received correspondence from the Halifax Regional Municipality. A letter May 31, 2001 was directed by HRM to Cecil Musgrave indicating the retaining wall and wooded area located in the backyard had become “partly demolished, decayed, deteriorated and is in a state of disrepair so as to be dangerous, unsightly.” The letter went on to refer to the municipal legislation and directing that arrangements must be made to repair or replace the retaining wall and to clean up the wooded area so as not to be a fire hazard and that such was to be done within twenty-one (21) days of receipt of the letter.
[3] Additional earlier correspondence from HRM was filed at the hearing including a letter to the resident, September 21, 1992 following a further visit by municipal staff and directing that the work be carried out immediately. A further review was encompassed in a report July 29, 1992 by an HRM staff engineer and there followed on August 8, 2001 an order to remedy dangerous or unsightly premises. The work not having been done HRM proceeded to rectify the situation and advised October 21, 2003 that the cleanup of dangerous or unsightly premises under the Municipal Government Act had been completed and billed Ms. Boudreau $15,853.70 advising that until such time as this was paid the charge against her property as a lien would remain.
[4] Cecil Musgrave and Barbara Musgrave filed a defence to the claim stating that they denied they misrepresented the condition of the property or breached the purchase and sale agreement.
[5] The matter came on for hearing before Small Claims adjudicator, David T.R. Parker on June 13, 2004 and he filed an eight page decision dated August 24, 2005 on August 26, 2005 allowing the claim of Jeannette Boudreau and Daniel Poirier in the amount of $15,853.70 which he reduced by thirty-five percent for betterment leaving judgment against Cecil Musgrave and Barbara Musgrave in the amount of $10,304.90
NOTICE OF APPEAL
[6] The Notice of Appeal raises seven grounds of appeal.
[7] The argument advanced on behalf of the Musgraves on appeal is that on a factual basis the Musgraves were not aware of the defect. Further, that Mr. Musgrave discussed the matter in 1992 with his brother-in-law who is an engineer and his neighbours and concluded that there was no problem with the retaining wall. The summary of the grounds of appeal also advanced the argument that the purchaser could have had the home professionally inspected. Somehow this meant that the outstanding work orders with the municipality of the County of Halifax (now HRM) could have been addressed by inquiries made by the purchasers advisers during the conveying process. In addition, the appellants say that the adjudicator calculated the damages erroneously and that this did not put the purchasers in the position they would have been had the representation never been made.
[8] Finally, it is argued that the Musgraves did not have a duty to disclose latent defects of which they were aware but at no time, in the Musgraves view, had they attempted to conceal.
[9] There is no doubt that the principle of caveat emptor still remains. However, as stated by then Clarke, J. in Unrau v. Gay, [1983] N.S.J. No. 54, when there is concealment by the vendor and it is an act of concealment of a defect which would otherwise be patent, it can be treated as fraudulent and the contract rendered voidable if the purchaser has been deceived by it. I agree with Clarke, J. when he said at para. 29:
... Any conduct calculated to mislead a purchaser or lull his suspicions with regard to a defect known to the vendor has the same effect.
CONCLUSION ON APPEAL
[10] It is not for an appellate court to retry a matter and the adjudicator had the benefit of seeing and observing the witnesses and having representations by the solicitor acting on behalf of the Musgraves (not the solicitor representing them on this appeal).
[11] There is clearly evidence to support the finding of fact by the adjudicator that the defendants were aware of the defect in their property. When a purchaser is advised by a municipal authority that at structure on the property must be replaced due to safety and unsightly concerns and there is nothing as a matter of record to the contrary such as a report by an engineer or correspondence from the municipality indicating they were satisfied with the situation and no longer considered it a danger. Failure to disclose the municipal authority’s advice that there existed a breach of its by-laws is likely to give rise depending upon the totality of the circumstances to a conclusion of concealment and misrepresentation. The adjudicator had an opportunity to view the witnesses and I have no difficulty in his determination that the Musgraves knew such a condition existed. Their suggestion that they satisfied themselves that the situation no longer existed without having done anything to rectify it is simply a rationalization. Clearly the situation did not improve in the intervening eight years.
[12] The Musgraves were provided with a copy of an engineering report on July 29, 1992 concluding that some work had been done on the common retaining wall but that such was inadequate to prevent eventual failure of the wall and that the wall was not safe. The engineering report required immediate action to correct the unsafe condition and to avoid potential sudden failure and further that this remedial action should be done under the supervision of a qualified professional engineer. This report was followed by a formal notice September 21, 1992 to the Savages indicating that remedial work must be carried out immediately as the condition was such that it was in violation of the Dangerous and Unsightly Premises By-law.
[13] The Musgraves may have convinced themselves that there really was not any problem but fixed with the knowledge of this background, the knowledge of non-compliance with the direction of HRM and that this direction had never been countermanded, failure to disclose was quite correctly actionable misrepresentation.
[14] It is also interesting to note that in the disclosure statement with respect to the property the vendors (the Musgraves) did make note of some defects and deficiencies but chose, as the Small Claims Adjudicator found as a fact, to remain silent on the outstanding notice and direction given to them by HRM under the Dangerous or Unsightly Premises By-law.
RESULT
[15] The appeal is dismissed.
DECISION RE CROSS- APPEAL
[16] Ms. Boudreau and Mr. Poirier took the position in their cross-appeal that the adjudicator was wrong in law by considering a reduction in damages on the “betterment principle”.
[17] The court brought to the attention of counsel the decision in Bagnell’s Launderers and Cleaners Ltd. v. Eastern Automobile Co. et al (1992), 111 N.S.R. (2d) 51 where it was noted at p. 60, para 35:
The British Columbia Court of Appeal in the decision of Nan v. Black Pine Manufacturing Ltd. (1991), 55 B.C.L.R. (2d) 241 (C.A.), dealt with the question of betterment by stating:
Whether or not the damages based on such costs should then be adjusted, either for pre-loss depreciation or post-reinstatement betterment, will depend on what is reasonable in the circumstances. No rules can be fashioned by which it can invariably be determined when such allowances should be made. It must, in all cases, turn on the facts peculiar to the cases being considered.
[18] I went on to state:
I would only add that such change must not be speculative and must be of some consequence. There is no such recovery warranted with respect to other items of repairs and replacement. However, it stands out that Bagnell’s are recovering a benefit of a new motor at 111,080 kilometers on a van which now has between 300 and 400,000 kilometers. Such a material benefit must be acknowledged and I decrease the recovery by this benefit which I assess at $1,000.
[19] Counsel were provided an adjournment to reflect on the matter and, in particular, on the second argument advanced by the appellant by cross-appeal, namely, that neither party were given any opportunity to address the issue of a reduction under the “betterment principle”. I expressed the view that the failure to provide them with this opportunity was probably an error in law and that, if I so concluded, at least that determination would have to be returned for further hearing before another Small Claims Adjudicator or, possibly, by consent addressed by myself to save the delay and additional cost. After careful reflection, counsel for the appellants by cross-appeal made the practical good judgment decision to withdraw the cross-appeal.
COSTS
[20] Success being divided, the order of the Small Claims Adjudicator is confirmed and each party will bear their own costs of this appeal.
J.