B.C. Home Inspector Ordered to Pay Homeowners $192,920.45

Update:

The Honourable Mr. Justice Burnyeat of the SUPREME COURT OF BRITISH COLUMBIA rendered a decision today, ordering defendant, British Columbia home inspector Mr. Imre Toth and 659279 B.C. Ltd. doing business as HomePro Inspections to pay plaintiff, homeowners Manuel Ignacio Salgado and Nora Gabriela Calcaneo $192,920.24.

This Supreme Court of British Columbia decision, sets a precedent and has home inspectors and the Canadian Association of Home and Property Inspectors (CAHPI) and the Canadian Association of Home and Property Inspectors of B.C. (“CAHPI (BC)”) quite concerned about the risks of liability after conducting a home inspection.

The plaintiffs, Manuel Ignacio Salgado and Nora Gabriela Calcaneo, contacted a real estate agent. Their agent introduced the property in question to them and also acted as their agent with regard to the purchase of the same property in North Vancouver.

This is the North Vancouver Home/property sold for almost $1.1 million in September, 2006, three (3) years ago; that Mr. Toth, a home inspector, must pay $192,920.45 due to his breaches of duty of care and negligence in the same year.

The former owners listed the Property for sale during the summer of 2006 at a listing price of $1,195,000.00. By a September 15, 2006 contract of purchase and sale (“Agreement”), the Plaintiffs agreed to pay $1,095,000.00 for the Property with the purchase to complete on October 27, 2006. The Agreement was “subject to an inspection report and bank approval to the Buyers’ satisfaction on or before 5 week days after acceptance”.

At the recommendation of their real estate agent, Mr. Toth as HomePro Inspections, was contacted and secured to conduct a home inspection of the property/home worth almost $1.1 million dollars and subsequently prepare a home inspection report. Mr. Toth inspected the Property and House on September 21, 2006. Mr. Toth, completed his inspection of the roof and the rest of the exterior of the house in about 30 minutes.

After the inspection, Mr. Toth provided both a written and a verbal report to the buyers, Manuel Ignacio Salgado and Nora Gabriela Calcaneo and received $450.50 for these services.

By agreement, the plantiffs and defendants accept that the cost of remedial work to remedy certain problems with the House totals $192,920.45, made up as follows: (a) “A” Frame Beams – west side of the House ($35,000.00); (b) “A” Frame Beams – east side of the House ($18,800.00); (c) Stabilization of House ($56,800.00); (d) Engineering ($26,269.00, comprised of costs incurred to date of $16,269.00, and estimated future costs of $10,000.00); (e) West side deck removal ($9,360.00); (f) replacement of the west deck ($24,100.00); and (g) a shoring up of the east deck ($11,500.00).

With G.S.T. of $9,091.45, and a contingency of $22,000.00, the total cost of the required remedial work is $212,920.45. From that amount, the Plaintiffs subtract the $20,000.00 that Mr. Toth estimated the remedial work would cost and claim $192,920.45, as well as pre-judgment interest and Scale “B” costs.

Here are some of Justice Burnyeat’s findings:

Regarding the costs of repairing the two rotten west side beams, I accept the evidence of the Plaintiffs that they were provided with a repair estimate in the neighbourhood of $4,000.00 by Mr. Toth. By agreement between the parties, the actual cost of replacing the west side beams is $35,000.00.

I find that Mr. Toth was negligent in his inspection of the horizontal and vertical beams on both sides of the House. Mr. Toth was negligent in not inspecting the east side beams, and was negligent in his inspection of the west side beams by either inspecting only two and not advising the Plaintiffs that he had only done so or by not drawing to their attention that the rot was much more widespread than he indicated to them. His breaches of duty of care caused the Plaintiffs to suffer damages. But for the negligent act and/or the omission, the damages would not have occurred as the purchase of the Property would not have occurred. I find that the Plaintiffs would not have purchased the Property if the full extent of the rot on the east and west side beams of the House had been known and brought to their attention. In the circumstances, the Plaintiffs are entitled to damages of $35,000.00 plus $18,800.00 less the $4,000.00 estimate provided by Mr. Toth.

I accept the evidence presented on behalf of the Plaintiffs that Mr. Toth gave them a repair estimate of $15,000.00 for structural work relating to the stability of the House. That estimate was woefully inadequate. While I find that damages are not available to the Plaintiffs as a result of this negligent misrepresentation of the likely cost of the structural changes that were required in order to provide stability for the House because I cannot come to the conclusion that the Plaintiffs relied on this misrepresentation to their detriment, I find that the estimate that was provided gave considerable solace to the Plaintiffs that the structural expenditures would not be excessive and, therefore, the structural problems were not significant. I find that the Plaintiffs are entitled to the actual cost of the structural changes which are required, including engineering costs, being $56,800.00, $26,269.00, $9,360.00, $24,100.00 and $11,500.00, less the $15,000.00 estimate provided by Mr. Toth.

Under the Contract, the “Inspector” is defined as being “659279 B.C. Ltd. dba HomePro Inspections”. Accordingly, I am satisfied that the attempt to limit liability by paragraph 13 of the Contract relates only to the “Inspector” and not to Mr. Toth personally. It was Mr. Toth who was the inspector. It is Mr. Toth who is the member of the CAHPI (B.C.). In this regard, the cover page indicates “This report prepared by: Imre Toth, B.Arch., RHI, Member of the Canadian Association of Home and Property Inspectors (B.C.).” I am satisfied that the ambiguity regarding whether the provisions of paragraph 13 of the Contract were also to apply to any failure by Mr. Toth to perform any obligations should be resolved against Mr. Toth in favour of a reasonable and fair interpretation.

I have no hesitation in coming to the conclusion that the Plaintiffs relied upon the report received by Mr. Toth to decide whether they would purchase the Property.

The Plaintiffs will be entitled to Judgment against the Defendants in the amount of $192,920.45. As the parties advise that the provisions of Rule 37(b) of the Rules of Court apply, the parties will be at liberty to speak to the question of costs in due course.

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