Case Name:

Dinsmore v. Southwood Lakes Holdings Ltd.

Between

James Dinsmore and Barbara Dinsmore, Plaintiffs

(Appellants) and

Southwood Lakes Holdings Ltd., Masterpiece Homes

(1997) Ltd., the Corporation of the City of Windsor

and the Ontario New Home Warranty Program, Defendants

(Respondents)

[2008] O.J. No. 3935

2008 ONCA 689

74 C.L.R. (3d) 1

2008 CarswellOnt 5955

170 A.C.W.S. (3d) 211

Docket: C45801

Ontario Court of Appeal

Toronto, Ontario

D.R. O'Connor A.C.J.O., J.M. Simmons and

S.E. Lang JJ.A.

Heard: October 6, 2008.

Judgment: October 10, 2008.

(15 paras.)

Real property law -- Sale of land -- Agreement of purchase and sale -- Breach of -- Breach of warranty -- Damages -- Appeal by homeowners from trial judge's order that builders were to pay homeowners damages of $29,700 for breach of building contract and builders' warranty dismissed -- Homeowners purchased townhouse from builders and noticed dampness on basement floor -- Builders acknowledged that cement slab in basement did not meet Building Code requirements -- Trial judge's factual findings supported by evidence -- Trial judge did not err in assessing damages on basis that reasonable course of action was to treat basement floor with sealant, obtain engineer's certificate confirming compliance with Building Code, re-grade lands sloping towards house, and install clay plugs in service trenches of sanitation system.

Statutes, Regulations and Rules Cited:

Ontario Building Code

Appeal From:

On appeal from the judgment of Justice John Brockenshire of the Superior Court of Justice dated February 7, 2007.

Counsel:

Raymond G. Colautti, for the appellants.

Gino Morga, Q.C., for the respondents Southwood Lakes Holdings Ltd. and Masterpiece Homes (1997) Ltd.

Montgomery Shillington, for the respondent Ontario New Home Warranty Program.

The following judgment was delivered by

1 THE COURT:-- In 1997, the appellants purchased a townhouse built by Southwood Lakes Holdings Ltd. and Masterpiece Homes (1977) Ltd. (the "builders") for $177,000. After taking possession of their new home, the appellants noticed dampness on the basement floor, which raised concerns about potential drainage problems. After investigation, the builders acknowledged that the cement slab in the basement did not meet the depth requirement of 3 inches specified in the Ontario Building Code, but did not agree with the appellants regarding the alleged drainage problem. The issue became how to resolve the problem.

2 Following a series of failed negotiations between the appellants, the builders, the respondent Ontario New Home Warranty Plan (the "Plan"), and representatives of the City of Windsor, the appellants commenced this action in February, 2002, claiming general and aggravated damages of $350,000 for breach of contract and negligence and $150,000 in punitive damages.

3 After almost three weeks of trial, the trial judge ordered the builders to pay the appellants damages in the amount of $29,700 for breach of the express and implied terms of the building contract and for breach of the builders' warranty. The trial judge assessed damages on the basis that a reasonable course of action would be to treat the basement floor with a specific sealant and topping, obtain an engineer's certificate confirming effective compliance with the Ontario Building Code, re-grade some of the lands sloping towards the house, and install clay plugs in the service trenches of the sanitation system.

4 The trial judge dismissed the claim against the Plan, finding that the appellants refused a reasonable solution offered by the builders despite assurances that the new work would enjoy an extended warranty under the Ontario New Home Warranties Plan Act (the "Act").

5 On appeal, the appellants do not directly challenge the trial judge's findings of fact. Rather, they allege that the trial judge made errors of law that affected his perception of the evidence. These errors include the appellants' arguments that the trial judge erred in his application of the principles of mitigation by failing to appreciate that the appellants were not required to accept a solution that contained a risk of failure; by failing to recognize that the proposed solution did not meet the minimum requirements of the Ontario Building Code; and by failing to consider that the warranties provided by the Act guaranteed that there would be no water penetration for two years.

6 In support of their argument that the sealant solution impermissibly failed to foreclose any risk of recurrence of the dampness, the appellants rely in part on two letters written to them early in the dispute by Fabrice Forte to the effect that the sealant would not work. However, Mr. Forte testified at trial that the sealant would work. Mr. Forte explained the content of his earlier letters to the appellants, and his refusal to provide them with a quote or guarantee about the sealant solution, on the basis that he did not want to be involved with Mr. Dinsmore. The trial judge accepted Mr. Forte's explanation and his evidence that the sealant and topping would provide an effective solution. Moreover, there was other expert evidence that the sealant solution would solve the problem.

7 In our view, the appellants' other challenges about the "risk" factor, including the evidence about the neighbour's attempts with a sealant, also amount to no more than challenges to the trial judge's factual findings. In our view, the trial judge's factual findings were supported by the evidence.

8 The appellants also argued that the sealant solution was unacceptable because it did not result in a slab that was 3 inches thick, exclusive of the topping, or meet the Ontario Building Code requirements for drainage. However, the City undertook a complete investigation of the drainage and was satisfied that it complied. It was also satisfied that the proposed sealant and topping provided satisfactory and substantial compliance with the Ontario Building Code.

9 Finally, the trial judge did not fail to consider the warranties provided by the Act. He found the builders liable in part based on breach of those warranties. In fact, the builders admitted such liability.

10 Next, we see no error in the trial judge's approach to the liability of the Plan. The trial judge found that the builders were prepared throughout to implement a remedy recommended by their experts as well as those of the City and the Plan. The appellants refused to implement that remedy or allow entry so that the work could be done. The appellants continued to withhold their approval despite the assurance that the work would enjoy an extended warranty under the Plan. In these circumstances, we agree with the trial judge that ss. 14(2) and (3) of the Act provide the Plan with an answer to the appellants' claim.

11 The appellants raised two objections with respect to the trial judge's award of damages. First, they claim that the trial judge erred in failing to award general and non pecuniary damages for interference with lifestyle and for loss of enjoyment of life. We disagree. The trial judge found as a fact that any such damages suffered by the appellants were minimal and that, in any event, the appellants' actions contributed to any such damages. We see no basis to interfere with these findings.

12 The appellants also argued that the trial judge erred in failing to include in the damage award the full amount of the fees and disbursements for the experts retained by the appellants. We so no error in the trial judge limiting the amount of this award to the investigative pre-litigation expenses. The trial judge took the balance of the experts' fees into account in his costs award.

13 Finally, we do not accept the appellants' ground of appeal regarding the detail sheet. The appellants failed to establish at trial that this document related to the specifications for their home.

14 The builders cross-appealed the trial judge's costs award, arguing that the trial judge erred in failing to take into consideration the appellants' election not to proceed under the simplified rules procedure and the respondents' offers to settle. The trial judge considered each of these matters. We see no error in his decision that neither point dictated a different result.

15 Accordingly, we would dismiss the appeal and cross-appeal. We direct that the appellants pay the respondent builders' costs fixed in the amount of $15,000 and the costs of the respondent Plan in the amount of $6,500, both amounts inclusive of disbursements and G.S.T.

D.R. O'CONNOR A.C.J.O.

J.M. SIMMONS J.A.

S.E. LANG J.A.

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