November 29, 1999 12:16 PM
The following is some case law concerning home inspectors. I will not post the total judgements in the interest of time but since all judgements are public documents you can write the court in question and ask them to mail you copies of the various cases.
I will however re-type the important portions of the orders for your information.
I am encouraged that we are getting some history that can be used in defense of claims against us.
Claim No. SCCH 105865
In the small claims court of Nova Scotia
March 17, 1998
Claimant: Shauna Scanlan
Defendants: Pillar to Post 902- 452-8858
The case in general was a problem with a roof inspected by Pillar to Post.
The inspection agreement had a clause in it limiting the inspectors liability to the cost of the inspection.
This is what the judge had to say:
I find that the Claimant has failed to establish on the balance of probabilities that the condition as existed in 1997, necessitating repairs, existed in 1996, at the date of the inspection. In light of the foregoing finding I need not make any finding on the second argument. I should add, however, that had I found the Defendant negligent, that is, having failed to carry out an inspection as contracted for, I would have found the Claimant’s claim limited to the amount of $ 240.75, the fee charged for the report, in accordance with the limitation of liability clause which is clear and unambiguous, particularly read in conjunction with other portions of the Inspection Agreement cautioning the limited nature of the inspection and the uses to which the report may be put.
Although not raised in argument, I should also say that the Inspection Agreement would not have been fundamentally breached had the Plaintiff’s allegations been established, so as to prevent the Defendant from relying on the clause in question.
I therefore do and hereby dismiss the Claimant’s claim against the Defendant.
Alexander S. Beveridge
The next case is also one where the inspector is saved due to the agreement containing the limitation clause. In this case the judge found the inspector negligent.
I will only re-type the interesting portions of the judgement,
The Provincial Court of Alberta, Civil Division.
Rick & Christina Hurley Plaintiff
Claire Lindsay, Pillar to Post Defendant
The case in general is about the inspector stating the second floor was heated because he noted heating registers in the floor. In fact no ducts were connected to the registers and no heat was present on the second floor 4 bedrooms. This was a vintage
house constructed in 1904 in the City of Medicine Hat Alberta.
Here is what the judge had to say:
I find that the conduct of the Defendant constitutes negligent misrepresentation on the part of the Defendant in the preparation of the Visual Inspection Report.
The issue on these facts is to determine what remedy, if any, is available to the Plaintiffs arising from the negligence of the Defendant.
The Visual Inspection Agreement contains the following clause:
Inspector and its employees are limited in liability to the fee paid for the inspection services and report in the event that client or any third party claims that Inspector is in any way liable for negligently performing the inspection or in preparing the Inspection
Report, or for any other reason or claim that Inspector has not fully satisfied all its obligations thereunder.
Counsel for the defendant relies on this clause in taking the position that the liability of the Defendant is specifically limited to the fee paid for services rendered. In support of this position, counsel refers primarily to the Supreme Court of Canada in Hunter
Engineering Co Inc. v/s Syncrude Canada Ltd. et al. reported 1989, 57 DLR (4TH) 321. in that case syncrude bargained for and purchased gear boxes which were determined not to be reasonably fit for the purpose for which they were intended. In summary, the Supreme Court took the position that, on the facts of that case, the breach was not a fundamental breach, and even if it were a fundamental breach, an exclusion of liability, pursuant to an exclusion of liability clause, was enforceable unless it was unconscionable or it ought to be enforced in the circumstances of the breach. No such circumstances exist in these proceedings. I agree with the position taken by counsel for the Defendant that the above clause limits the liability of the Defendant to the fees paid for inspection services rendered.
The Plaintiff further argue that their claim can be sustained against the Defendant in tort for negligent misrepresentation by the Defendant notwithstanding the fact the parties were in a contractual relationship.
This argument raises the issue whether the Plaintiff’s claim can exist and succeed in tort against the Defendant outside the terms
of the contract. In my view, based on the current status of the law, that question must be answered in the negative. Any remedy available to the Plaintiffs against the Defendant Lindsay arise solely from the contractual relationship between the parties as reflected in the terms of the visual inspection agreement.
My review of the existing law on this issue indicates that there are certain circumstances where a remedy in tort may succeed outside the contract. This situation could arise in circumstances where the conduct is outside the duties and obligations imposed on the offending party under the terms of the contract.
An example of this principle was considered by the Supreme Court of Canada in J. Nunes Diamonds v/s Dominion Electric Protection Co. (1972) 26 DLR (3rd) 699 where it is stated that:
…a contractual limitation may not apply where the tort is independent of the contract in the sense of falling outside the scope of the contract, as in the example given in Elder Dempyer and Co Ltd. v/s Patterson Zochonis & Co. Ltd. (1924) AC 524 (H.,L.,) of
the Captain of a vessel falling asleep and starting a fire in relation to a claim for cargo damage.
In this example the conduct of the Captain is beyond the scope of his duties and obligations thereby giving rise to the argument that any recourse to a contractual limitation may not apply. The conduct of the Defendant Lindsey as demonstrated in these
proceedings, clearly represents conduct which fall within the scope of the duties and obligations imposed under the terms of the contract.
Therefore, I find on these circumstances that the action brought against the Defendant in tort for negligent misrepresentation must fail. The Defendant is entitled to rely on the exclusion clause herein and the liability of the Defendant is limited to the fee paid
by the Plaintiffs for the services rendered.
The Plaintiffs claim is dismissed.
No cost to be awarded.
Dated at the City of Lethbridge, in the province of Alberta, this 12th day of November, A.D. 1998.
Gerald R. DeBow
Judge of the Provincial
Court of Alberta.
This is further case law where not only did the home inspector get nailed but the franshisor as well. For some reason the limit of liability clause did not save any one of them. You will note the contract was made over the lelephone. Let us all learn from that.
Get the contract signed before the inspection even if it is a faxed copy. I suggest you not only date the contract but also place the time it was signed on the contract so it can be demonstrated it was done prior to the start of the inspection.
Fraser v. Knox
- Purchaser had house inspected before closing
- oral contract with inspector made over telephone
- inspector failing to notice and advise of possible water leakage problems in basement
- purchaser having extensive repairs done
- inspector found liable for negligence
- franchisor inspection company found jointly and severally liable for purchaser’s damages
- limitation of liability clause in inspection agreement of no effect
- it was not brought to purchaser’s attention before inspection
- agreement was not given to purchaser to sign until inspection had been completed
Mr. Fraser purchased a house in Ottawa. Before closing, he had the house inspected by a franchisee of Pillar to Post, Inc. After closing, he discovered that there was a significant problem of water leakage and damage in the basement. He also found that there had been two fires in the kitchen. He had over $20,000 worth of work done to repair and improve the premises, and brought an action to recover damages.
The claims for fraudulent misrepresentation against the vendor of the house (who was mentally incompetent and living in a nursing home), the vendor’s attorney for property and the real estate agents and brokers were dismissed, as were all claims in relation to the fires.
The basement was another matter. There were numerous signs of a longstanding problem of water coming into the basement. Pictures put in evidence by Fraser showed mortar joint deterioration and cracks and chipping in the foundation walls around the basement windows. Inside the basement, rot was visible on some of the window frames. Paneling and carpet had been installed in the 1970s, so that the foundations could not be seen from inside. However, the basement smelled musty, and residue from leaking water was visible on some areas of the carpet and paneling. The failure of Bouchard, the home inspector, to note these problems and bring them to Fraser’s attention was negligent. Fraser
relied on Bouchard’s advice that there was no cause for concern about the condition of the basement, and as a result, he paid
more for the house than he would have if he had known of possible problems.
Bouchard argued that his liability was limited to the cost of the inspection. When the inspection was finished, he and Fraser had both signed an Inspection Report, which consisted essentially of a form on
which items were checked off. The first two pages were an Inspection Agreement which contained a limitation of liability clause. The trial judge found that the contract between Fraser and Bouchard was an oral contract, formed over the course of two telephone conversations. Neither during these conversations nor when he arrived to do the inspection did Bouchard alert Fraser that he would be seeking to limit his potential contractual and negligence liability. The limitation of liability clause did not form part of the contract between Bouchard and Fraser. Where a clause limiting liability is not brought to a party’s attention before or at the time the contract is made, it is ineffective: Trigg v. MI Movers International Transport Services Ltd. The signing of the Inspection Agreement did not create any contractual rights between Fraser and either Bouchard or Pillar to Post, Inc., and the clauses purporting to limit liability were irrelevant in determining the parties’ rights; Campbell v. Image.
Some of the money spent by Fraser was not related to the basement, or to the repair of flaws that the inspection could reasonably have been expected to disclose. Some of the work would have been done in any event. The trial judge found that damages of $10,000 had been incurred because of the inspector’s negligence.
Pillar to Post Inc. claimed it was not liable to Fraser. However, in all the circumstances, it was reasonable for Fraser to believe that in dealing with Bouchard he was also dealing with Pillar to Post Inc. The company and the inspector were found to be jointly and severally liable to Fraser.
Ontario Court (General Division)
C. Aitken J.
October 26, 1998