Baglole v. MacEachern

Baglole v. MacEachern Court Small Claims Court Date 2025-02-18 Citation 2025 NSSM 9 Docket 532620 Judge/Registrar/Adjudicator Balmanoukian, Raffi (Adjudicator) Document Type Decision Decision Content

IN THE SMALL CLAIMS COURT OF NOVA SCOTIA Citation: Baglole v. MacEachern, 2025 NSSM 9 Date: 20250218 Claim: No. 532620 Registry: Sydney Between: Troy Baglole Claimant Defendant by Counterclaim and Darren MacEachern and Charlene MacEachern Defendant Claimant by Counterclaim

DECISION Adjudicator: Raffi A. Balmanoukian, Adjudicator Heard: September 26, 2024 by Teams videoconference Counsel: Troy Baglole, self-represented Darren MacEachern and Charlene MacEachern, self-represented By the Court: [1] The Property Disclosure Statement, that ever-fertile ground for litigation which I will refer to as the PDS, again presents itself to the Court. The Claimant asserts that the Defendants misrepresented (or omitted) material information on the PDS, and that they are responsible for the cost of countermeasures to prevent basement flooding, which he fixes at $13,737.33. [2] The defence consists, in its entirety, of “deny all claims” and counterclaims for $15,000 for “costs of refuting claim [;] stress and inconvenience.” The counterclaim was defended. I confirmed to the parties that this Court’s jurisdiction over general damages is limited to $100. Mr. Baglole confirmed by email that he would “abandon any access” (which I take to mean ‘excess’). The MacEacherns did not reply. As will appear, they nonetheless persisted with the counterclaim. I have dismissed it, making the quantum irrelevant. [3] I will first provide a high-level overview, then a summary of the witness’ additional verbal and documentary evidence, followed by my analysis and conclusions for dismissing the claim as well as the counterclaim. [4] The Claimant purchased the property from the

Defendants in January 2023, having viewed the property in November 2022 (a verbal offer in December 2022 was unsuccessful). The agreement provided for a PDS, which the Defendants provided dated January 22, 2023. The Claimant had the property professionally inspected the next day. [5] As a result of that inspection, the parties entered into an amendment effective January 27, 2023 addressing radiator repair and inclusion of remaining firewood. No basement issue was addressed. Mr. Baglole waived conditions on January 30, 2023. Notably, the MacEacherns had Wise Cracks Foundation Repair Specialists do hydraulic cement repair on three vertical cracks and one corner crack in December 2022. It is noted as “no warranty” which appears to be limited to the corner crack item, as the box for warranty and warranty transferability is also checked. [6] Mr. Baglole moved in March 2023 (the closing date was not in evidence, although the agreement of purchase and sale provides for a closing date of February 28, 2023 and I accept this as accurate). [7] By May 2023, the Claimant experienced basement flooding. This coincided with a power failure, causing the sump pump to be inoperative. The Claimant purchased a generator to address this. The sump pump was previously connected to the sewer line, which the Defendant had disconnected prior to sale “to meet code.” [8] Subsequently, a flood in July 2023

was alleged to be the result of water from a nearby thoroughfare. The Claimant asserted that it came to his knowledge that “this is not the first time,” and by August had installed a pump and backup battery. The Claimant seeks compensation for all these things. [9] By September, the Claimant provided the MacEacherns with an “intent to sue,” and here we are. [10] Against that backdrop, I turn to the individual witnesses. Les MacLean [11] Les MacLean, the buyer’s real estate agent, has 38 years’ experience. MacLean’s testimony was that the property had a ‘material latent defect.” MacLean is neither an engineer nor a lawyer. MacLean had not been in the property since the purchase. MacLean noticed a basement trough (noted throughout the evidence as a ‘trowel’ – I will use the term ‘trough’) with water in it, and concluded that the water was from the vertical/corner cracks noted previously. MacLean testified that they would have flagged it to the buyer had they known of the extent of the purported defect; MacLean did, however, notice that the sump pump was “cutting in and out” at the time of viewing, when it was not raining. [12] MacLean was present at the time of the home inspection and pointed out the trough water to the inspector. The inspector also noted this, but MacLean could not recall if this was noted in the inspection report. They did not notice any water coming in from

below, and did not classify this as “seepage” as characterized in the PDS. [13] MacLean told the Court that about 60% of sellers will prepare a PDS; about 40% won’t. The 60% was not broken down between those who do so prospectively and those who do so only in response to an accepted offer for which it is a seller’s condition. Crystal Gay [14] Ms. Gay is the Claimant’s neighbour. She has water problems in her own house, starting in 2016. She would hear a “spraying” sound out of the Claimant’s house “twice in the time it takes for the dogs to go out,” being the expulsion of water from the Claimant’s house. [15] Her home has flooded from an inadequate municipal drain but not from the roadway. There has, however, been pooled water from the road and she has called the Municipality to clear the lines (which has not been done to her knowledge since she has lived in the property in 2012). Her home has flooded approximately three times between 2012 and hearing. She had never learned of a claim by the Defendants for flooding. Troy Baglole [16] The Claimant concluded his case with his own testimony. As noted, he was aware of the crack repair and purchased a back-up generator after his first flood incident in May 2023. He testified to a text exchange with the Defendant as to the sump’s disconnection from its prior egress (the sewer drain) and that he was aware of basement “seepage” (to

which he entered the dictionary definition and submitted is outside the scope of the current claim). [17] In July, he experienced water “from the thoroughfare” and showed a video of his flooded back yard. He said he learned that this was “not the first time this had happened.” [18] Although the battery back up system is noted as an “estimate,” the Claimant testified this had in fact been done. [19] In February 2024, he testified that he experienced another flood and the pump “burned out.” [20] On cross-examination, he testified that the April 2023 event was neither a flood nor a power outage, and that the May event was a three-hour power outage. He further claimed that the sump was not honoured as a warranty claim as it was burned out “from overuse.” He has not made any insurance claim (which I pause to add would be irrelevant to liability, aside from any subrogation that may result). [21] He claims damages for the sump pump, back up system, and a shop vac. He also claims for a basin and an extension to an external pipe to past his deck. He also claims for the estimated cost of a French Drain system, which was not done. The existing drain system is apparently hand-dug and dates from 1932. [22] He was aware that the sump pump “kicked in” every seven minutes (give or take) but was not aware that this was abnormal. [23] He testified that the “floods” resulted in 3-4” of water, in

areas of storage. There is a basement bedroom which is elevated and was not shown to be affected. [24] Although the claim includes an allegation of mould, the Court heard no evidence of this, nor of remediation cost. Darren MacEachern [25] The thrust of the co-Defendant’s evidence is that they “did everything right” and completed the PDS “to the best of their knowledge.” The only thing that arose from the inspection was the radiators, which they addressed. A prior agreement (with a third party, not in evidence) fell through as a result of foundation cracks, leading to the repair work by Wise Cracks noted above. He noted that as a result of the location of these cracks, they also had to replace the oil tank. Also, it was Wise Cracks that advised that the sump should not be tied into the sewer drain and should be changed. It was. [26] He testified that the basement never “flooded” during his ownership of over 30 years. [27] His tab 10 shows the “thoroughfare” abutting the property. In 2016, water backup or overflow affected the whole street (but still not his basement). [28] He insisted that any post-sale problems are new to the property, and that he did not notice any discharge to his back yard. [29] Ms. MacEachern did not testify. Argument [30] The parties’ submissions may be summarized briefly. The Defendants say they acted in good faith and did nothing wrong. The Claimant

begs to differ and submits that the Defendants either lied or withheld relevant information, and that what the Claimant experiences is not “seepage,” nor is it accurate to say (as claims the PDS) that the property is not on a flood plain. Analysis [31] I begin by saying that I believe the Claimant is sincere, if aggressive, in his belief that he was hard done by at the instance of the Defendants. His “intention to sue” is terse and unequivocal. And to a certain extent it is understandable that he feels this way. He has clearly experienced post-purchase stress and not from isolated events. [32] But this does not automatically result in a successful claim. There must be a knowing or reckless, or potentially negligent, misrepresentation or an actively concealed dangerous material latent defect (and in this respect, Les MacLean’s experienced but still layperson’s definition is incomplete). An innocent misrepresentation, or a post-closing defect, is not enough. In this province, absent such situations (or contractual warranty), caveat emptor (buyer beware) is alive and well. [33] I recently had occasion to address these issues in Leppert v. Gillis, 2025 NSSC 1, including a review of salient Nova Scotia caselaw of which the unquestioned lead is Gesner v. Ernst, 2007 NSSC 146. I take the liberty of reproducing Leppert at paras. 72-82: [72] The legal starting point for any PDS analysis

in Nova Scotia is Gesner v. Ernst, 2007 NSSC 146, a 25 day marathon trial before ACJ Smith (as she then was). It makes it clear that caveat emptor (buyer beware) is alive and well in Nova Scotia, absent fraud, mistake, or non-innocent misrepresentation, or absent contractual terms to the contrary: para. 44. [73] It then goes on to discuss patent defects – those discernable on a reasonable inspection – and latent. Latent defects are those which are not discernable on such an inspection; liability for latent defects arises at common law for those which are both dangerous and “actively concealed” from a purchaser, or in respect of which a purchaser specifically asks and is given a knowing, reckless, or negligent response. Latent defects must exist at the time of sale and be known (or at least should be known) to a sentient owner; a latent defect that is not known to the owner, by definition, is not capable of being disclosed to a buyer. There is no duty on a seller to “suss out” their own property’s latent defects of which they have no prior knowledge. [74] Over time, the PDS has attempted to address some of the rigidity of the common law, by having a seller put to paper their best knowledge of the property, and having that disclosure form part of the agreement of purchase and sale, as a dynamic document with an obligation to disclose any pre-closing divergences (ie change in

condition) that come to a vendor’s knowledge. [75] It always has been, and remains, an optional document; some vendors fill them out, either as a way of providing evidence that they have disclosed such-and-so, or at the importuning of a potential party (or one or more real estate agents). The vendor who does so must be honest in their answers (or lack of knowledge of the answer) and neither fraudulent nor reckless. [76] Other vendors, perhaps prudently given the fertile litigation field that the PDS provides, decline to complete this oft-misunderstood document. They may raise suspicion or limit marketability in not doing so; but they are completely within their rights to say, “if you buy this, I don’t hear from you again after closing.” Whichever way they proceed, they are liable if they out-and-out lie (or provide a countercheck quarrelsome to such an extent as to constitute recklessness); but they are not liable if they have answered honestly (or have been innocently incorrect) and have not “actively concealed” a dangerous latent defect. [77] Gesner and its progeny make clear: - A PDS is not a warranty or guarantee: Gesner, para. 54. - Many PDS questions (both at the time of Gesner and at bar) do not ask for conclusive affirmations of property status; they ask such questions as “are you are of” and include “do not know” or “does not apply” as optional answers: Gesner, para.

80. - Liability under a PDS is grounded upon a seller’s misrepresentation, either fraudulent or reckless (See also Zafiris v. Surette, 2019 NSSM 18 and Moffatt v. Finlay, 2007 NSSM 64) - The PDS standard form at the time of Gesner specifically said that the information is “believed to be accurate. However, it may be incorrect.” The current PDS omits that second sentence. However, it maintains the warning to a buyer that “the Buyer is urged to carefully examine the Property and have it inspected…..to verify the above information.” While it is perhaps unfortunate that the current form (and split infinitive) is not so forceful as its forebear, I believe that the current wording continues to put the purchaser on warning of potential error or omissions – otherwise, why the need to “trust but verify” by inspecting the same subjects? [78] As I noted at the outset, legions of cases have followed. Most are applications of the Gesner principles in one form or another, as they relate to the facts of the case at bar. [79] In Lowe, supra, Adjudicator Darling (as she then was) embarked on an extensive discussion of patent vs. latent defects in the PDS context, which I reproduce here: The Law Relating to the Purchase of “Second hand” homes: [15] Both parties provided me with a number of authorities at the hearing related to a seller’s liability regarding “second” (and beyond) hand homes. I

have reviewed all of these authorities. The Claimant’s primary authorities are Doherty v. Rethman, 2015 NSSM 13 (Canlii), Skinner v. Crow 2010 NSSM 66 (Canlii), Brisbin v. Gilby, 2007 NSSM 66 (Canlii) and Boychuk v. Butler, 2007 NSSM 10 (CanLii), and from the Defendant, Dennis v. Langille, 2013 NSSC 42, and Forbes v. Woodroffe, 2022 NSSM 18. [16] There are two legal issues which inform much of the reasoning in this case. One is what constitutes a “patent” as opposed to “latent” defect, and the other the law as it relates to negligent or fraudulent misstatement in the context of Property Disclosure Statements, and more generally in negotiations for sale of a property. [17] The most succinct and recent statement provided of the principles of “latent” and “patent” defect is found in Forbes v. Woodroofe, 2022 NSSM 18, paras. 82 85, in which Adjudicator Richardson said: [82] The law with respect to the purchase of second-hand (that is, not new) homes is well established. Such sales are subject to the rule of caveat emptor. Absent fraud, mistake or misrepresentation a purchaser takes an existing property as he or she finds it, “whether it be dilapidated, bug-infested or otherwise uninhabitable or deficient in expected amenities, unless he protects himself by contract terms:” Prof Laskin (as he then was), cited in Nixon v. MacIver, 2016 BCCA 8, approved in Apogee Properties Inc v

Livingstone 2018 NSSC 143 at para.36; Thompson & Martin v. Schofield & White 2005 NSSC 38 at para.16. The rule means that an agreement of purchase and sale for a second-hand house does not carry with it any statutory express or implied warranties, such as those created under the Sale of Goods Act or the Consumer Protection Act. If a purchaser wants a warranty of some kind he or she must make it an express condition of the APS. [83] However, caveat emptor applies only to patent defects. It does not apply to latent defects, which are defects not discoverable by a purchaser through reasonable inspection. Even here the law is rather strict. A seller must disclose a latent defect “only if it is dangerous in some way, or if asked directly whether a particular defect is known by the seller to exist:” Black v Honsberger 2021 NSSM 55 at para.16. If the seller fails to disclose a latent defect that is dangerous; or responds to questions regarding the existence of latent defects in a fraudulent or negligent manner; or if they have intentionally covered over such defects and thereby made them difficult to spot, he or she will become liable: Apogee at para.37; Thompson at para.18. [84] I emphasize here that the duty to disclose latent defects applies only to dangerous defects. There is a suggestion to the contrary in MacIsaac v. Urquhart 2019 NSCA 25 at para.53: “One exception [to the rule

of caveat emptor] is that it does not apply where a vendor is aware of a latent defect of the property and does not disclose it to the purchaser.” However, a review of the two authorities cited in support—McCluskie v. Reynolds (1998) 1998 CanLII 5384 (BC SC), 65 BCLR (3d) 191 (BCSC) at para. 54 and Torfason v. Booth 2017 ABQB 387 at para.81—does not reveal support for such an extension of the rule. Torfason was a case involving defects in title, not physical defects in the property. And a review of the discussion in McCluskie at paras.46-53, which led up to para.54, make clear that the reference was to latent defects that render a house unfit for human habitation or render it dangerous. [18] In Dennis v. Langille, 2013 NSSC 42, Justice Murphy conducted an appeal of a decision of a small claims adjudicator, who has found that shoreline erosion was a “major and substantial latent defect, not apparent on reasonable observation of the property (para 3)”. Justice Wright disagreed, saying that the property’s “adjacency to the water”, made the threat of erosion patent (para. 31). He reviewed the law as it related to the distinction between “patent” and “latent” as follows: Nova Scotia case law does not definitively indicate which definition is preferred in this province; however, the British Columbia Court of Appeal effectively reconciled them with the following analysis in Cardwell

[cited at Cardwell v. Perthen 2007 BCCA 313) at para.48: ... The cases make it clear that the onus is on the purchaser to conduct a reasonable inspection and make reasonable inquiries. A purchaser may not be qualified to understand the implications of what he or she observes on personal inspection; a purchaser who has no knowledge of house construction may not recognize that he or she has observed evidence of defects or deficiencies. In that case, the purchaser's obligation is to make reasonable inquiries of someone who is capable of providing the necessary information and answers. A purchaser who does not see defects that are obvious, visible, and readily observable, or does not understand the implications of what he or she sees, cannot impose the responsibility ‑ and liability ‑ on the vendor to bring those things to his or her attention. The obligation to make reasonable inquiries arises out of the visual test as a way to ensure that the test is applied objectively; as such a defect is patent if it is objectively discoverable on a reasonable inspection of the property. [19] Justice Murphy found that there was no allegation of misrepresentation made in the above case. Case law makes clear that the increasing use of Property Disclosure Statements (in some instances in the stead of home inspections), create an additional nuance in the analysis, in that if a seller makes a

negligent or fraudulent representations with respect to even patent defects, the above case law makes clear that liability may follow based upon misrepresentation. [20] Doherty v. Rethman, 2015 NSSM 13 (Canlii), a decision of Adjudicator Knudsen at para 23 canvasses the concepts of what constitutes negligent misrepresentation, and cites the standard requirements established in Queen v. Cognos Inc., 1993 CanLII 146 (SCC), [1993] 99 D.L.R. (4th) 626 (S.C.C.) at page 643: 1. There must be a duty of care based on a special relationship between the representor and the representative; 2. The representation in question must be untrue, inaccurate or misleading; 3. The representor must have acted negligently in making said misrepresentation; 4. The representative must have relied, in a reasonable manner, on said negligent representation; 5. The reliance must have been detrimental to the representee in the sense that damages resulted. [21] Adjudicator O’Hara in Brisbin v. Gilby, 2007 NSSM 66, a case involving failure to disclose flooding issues in a basement, at para 62 cites Justice Wright’s decision in Desmond v. Kinlay (2000) Canlii 2201 (NSSC) for the proposition that “the vendors misrepresentation in the property disclosure statement constituted a collateral warranty, the breach of which entitled the plaintiff to damages”. [22] Adjudicator O’Hara also comments on the difficulty of

quantifying damages in such cases, because on occasion, repairs being made will put the homeowner in an even better position than they would have been. He notes at paras 67 to 70: [67] In the law of torts, the measure of damages is normally said to be that which would put the innocent party in the position they would have been in but for the tort, in this case, the negligent misrepresentation. [68] In considering those principles with regard to this case, it is to be noted that had the water leakage problem been properly disclosed. Ms. Brisbane could have potentially walked away from the deal, attempted to renegotiate the price or get an allowance from the vendor, or possibly do nothing and proceed through to the closing. It would be an exercise in speculation to attempt to determine what would have happened in that case. [69] A further principle to bear in mind is that the innocent party should not be put in a better position than they would have been in if there had been no breach. [70] In a number of cases similar to this, the courts have applied what has been referred to as a “betterment allowance”. To address this concern in Desmond v. McKinley, Justice Wright applied a betterment allowance of one third off of the invoices. Likewise, in Thomson v. Schofield, Justice Warner also applied a better mid allowance of 1/3, recognizing there would be an enhancement of the value of

the property as a result of the report required repairs. [23] In his decision, Adjudicator O’Hara reduced his award by a one third betterment allowance. In Boychuk v. Butler, 2007 NSSM 10, a decision of Adjudicator Patrick Casey, a fifty percent betterment allowance was applied against an award for a faulty septic system. [24] I will note that the concept of “caveat venditor” which Ms. Lowe argues has replaced “caveat emptor”, seems to be based upon a one-page blog post from a lawyer in India. Ms. Lowe has done a very credible job of research in preparation for this case, but the case law above does not support a shift of such seismic dimensions in Canadian law. The concept of “buyer beware” continues, but for the obligations created by a PDS regarding negligent or fraudulent misrepresentation, and the required disclosure of dangerous latent defects. [80] The second case cited by the Defendants, Doherty, supra, is discussed in the quotation above. [81] The analysis comes to this: A vendor cannot lie. They cannot actively conceal a dangerous latent defect. They cannot be reckless with the truth. And they have every ability to decline to provide a PDS, if they wish, recognizing that such a refusal may affect marketability. [82] But a PDS, once provided, can be incorrect without being dishonest. It is not a warranty or guarantee that something will not happen a day or a month or a

year after closing, to a part of the realty or personalty that was in fine nick on the day it changed hands. And if something does turn out to be incorrect but was known to and waived by a purchaser, it does not allow them to come back with a case of buyer’s regret. [34] I make the following findings: - I accept the Defendants did not have basement water flooding issues during their ownership, potentially aside from the vertical cracks - There was no evidence of long-standing water flooding issues such as mould or mustiness, which would or at least should have been flagged in an inspection report or in-person viewing, particularly given the presence of living space in the basement - The water “trough” was patent - So was the sump pump “clicking in” repeatedly, even if this did not occur to the Claimant to be an unusual issue or one that should be investigated further or inquired upon to an inspector or vendor - The Defendants, on a balance of probabilities, did not experience flooding issues as their sump – rightly or wrongly – was tied into the drain system; the same can explain why they did not notice discharge to the back yard as it simply did not exist until shortly before closing. What changed post-closing was the way in which these function, not in what the Defendants experienced (and represented) prior to closing. - The water off-flow from the municipal thoroughfare,

while unfortunate, does not constitute a “flood plain” within the meaning of the PDS, or in the alternative was not a misrepresentation in the sense of being a fraudulent or reckless misrepresentation by the Defendants, given their experience during their ownership - At least the May 2023 “flood” was exacerbated by power failure; the July 2023 “flood,” while not as extensive in the area as in other parts of the Province, was still a significant weather event (as evidenced by newspaper reports presented to the Court) [35] I also find that the Claimant was aware of the drainage “trough” prior to closing and the frequent tripping of the sump pump. They had an opportunity to make further inquiry, either of the Defendants or through the inspector. In fact, the inspection resulted in an amendment to address corroded radiators (and to leave behind residual firewood), which was done and which was followed by a condition waiver. As noted, I have found that both the trough and the sump were patent. [36] It is for the Claimant to establish, on a balance of probabilities, that the Defendants either made a non-innocent misrepresentation, or actively concealed a dangerous latent defect. He has not done so. The claim is dismissed. [37] In the alternative, had I found liability, I would have awarded the cost of extending the pipe to beyond the deck. The power back-up is a complete betterment

to the pre-existing sump system. As for the pump itself, these do have a service life and burn out from time to time, and there was no indication (the proof which lies on the Claimant) as to how far along the old one was to allow for a proper calculation of how much better of he is with a new one. It appears from the duration it served that it was well along in it service life. The French Drain was not presented to me as being necessary for proper water management and indeed it had not been done at hearing. All of this would result in a better system than that for which the Claimant and Defendants contracted, in any event, and would have been heavily discounted accordingly. [38] Turning to the $15,000 counterclaim. I have no doubt it was precipitated by the claim – in fact it is explicitly tied to it with the succinct “costs of refuting claim [;] stress and inconvenience.” Nothing was presented to the Court how the MacEacherns derived this (or any other) figure and I repeat that this Court’s $100 general damages jurisdiction was highlighted to all prior to hearing. Mr. MacEachern’s evidence was essentially that he is a stand-up guy whose reputation and word mean a lot to him, and this litigation is an affront to that. [39] Leaving aside that pleadings are privileged (meaning they are protected against libel claims, over which in any event this Court has no jurisdiction

whatsoever), there was no evidence as to any actual pecuniary loss (other than filing or service), or non-pecuniary other than the stress inherent in litigation. There was no evidence that the litigation, although phrased rather aggressively, was in bad faith. [40] The evidence was, further, that some 40% of at least Les MacLean’s clients/customers do not complete the (very) optional PDS. The seller who chooses to do so takes on the very real risk that a disappointed buyer, with or without merit, will come along after the sale with a claim; as I pointed out in Leppert, it is both a feature and an arguable pitfall of this Court that making such a claim is easy and cheap. It is neither uncommon nor unpublicized. The seller has every right to take the potential impact on marketability and to say, “inspect if you choose, but there’s no PDS and if you buy this I never hear from you again.” The Defendants chose not to take this approach. They took the associated risk, regardless of whether the risk of such a claim possessed merit or not. In that way, they authored their own trajectory to this Court. Their counterclaim, both for this reason and for want of proof of damages even to this Court’s modest jurisdiction, is dismissed. [41] I will prepare and provide the Order. Balmanoukian, Small Claims Court Adjudicator