Facts:
Paul McInnis, the male Plaintiff, helped his father build a house in
1971 on Part of Lot 3, Concession 12 in the Township of Stephen in
the County of Huron. In 1981 the Plaintiffs purchased that house
from the male Plaintiff's father. Then in 1987 the Plaintiffs sold
the house and surrounding land to the Defendants. Paul McInnis
testified that during their period of ownership from 1981 until
1987, he and his wife did not have any problems with the plumbing or
the septic system. In fact, he said in his evidence that everything
was working fine.
The Plaintiffs obviously liked the house and its location so much
that they bought the property back from the Defendants in 1995. The
terms of that transaction are set out in an Agreement of Purchase
and Sale dated August 10, 1995. The one term that is relevant to
this case is the provision that states:
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"The vendor warrants that the
septic system is in good working order and this warranty
shall survive closing." |
The transaction was completed on
September 29, 1995, and the Plaintiffs took possession on that date.
Paul McInnis testified that approximately 2 weeks later the septic
system started to back up into both toilets and the bathtub on
almost a daily basis.
Paul McInnis testified that he called Grand Bend Sanitation to look
at the problem. Grand Bend Sanitation pumped out the septic tank on
November 11, 1995. Mr. McInnis said that everything worked fine for
a short period of time, but that the septic system soon started to
back up again. On December 5, 1995, Grand Bend Sanitation
re-attended and located blockage in the weeping bed line near the
north edge of the property. That blockage was removed.
Grand Bend Sanitation had to re-attend in June 1996 to clean out the
septic system, including the line which was again plugged. However,
because of the test holes that had to be dug to locate the blockage,
sewage started to seep to the surface and pond on the north edge of
the subject property and on the adjacent farmer's field.
Andy O'Brien testified. He is the owner and operator of Grand Bend
Sanitation, and has been since 1987. He is in the business of septic
tank repairs, cleaning and drain cleaning. I found him to be a
knowledgeable witness. He testified that when he first attended at
the subject property on November 11, 1995, he found the solid
content of the septic tank to be quite heavy and to be causing a
blockage on the inlet side of the tank. On that date he also found
that the septic tank was running above its normal operating level.
In fact, he found the level of the tank was right to the top. He
testified that the normal level was 6 to 8 inches below the lid of
the septic tank. When he re-attended on December 5, 1995, he found
that the septic tank was still running at a higher level than
normal. He said that this meant that there was a blockage on the
outlet side of the tank. It was then that he traced the problem to a
blockage in the line near the boundary of the property. He testified
that it would be difficult to say how long the blockage had been
there.
Mr. O'Brien also testified that on November 11, 1995, he found that
there was a 2 to 3 foot build-up of sludge in the bottom of the
septic tank. He said that a maximum of 1 foot of sludge would be
normal. He said that the amount of sludge that he found on November
11, 1995, would not be a normal amount to have built up from
September 29, 1995 [ which was the date of the closing of the real
estate transaction ] until November 11, 1995.
The evidence of Paul McInnis and Andy O'Brien was that the blockage
was almost on the property line. Mr. McInnis testified that the
neighbouring landowner refused to give permission to the Plaintiff
and Grand Bend Sanitation to enter on the adjoining property to
properly remove the blockage. This denial of access was unfortunate.
Mr. O'Brien testified that if he had been able to gain access to the
adjacent land, he might have been able to remedy the problem once
and for all relatively inexpensively. However, when permission was
denied, Mr. O'Brien testified that the next best alternative was to
put in a new weeping bed that was wholly contained on the
Plaintiffs' land. Unfortunately, the neighbouring land owner did not
testify and I do not know why access was denied.
The Defendant, James Grant, testified that he and his wife did not
have any problems with the septic system during the 8 years that
they owned the property, being 1987 until 1995. He said that when
his lawyer pointed out the clause (which I have quoted above)
concerning the septic system working, he did not have any problem
signing the Agreement of Purchase and Sale with that clause in it.
Mr. Grant said that the septic system had never backed up during his
period of ownership and he was not aware of any ponding on his
property during that 8-year period. He testified that he only had to
have the septic tank cleaned out once, and that was shortly after he
and his wife had purchased the property in 1987.
Liability:
Issue # 1: Merger
The first issue to determine is whether the warranty regarding the
septic system which is contained in the Agreement of Purchase and
Sale survived the closing of the transaction. It is agreed that the
Vendor did not provide any separate document on closing concerning
the warranty contained in the agreement of Purchase and Sale. Should
the Purchaser have insisted on obtaining a separate Warranty on
closing ? Counsel for the Plaintiffs provided me with two cases
which I have found helpful on this subject.
In Richview Construction Co. Ltd. v. Raspa, (1975) 66 D.L.R.
(3d) 193 (Ontario Court of Appeal), a warranty regarding the
servicing of a lot was provided in an Agreement of Purchase and
Sale. However, unlike our case, there was no provision in the
Agreement to indicate that the warranty was to survive the closing
of the transaction. Mr. Justice Arnup stated (at page 196):
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"It is small comfort…to
recognize that no problem would have arisen if the offer to
purchase had read: 'The vendor warrants that this is a fully
serviced lot, and agrees that this warranty shall survive
the closing of the sale'…." |
Mr. Justice Dickson, in the Supreme
Court of Canada decision of Fraser-Reid et al. v. Droumtsekas et
al. (1979), 103 D.L.R. (3d) 385 at page 397 said:
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"There is no presumption of
merger. The proper inquiry should be to determine whether
the facts disclose a common intention to merge the warranty
in the deed; absent proof of such intention, there is no
merger." |
Based on the wording in our Agreement
of Purchase and Sale that "this warranty shall survive closing"
and the evidence of the male Plaintiff and the male Defendant, I
find that the warranty regarding the septic system survived closing
and did not merge. It was not necessary to have a separate document
prepared and signed to indicate that the warranty lasted past the
time of the closing of the transaction.
Issue # 2: Effect of Warranty
The remaining issue for me to determine is whether the Defendant is
liable to pay to the Plaintiff the amount of the damages that the
Plaintiff incurred to repair and replace the septic system.
Neither side could refer me to any cases concerning warranties of
septic systems in real estate transactions. At the time of hearing
submissions, I indicated my surprise that there were not any cases
on the subject, especially since there are many rural properties
throughout the County of Huron and the Province of Ontario which are
serviced by septic systems.
Case Law:
Using Quick Law, I have been able to find four cases which are of
some assistance to our case at hand.
The most recent case is Vaz-Oxlade v. Volkenstein, [ 1998 ]
O.J. 5035, a decision of Mr. Justice Cullity rendered on the very
same day, December 2, 1998, that the evidence in this case was being
heard. In that case, the warranty read (in part) as follows:
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"Vendor warrants that the Septic
System has operated satisfactorily during his ownership of
the property …." |
The Vendor in that case testified
that there had been no problems with the system during the 8 years
that he had lived on the property and that at the time that he had
purchased the property, he had been given the same assurance. He
further testified that he had never had to pump the septic tank out
during his period of ownership. The sale closed in 1988. It was not
until 1995 that the Purchaser began to hear about problems with the
septic system. The burden of proof was on the Purchaser to prove her
case on a balance of probabilities. Mr. Justice Cullity found that
the Vendor had not experienced problems with the septic system and,
therefore, the Vendor was not in breach of his warranty.
In Palmer v. Pepin, [ 1997 ] O.J. 4135 (Ontario Court -
General Division), the Vendor gave a warranty which read (in part)
as follows:
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"…the [vendor] warrants, such
warranty to survive closing, that the septic system [is] in
good working order as of the date of closing." |
The septic tank was small and
required numerous pump-outs. It was eventually replaced with a
complete tile bed system. Mr. Justice Stortini found that the septic
holding tank was in good working order, and that there was no
warranty with respect to the septic tank size, pump-outs or the
existence of a tile bed system. Accordingly, he found that the
Vendor had not breached the warranty concerning the septic system.
The septic system was also discussed in McGowan v. Mulrooney,
[ 1992 ] O.J. 1838 (Ontario Court - General Division). Mr. Justice
Rutherford had this to say:
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"I accept the evidence of the
[Vendors] and the witnesses they called to testify that
there was no sewage odour or sign of malfunctioning of the
septic system during the occupation of the premises by the
[Vendors]. While it strains credulity to think that a septic
system would work adequately one day and not the next, there
was no expert or even experienced evidence before me to
suggest how quickly a functioning system can block up or
otherwise cease its normal operation. The evidence I accept
is that the system functioned as intended in June 1989 when
the [Vendors] made a representation that they had
experienced no problems with it, and that was still the case
when they moved out near the end of July. By the end of
August however, after about a month with little use, the
[Purchasers] experienced the difficulties detailed in the
facts.
On all the evidence I find that the [Purchasers] have failed
to establish, on the balance of probabilities, that when
[the male Vendor] made the representation to the
[Purchasers] concerning the location of and lack of problems
with the septic system, [the male Vendor] lacked an honest
and reasonably based belief in the truth of what he was
saying. The [Purchasers] have not discharged the burden of
demonstrating by a preponderance of evidence that the
[Vendors] concealed anything or were untruthful or even
reckless as to the truth or falsity of their
representation." |
Accordingly, the Plaintiffs' claim in
that case against the Defendants was dismissed.
The last case to which I wish to refer is the decision of Mr.
Justice Carnwath in Riddall v. McFarlane, [1997 ] O.J. 4626.
In that case, the Vendors gave a warranty that the "septic system
was in good working order at the time of closing," being September
1994. About 1 month after closing, the Purchasers noticed foul
septic odours coming from the sump pump well in the basement and
from various drains in the house.
In that case, the Vendors had had the septic system installed in
1987. In the following year, the septic system experienced a minor
"break-out" at the end of some of the tile runs. But apart from the
repairs required by that "break-out", the Vendors did not have any
difficulty with the septic system during their time of ownership.
The septic system never backed up into the house; it never caused
any odour in the house. There were no problems with the septic
system from 1989 until 1994.
Mr. Justice Carnwath had this to say about the evidence of the
Purchasers and the Vendors:
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"Both [Purchasers] testified. Nothing in their manner or
demeanour suggested in any way they were trying to deceive
the court. They appeared to be reliable and trustworthy. I
accept their evidence that within a few weeks after closing,
they detected foul smells coming from the sump pump and
drains in the house.
Both [Vendors] testified. Nothing in their manner or
demeanour suggested in any way they were trying to deceive
the court. I find their evidence to be trustworthy and
reliable. I accept their evidence that there was a minor
break-out at the end of some tile runs, shortly after the
septic system was installed in 1987. I accept their evidence
that after the repairs described above were carried out,
they had no problems with the septic system from 1989 to the
closing day, September 29th, 1994." |
In analyzing the facts before he
dismissed the Purchasers' claim against the Vendors, Mr. Justice
Carnwath went on to say:
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"The burden of proof is on the plaintiff [Purchaser] to
satisfy me on the preponderance of the evidence that the
septic system was not in good working order at the time of
closing. I find the plaintiff has failed to discharge the
burden. Finding as I do that [the Vendors] had no problems
with the system from 1989 to the date of closing, and
finding as I do that [the Purchasers] detected foul odours
from the sump pump and the drains, I turn to the
uncontroverted evidence. I find the septic bed became
inundated with water subsequent to closing which backed up
ultimately into the weeping tile, around the foundation of
the house, resulting in the odours described by [the
Purchasers]. Since this happened in the fall and not in the
wet spring season, either the system had broken down
completely or an independent act filled the system with
water. I find it more likely than otherwise that the
temporary re-routing of the sump pump discharge through the
rear of the property caused the weeping bed to fill up and
back up the system. [The male Purchaser] testified that
after the pumping of the septic system, the repair of the
broken seal at the tank itself and the relocation of the
sump discharge line, they experienced no further problems."
"I am unable to find that the odours were caused by the
faulty design of the system…. The system was in good working
order in 1989 to the closing date…." |
Analysis:
I agree that the burden of proof is on the Plaintiffs to satisfy me
on the preponderance of evidence that the septic system was not in
good working order on September 29, 1995, being the date of closing.
I found both Mr. McInnis and Mr. Grant to be credible witnesses. If
the evidence stopped with their testimony, I would find that the
Plaintiffs had not proven their case on a balance of probabilities.
In the McGowan case (supra) there was no expert or
experienced evidence for the trial judge to consider as to how the
septic system may have ceased to function properly. However, in our
case we have the evidence of Andy O'Brien.
I found Mr. O'Brien to be a credible witness. While he could not say
how long the blockage had been in the line, he did testify, and I
accept his evidence, that the amount of sludge that he found on
November 11, 1995, would not have been a normal build-up in the
septic tank from September 29, 1995 until November 11, 1995.
Therefore, I find that there were problems with the septic system on
or before September 29, 1995.
In the Van-Oxlade case (supra), 7 years elapsed from the time
of closing until problems with the septic system became known. In
our case, problems started occurring within approximately 2 weeks
after closing.
Based on all of the evidence that I heard, I do not find that the
demand on the septic system changed significantly from the time
during the ownership by the Defendants to the time during which the
Plaintiffs used it.
Before a person signs an unqualified Warranty, that person has an
obligation to have his or her thoughts verified, particularly when
(as here) the testing procedure would be as easy as opening up the
septic tank lid and checking the level and the content of the tank.
By not conducting any verification testing prior to signing the
Warranty, the Defendants were reckless in their conduct. My decision
might have been different if the Warranty given by the Defendants
had been qualified by the words "to the best of my knowledge." But
the Warranty here was not so qualified.
I find that the septic system was not in good working order on the
day of closing. Therefore, the Defendants breached the Warranty that
was given to the Plaintiffs concerning the septic system.
Damages:
The Plaintiffs paid a total of $ 465.45 to Grand Bend Sanitation for
its efforts to repair the problems. I find those efforts and
expenses were reasonable. The Plaintiffs had a new sewage disposal
system installed at a total cost of $ 4,546.92 (including the
Application Fee paid to the Huron County Health Unit). Based on the
testimony of Mr. O'Brien, I find that a new sewage disposal system
was necessary and that the cost incurred by the Plaintiffs was
reasonable. Thus, the total damages are $ 5,012.37.
Conclusion:
There be judgment in favour of the Plaintiffs against the Defendants
in the total amount of the damages of $ 5,012.37, together with
pre-judgment interest from April 1, 1997 at the rate of 3.3 % per
annum.
Costs:
At the conclusion of the oral argument, I indicated that I would
give each side an opportunity to deal with the issue of costs after
this decision had been released. Accordingly, if the parties are
unable to agree on the costs, they may make arrangements within 14
days with the Court Clerk for either a telephone conference call or
a court date at which time I will hear submissions on the issue of
costs.
__________________________
N. B. Pickell, Deputy Judge
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Arbitration Decisions - Norman Pickell - McInnis v. Grant
