IN THE SUPREME COURT OF BRITISH COLUMBIA
| Citation: | Ferrer v. Janik, |
|
| 2019 BCSC 1004 |
Date: 20190530
Docket: S75691
Registry: Nanaimo
Between:
Enrique Ferrer and Nelly Ferrer-Timmers
Plaintiffs
And
Roman Janik, Krystyna Janik, City of Parksville,
Coast Realty Group (Parksville) Ltd., Brenda Nicolls,
589557 B.C. Ltd. doing business as Central Island Homepro
Division of 589557 B.C. Ltd., Rudolph John Brulotte,
Louise Roy and Aaron Nicklen
Defendants
And
Roman Janik, Krystyna Janik, Coast Realty Group (Parksville) Ltd.,
Brenda Nicolls, 589557 B.C. Ltd. dba Central Homepro
Division of 589557 B.C. Ltd., Rudolph John Brulotte, Louise Roy,
Aaron Nicklen and Steven Osborne
Third Parties
Before: The Honourable Madam Justice Jackson
Oral Reasons for Judgment
| The Plaintiffs, appearing in person: | E. Ferrer N. Ferrer-Timmers |
| Counsel for the Defendants, 589557 B.C. Ltd., Rudolph Brulotte: | N. Trevethan |
| Counsel for the Defendants, City of Parksville: | A. Buckley |
| Place and Date of Trial/Hearing: | Nanaimo, B.C. May 30, 2019 |
| Place and Date of Judgment: | Nanaimo, B.C. May 30, 2019 |
[1] This decision was delivered in the form of Oral Reasons. For publication, the Reasons have been edited for style and grammar.
[2] On or about August 9, 2014, Enrique Ferrer and Nelly Ferrer-Timmers (the “Plaintiffs”) contracted to purchase a home at 864 Gaetjen Street, in Parksville, British Columbia (the “Home”). A few days later, on August 15, 2014, the Plaintiffs entered into a contract with 589557 B.C. Ltd., doing business as Central Island Homepro Division Of 589557 B.C. Ltd., and Rudolph John Brulotte (collectively the “Applicants”), whereby the Applicants were to conduct an inspection of the Home (the “Inspection Contract”). Under the Inspection Contract, in exchange for the Applicants’ services, the Plaintiffs were to, and did, pay a base fee of $525.00 plus applicable taxes, totalling $551.25 (the “Fee”).
[3] The Applicants bring this application under R. 9-7 of the Supreme Court Civil Rules, the Summary Trial Rule, and seek judgment on the issue of whether the Plaintiffs’ claim for damages is limited to the Fee they paid pursuant to the Inspection Contract for the home inspection conducted by Mr. Brulotte. The Applicants’ position is that the Inspection Contract included a term limiting the Applicants’ liability to the Fee paid by the Plaintiffs (the “Limitation of Liability Clause”). The Plaintiffs say the Limitation of Liability Clause is not enforceable and does not limit the Applicants’ liability.
[4] A threshold issue is whether this application is suitable for summary trial. Suitability for summary trial depends on the facts and legal issues in each particular case. In Inspiration Management Ltd. v. McDermid St. Lawrence Ltd. (1989), 36 B.C.L.R. (2d) 202 (C.A.) [Inspiration Management] at para. 48, Chief Justice McEachern set out a non-exhaustive list of factors a chambers judge is to consider in determining whether it would be unjust to grant a judgment in a summary trial. These factors include:
§ the amount involved;
§ the complexity of the matter;
§ the urgency;
§ prejudice likely to arise by reason of delay;
§ the cost of taking the case forward in relation to the amount involved;
§ the course of the proceedings; and
§ any other matters which arise for consideration.
[5] In Gichuru v. Pallai, 2013 BCCA 60 at para. 31, Justice D. Smith supplemented the list of factors articulated in Inspiration Management by adding “the cost of litigation, the time of the summary trial, whether credibility is a critical factor in the determination of the dispute, whether the summary trial may create an unnecessary complexity in the resolution of the dispute, and whether the application would result in litigating in slices”: see also Dahl et al. v. Royal Bank of Canada et al., 2005 BCSC 1263 at para. 12, upheld on appeal at 2006 BCCA 369.
[6] The Applicants are of the view that the issue is suitable for summary trial. Based on the Plaintiffs’ response to application, I initially understood that they were in agreement as to suitability. However, in their submissions (made by Mr. Ferrer and adopted by his wife Ms. Ferrer-Timmers), the Plaintiffs suggested there are conflicts in the evidence, and thus I am left with the impression they may not agree the matter is suitable for summary trial. I have proceeded on the basis that the parties do not agree the matter is suitable for summary determination. In any event, it is always the case that the chambers judge hearing a summary trial must be satisfied the matter is suitable, even where the parties are in agreement: Westsea Construction Ltd. v. 0759553 BC Ltd., 2012 BCSC 1799 at para. 93.
[7] In my view, the issue raised in this application is suitable for summary trial. Unlike the factual and legal issues associated with the substantive claim, the factual and legal questions surrounding the issue presented for summary trial are not complex, and determining the issue will not cause delay in the proceedings. A trial on the substantive issues will likely be prolonged and expensive, but determination of the summary trial issue will not add to the complexity of the dispute. I do not view the summary trial application as litigating in slices. The parties would benefit from knowing whether the damages recoverable from the Applicants are limited to the Fee before they proceed to trial, since a finding in the Applicants’ favour could impact the overall resolution of the matter. Therefore, I elect to exercise my discretion to determine the issue presented on summary trial.
[8] The Applicants argue the Limitation of Liability Clause is not vague or ambiguous and must be enforced. They submit the clause offers them protection for negligence in the performance of the Inspection Contract by limiting their liability to the Fee they were paid. The Applicants submit the Plaintiffs’ claim falls within the scope of the Limitation of Liability Clause and that the protection it provides is therefore applicable. The Applicants argue the Limitation of Liability Clause is not unconscionable and that there are no overriding policy considerations that outweigh the public interest in freedom of contract.
[9] In the Plaintiffs’ application response, they argue that based on the costs they allege they have incurred as a result of the Applicants’ negligence, and the time they have spent pursuing their claim (the notice of civil claim was filed in May of 2015), it would be unjust to limit the Applicants’ penalty to the Fee. They also argue there is an inequality of bargaining power, with the Applicants having the advantage, because the Inspection Contract was, they allege, a standard form contract. The Plaintiffs also seem to suggest the Limitation of Liability Clause should not be enforced because there is an overriding public interest in not allowing home inspectors to limit their liability through contract.
[10] The correct approach to considering the enforcement of limitation of liability clauses was set out by the Supreme Court of Canada in Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4 at paras. 122-123. In summary, the process involves the following three enquires:
1. does the exclusion clause apply in the claim made?;
2. if so, was the exclusion clause unconscionable at the time the contract was made?; and
3. if it was not unconscionable, should the court nevertheless refuse to enforce the clause on the basis of an overriding public policy?
[11] Regarding the third enquiry, the burden lies with the party seeking to avoid enforcement to establish there is a public policy reason for not enforcing the clause that outweighs the strong public interest in the enforcement of contracts.
[12] As the party seeking to rely on the Limitation of Liability Clause, the onus is on the Applicants to establish its applicability. However, the onus is on the Plaintiffs to establish the Inspection Contract is unconscionable (Loychuk v. Cougar Mountain Adventures Ltd., 2012 BCCA 122 at paras. 29-30) or that there is an overriding public policy reason not to enforce the Limitation of Liability Clause that outweighs the public interest in freedom and certainty of contract, as well as the enforceability of contractual obligations (Tercon at para. 123).
[13] The Limitation of Liability Clause reads as follows:
2.1 in the event of any errors, omissions, breach of contract, and/or negligence by the inspector the client hereby agrees to the following restrictions on their legal rights: …
(d) the inspector’s total liability to the client for errors, omissions, breaches of contract and/or negligence in any part of the inspection or inspection report shall be limited to the amount of the fee paid for the inspection. For greater clarity this means that if the client sues the inspector any damages awarded cannot exceed the cost of the inspection.
[14] Although the Plaintiffs suggested the claim involves gross negligence on the part of the Applicants, gross negligence was not pled in the Plaintiffs’ amended notice of civil claim. As noted by Madam Justice Dickson in Creyke v. Creyke, 2016 BCCA 499 at para. 47, the pleadings dictate the issues to be determined at trial. Further, the inspection was a visual inspection, and the Plaintiffs acknowledged that the defects alleged were not observable on visual inspection.
[15] At para. 52 of their amended notice of civil claim, the Plaintiffs allege that the Applicants “were negligent in their complete inspection of the residence and completion of the home inspection report” and list particulars of the negligence. If the Applicants were to be found liable in this case, it would be for negligence in their inspection of the home or their preparation of the report. The allegations made by the Plaintiffs fall squarely within the scope of the Limitation of Liability Clause.
[16] The Plaintiffs rely on the decision of Justice Burnyeat in Salgado v. Toth, 2009 BCSC 1515 as support for their position that the Applicants should not escape liability under the contract. However, Salgado predates the Supreme Court of Canada’s decision in Tercon, and therefore does not apply the analysis mandated by the Court in Tercon.
[17] Further, in Salgado at paras. 73-75, Burnyeat J. found that the plaintiffs had not read the terms of the contract prior to signing it, they felt rushed, and were given very little time to consider the contract before being presented with it, which was after the presentation of the inspection report. As pointed out by counsel for the Applicants, all of those facts are distinguishable from the facts of this case. The evidence is that Mr. Ferrer read and understood the Inspection Contract before he signed it and that Mrs. Ferrer-Timmers deferred to her husband’s decision regarding its suitability. Further, the court in Salgado found that the contract and the report were separate, and that there was no term in the report excluding representations and warranties. In addition, Burnyeat J. found the home inspector should have drawn the exclusion and waiver clauses to the attention of the plaintiffs.
[18] In this case, both of the Plaintiffs initialed the Limitation of Liability Clause, and there was no suggestion by the Plaintiffs that they were unaware of its meaning or effect. In addition, the contract in Salgado defined inspector as the corporate entity, and not the inspector in his personal capacity. In this case, the Inspection Contract defines inspector as including both of the Applicants. As such, Salgado is clearly distinguishable on its facts and does not assist the plaintiffs. I would add that in my view, the observation of Burnyeat J., that the nature of advice given by a home inspector invites reliance, does not alter the effect or enforceability of a term which limits liability and was agreed to by parties to a contract, absent a finding of unconscionability or an overriding policy consideration, as set out in Tercon.
[19] I find the Plaintiffs’ claim falls within the scope of the Limitation of Liability Clause.
[20] I turn therefore to the second inquiry under the Tercon test.
[21] In order to establish the inspection contract was unconscionable, the Plaintiffs must establish two things: first, proof of inequality in the position of the parties, with the Plaintiffs having the weaker position; and second, proof of substantial unfairness in the bargain obtained by the Applicants: Loychuk at paras. 29-30.
[22] While the Plaintiffs argue the Inspection Contract is a standard form contract, there is no evidence before me to that effect. The evidence demonstrates that Mr. Ferrer is a successful business person. He is an engineer and holds Masters degrees in both engineering and science. Previously, he was in the business of electrical energy trading. He has also been employed as a college instructor in electrical technologies and as a design engineer. Over the course of his lifetime, he has owned over 20 houses, and according to his evidence was not surprised the Applicants presented the Inspection Contract, as he had lots of experience with house inspections in relation to the previous houses he had purchased. There was no evidence that the Plaintiffs sought to negotiate any of the terms of the Inspection Contract.
[23] Based on the evidence, I find that the Plaintiffs understood what they bargained for and were on equal footing with the Applicants in entering into the Inspection Contract.
[24] Given my finding that the Plaintiffs have failed to establish the first element of unconscionability, it is not necessary for me to address the second element, namely proof of substantial unfairness in the bargain obtained. However, the observations of Justice Rogers in Gordon v. Krieg, 2013 BCSC 842 at paras. 165-166 are in my view, equally applicable in the context of the Inspection Contract in this case. Given the price paid by the Plaintiffs for the services the Applicants provided, and the nature of those services, which involved only a visual non-invasive inspection, in my view, the bargain made between the parties was not unfair, let alone substantially unfair. I will turn now to the third element of the Tercon test.
[25] As noted earlier, the Plaintiffs bear the burden of establishing that this Court should nevertheless refuse to enforce the Limitation of Liability Clause on the basis of an overriding public policy that outweighs the very strong public interest in the enforcement of contracts.
[26] As the Applicants correctly point out, absent a legislative prohibition, parties are free to contract out of tort liability provided they do so in clear and unambiguous language: Gordon v. Krieg at para. 160; Calder v. Jones et al., 2010 BCPC 77, at paras. 71-76.
[27] In support of what I understood to be a public policy argument, the Plaintiffs rely on the following sections of the Home Inspector Licensing Regulation, B.C. Reg. 12/2009 [Regulation]:
Conditions on licence
7.1 The director may impose, as a condition on a licence, one or more of the following:
(a) that the licensee take periodic instruction or training, as specified by the director, in a program related to home inspection that is approved by the director;
(b) that the licensee obtain and maintain errors and omissions insurance and comprehensive general liability insurance, in amounts approved by the director.
…
Home inspection contract requirements
12 (1) In addition to any information required under sections 19, 20 and 23 of the Act to be contained in a home inspection contract, a home inspection contract must
(a) contain the address of the property to be inspected,
(b) specify what will be covered by the home inspection,
(c) state whether or not the licensee will inspect for mould,
(d) state whether or not the licensee will inspect for asbestos,
(e) state that the home inspection will be non-invasive or specify the invasive procedures that will be used, and
(f) contain the following statement:
Home inspectors operating in British Columbia are required to be licensed under the Business Practices and Consumer Protection Act and are regulated under that Act. The services of a home inspector are not provided on behalf of, or in affiliation with, the Province of British Columbia or the Business Practices and Consumer Protection Authority (commonly known and doing business as Consumer Protection BC). For more information on the regulation of home inspectors, what a home inspection should involve, how to select a home inspector and about your rights as a consumer, please contact Consumer Protection BC.
(2) A licensee must not, in a home inspection contract,
(a) exclude from the home inspection a garage or carport, whether or not the garage or carport is attached to a dwelling,
(b) purport to limit the liability, or the amount of the liability, of the licensee, or
(c) purport to limit the time for making a claim against the licensee.
[28] However, those provisions were only added to the Regulation in 2016 (B.C. Reg. 70/2016) and were not made retroactive. Those provisions were effective on September 1, 2016, and were thus not in effect when the parties entered into the Inspection Contract in 2014. Further, those two additions - the requirement to carry liability insurance and the prohibition on limiting liability - go hand in hand by providing mutual protection for both the licenced inspector and the consumer of the inspector’s services, and are therefore neutral in their overall effect. Refusing to enforce the Limitation of Liability Clause would create an advantage for one party a the contract and a corresponding deprivation to the other. While it may be fair to suggest the addition of these provisions to the Regulation was a development grounded in public policy, in my view, it does not follow that the additions provide a basis to override clear contractual terms bargained by the parties prior to their introduction in 2016.
[29] After careful consideration of the evidence and the submissions of the parties, and for the reasons already noted, I find and order that the Plaintiffs’ claim for damages against the Applicants is limited by the Inspection Contract to the Fee paid by the Plaintiffs in the amount of $551.25.
[30] The Applicants were the successful party on this application and therefore would normally be entitled to costs. If the parties cannot agree on costs, they may contact Supreme Court scheduling to seek a further date to appear before me to address that issue, provided they do so within 30 days of these reasons.
“Jackson J.”
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