Thread: Ruling against HI in Ontario re: mold

This case was in Canada but I'm wondering what the implications might be for US Home Inspectors.

Home inspector liable for cost of removing mould - Moneyville.ca
It's kind of scary to think that the inspector found no evidence of any water issues, yet was held liable for mold development three months after the inspection. I always tell my clients that a home inspection is a "snapshot in time" and that conditions can and do change over time, sometimes suddenly, and it's really impossible to predict what changes will occur.

Opinions? Anyone face something like this?

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Smells fishy to me, like the author is peddling mold testing...
No facts or pertinent details so as to be able to prove or disprove, just smells fishy.

Daniel Leung posted news of this case last year. There are details from the inspection and the trail missing in most of the commentary we see. Here's some more from another site, again a realtor warning other realtors. My impression is that the judge was almost as clueless as the two women who were damaged by the home inspection.

Three months after the purchase, mould issues had arisen, and the buyers sued the seller, inspector, and the real estate agent.
The judge felt that the home inspector should have known that parging on the brickwork could lead to moisture penetration into the foundation, which would create mould. She also felt that the buyer’s real estate agent should have read the inspection report and drawn the same conclusion: parging on the exterior wall could ultimately lead to mould. Lastly, the buyers were found responsible for not reading the report themselves.
As a result, the judge ruled that the home inspector was 50 percent responsible, the real estate agent was 25 percent responsible, and the buyer was also 25 percent responsible. The sellers could not be held responsible as they were not aware of any leaking during their six years of ownership, nor were there any evidence of a cover up done regarding this issue. The case is in the process of being appealed by the real estate agent and the home inspection company.

The agent could have told the inspector that the clients were freaked out about mold, but chose to remain silent.
The inspector neglected to warn the clients that the basement might be damp. We need to watch for signs of paranoia and respond to it in the short time we have with the client.
For some reason, the sellers never saw mould, but 3 months after the buyers moved in, the house was a mold farm.
The judge tried to spread the blame evenly, sort of, but after the appeal, it came down to 100% for the HI. It's a mess.

To some extent the judge sounds soft-hearted. From what's written in the article he appears to assume that because of a damaged driveway there could be mold issues. It bothers me that because the client did not understand the contract with the inspector that there would be no enforcement of the contract.

If a purchaser has concerns for mold despite none being found during an inspection then I'd recommend that they have the air be tested.

Originally Posted by Eric Barker

To some extent the judge sounds soft-hearted. From what's written in the article he appears to assume that because of a damaged driveway there could be mold issues. It bothers me that because the client did not understand the contract with the inspector that there would be no enforcement of the contract.

If a purchaser has concerns for mold despite none being found during an inspection then I'd recommend that they have the air be tested.

Yes. Thanks to this court case, we now know that driveways and parging on brick causes mould, and mold causes illness for which inspectors must pay.

The plaintiff didn't even read the inspection report. Never opened it. She signed a contract and the contract was tossed aside by the judge.

Here's last year's thread. This inspector needs a good lawyer. As Ray points out, prove the illness is due to mould. Prove the inspector acted irresponsibly by not reading the report word for word to the clients. The inspector identified a gap between the house and the drive and a need for parging repair. Why were no repairs carried out? Why would a person with health problems choose an 80 yr old brick-lined pit for a home? When a responsible person signs a document, that document is considered to have been read and acknowledged by the signee. And so on.

http://www.inspectionnews.net/home_i...ot-seller.html

Would be interesting to know the exact wording used in the report. The article states: "...The inspector said in his report that the exterior brickwork concrete at the base of the home near the driveway needed repair, as did sections of the driveway itself, but you could probably find this in most old homes.....".

If in fact this is the wording used then the HI left himself open for liability with stating "...as did sections of the driveway itself, but you could probably find this in most old homes.....".

This may be what the Judge focused on, who knows.

Mold is the result in this case. It could have been an undermining of the foundation in another scenario. A collapsed wall, etc.

The Judge could have been predisposed (biased ) toward the home plaintiff and the HI had no chance from the beginning. Tho the HI's presumed wording may have been the crux of the issue.

The appeal result would be interesting to know.

Given the subject matter and the audience, it is likely that my opinion will not be popular, and even subject to ridicule.
I think the inspector was at fault and erred on (at least) three points
The first point is the inspector reported a condition without reporting the possible consequences of the condition, and without making a recommendation of how to correct the condition.

The following is taken from the Judges summary (bold added)

[16] Mr. Koerth assessed this house which was at least 80 years old, and knew that the foundation would not have been damp proofed. He concluded and I agree that the moisture in the basement was caused by water penetration through the foundation walls which was permitted by lack of surface drainage away from the exterior walls.
[17] He concluded that the drainage issue did not arise suddenly before the purchase and that, unless the topography has changed, these issues arose long before purchase and not all at once.
[27] In the present case he ticked off all the boxes in his checklist but I am unable to find that he completed a thorough inspection based on his own evidence.*
[71] There was no explanation of the potential significance of driveway parging.* The breakdown of parging is significant as a sign of what may be occurring in the foundation wall below grade.* I find it is highly relevant to the potential for moisture penetration.

Simply reporting a condition is insufficient. Failure to also report the consequences of the condition, along with a recommendation of what should be done is a failure to perform your duty as an inspector.

Second point is, Focus on what is important to the customer
In this case, what was important to the customer was mold. An inspector knows that mold can only occur when there is sufficient moisture to support the growth of the mold. If there is no possible source of moisture then there is no mold.
Some time ago I started a thread http://www.inspectionnews.net/home_i...-lawsuits.html , in the thread I stated:
“The thing that will get you into more trouble than anything else is water damage.
Water damage, leaks, mould, and rot. Overlook any of these and your in for a ride you won’t like.
50% of your inspection time should be looking for water damage.”
This is what the Judge said in the summary:
[12] Simply put, all these manifestations of damage are the result of moisture.
[36] From the viewpoint of the several defendants, this finding would seem to conclude the matter.* However, it does not. The fact question in this case is not whether there was mould. The fact question is whether there was a concern about the condition of the*home*that would have caused Glenda Halliwell not to waive the inspection condition and purchase this house.*
In [36] the judge is talking about the conditions that lead to moisture penetration into the basement which was the root cause of the mold. The conditions were; improper drainage, and damaged/ missing parging.

The third and final point of error made by the inspector was the inspector tried to write a contract that excludes all liability of the inspector. This just cannot be done. In trying to do so, the inspector actually increased the liability. In the thread I referenced earlier I wrote:
You need to understand that even a New York lawyer cannot write a contract that will keep you from being sued.

In the Judges summary
[55] The aspect of his testimony that has no credibility relates to his interaction with Glenda Halliwell. After a self-serving review of all the limitations on what the home*inspection was about and repeatedly emphasizing there was no mould inspection, he asserted that Glenda Halliwell was given time to read and ask questions about the limited scope of the*home*inspection. This assertion is inconsistent with all evidence as to the time spent at the inspection. The documentation which limited the scope of the inspection was not adequately brought to the attention of Glenda Halliwell and it was inconsistent with the indicated promises made by Joel Lazarus and supported by the building*inspector’s website.*
[86] During argument I asked several times for Mr. Edwards’ counsel to explain what value was there in a*home*inspection that by its terms and conditions purported to remove responsibility for everything except what could be seen visually, where there were no checks or balances for the insight or ability of the inspector*to observe and there was no responsibility to explain why something might be significant.* While it is obiter and not necessary for my decision, I have not been satisfied that the standards as set out in the standard form documentation handed to the client actually set out standards of care for the industry at all. Rather they appear designed to immunize the*inspectors*from liability.
[87] The consumer gains no reassurance from these standards. There are no teeth in the standards and, fundamentally, in the circumstance such as the one I have heard about, there was no meeting of the minds to form a contract.*

Originally Posted by Garry Sorrells

The Judge could have been predisposed (biased ) toward the home plaintiff and the HI had no chance from the beginning.

This is the exact reason I decided to not "take my chances on arbitration" about 3 years ago. As the attorneys for State Farm said, you can be right as rain and still end up with a judgment against you.

The third and final point of error made by the inspector was the inspector tried to write a contract that excludes all liability of the inspector. This just cannot be done.

In Ontario it is done all the time and there are cases where the limitation of liability upheld, provided the contract and limitations were signed prior to start of inspection. And there was no finding of negligence.

I know this inspector and fortunately he is insured.

The case was appealed and the appellate court upheld the findings of the lower court and apportioned blame on the inspector 100% where as the lower court apportioned 50%.

Like you say, no contract can absolve you of negligence.

Thanks, Rick. No ridicule from me. These legal discussions are always educational.

CanLII - 2011 ONSC 1642 (CanLII)

CanLII - 2011 ONSC 390 (CanLII)

CanLII - 2012 ONCA 348 (CanLII)

I have not looked at the case documents, only what has been posted. But it does seem that the judge opened Pandora's Box, for the HI, when the judge decided ."... [87] The consumer gains no reassurance from these standards. There are no teeth in the standards and, fundamentally, in the circumstance such as the one I have heard about, there was no meeting of the minds to form a contract.*..."

No meeting of the minds = no contract. Then it becomes fun and games for the judge.

This Judge wanted a narrative report and not a check list.
"...[27] In the present case he ticked off all the boxes in his checklist but I am unable to find that he completed a thorough inspection based on his own evidence.*..."

The Judge has higher expectations than what the creators of the SOP had. And figured out that the writers of the SOP wrote them with self protection in mind. The pendulum may be swinging toward a Home Inspection Specialist rather than a Home Inspection Generalist and more than a visual inspection. Possibly the judge had been watching the Holmes show or had a bad experience with a home inspection.

This judge wanted the report to spell out extensively cause and effects to educate the client, which would be good for the client but many HI just don't know what they are and therefore can not write that narrative. Or just do not want to take the time.

Originally Posted by Garry Sorrells

I have not looked at the case documents, only what has been posted. But it does seem that the judge opened Pandora's Box, for the HI, when the judge decided ."... [87] The consumer gains no reassurance from these standards. There are no teeth in the standards and, fundamentally, in the circumstance such as the one I have heard about, there was no meeting of the minds to form a contract.*..."

No meeting of the minds = no contract. Then it becomes fun and games for the judge.

This Judge wanted a narrative report and not a check list.
"...[27] In the present case he ticked off all the boxes in his checklist but I am unable to find that he completed a thorough inspection based on his own evidence.*..."

The Judge has higher expectations than what the creators of the SOP had. And figured out that the writers of the SOP wrote them with self protection in mind. The pendulum may be swinging toward a Home Inspection Specialist rather than a Home Inspection Generalist and more than a visual inspection. Possibly the judge had been watching the Holmes show or had a bad experience with a home inspection.

This judge wanted the report to spell out extensively cause and effects to educate the client, which would be good for the client but many HI just don't know what they are and therefore can not write that narrative. Or just do not want to take the time.

The purchaser had two expectations:
(1) No repairs. The purchaser had no money for repairs and would not consider purchasing a house that needed repairs.
(2) No Mold. The purchaser had severe allergies and would not consider purchasing a house with mold.
The Judge believed the inspector knew and understood the purchasers expectations.
The inspector knew that the drainage and parging was defective, and that the defect would be costly to correct. The inspector also understood that if not corrected that water was likely to penetrate the basement wall, allowing mold to grow.
The inspector did inform the purchaser of the defect, but did not inform the purchaser of the need to repair or the consequences if not repaired.
There was no "Meeting of the minds" because, the purchaser believed the inspector understood and agreed to these expectations. The purchaser was given the contract (with limitations) only after (or during) the inspection. The Judge believed the inspector knew and understood the purchasers expectations BEFORE the inspection, but did not meet those expectations.
Instead the inspector relied on disclaimers in the contract, which was only given to the purchaser at the end of the inspection. Since the purchaser had no opportunity to understand the limitations in the contract until after the inspection . The Judge ruled that the written contract was invalid. Since the written contract was invalid, only the oral understanding (contract) remained. Again, the oral understanding was; no repairs and no mold.
Also, (as I understand it) the Judge believed the contract was written so as to protect the inspector from wrong doing, and did not offer the purchaser any reassurance.


You just cannot protect yourself from your own negligence with a contract.
Trying to do so will often result in having the entire contract voided.

Thanks, Raymond. Some heavy reading for a long winter night.

Originally Posted by Garry Sorrells

I have not looked at the case documents, only what has been posted. But it does seem that the judge opened Pandora's Box, for the HI, when the judge decided ."... [87] The consumer gains no reassurance from these standards. There are no teeth in the standards and, fundamentally, in the circumstance such as the one I have heard about, there was no meeting of the minds to form a contract.*..."

No meeting of the minds = no contract. Then it becomes fun and games for the judge.

This Judge wanted a narrative report and not a check list.
"...[27] In the present case he ticked off all the boxes in his checklist but I am unable to find that he completed a thorough inspection based on his own evidence.*..."

The Judge has higher expectations than what the creators of the SOP had. And figured out that the writers of the SOP wrote them with self protection in mind. The pendulum may be swinging toward a Home Inspection Specialist rather than a Home Inspection Generalist and more than a visual inspection. Possibly the judge had been watching the Holmes show or had a bad experience with a home inspection.

This judge wanted the report to spell out extensively cause and effects to educate the client, which would be good for the client but many HI just don't know what they are and therefore can not write that narrative. Or just do not want to take the time.

No doubt, this case should put us all on the alert. Yes, the expectations are higher, higher now than they were in 2006. The inspector may not have explained the scope of the inspection to his clients very well.
The judge, after a 13 day trial, concluded that the inspector had not met the expectations of the home buyer. The home buyer did not read the report. Maybe there is a reading comprehension problem there. The inspector may have breezed through the damp basement part of the house thinking his written report would detail the nasty stuff. He also thought his contract would protect him.

Fwiw, here is how the courts up here look at professionals and a standard of care.

When professional standards fail the test

All professionals are subject to performance standards dictated by the administrative bodies responsible for overseeing their profession. There are also standards not necessarily prescribed in any law or code but described at any point in time as the common standards within the profession. One might assume that conformance with both types of standard would protect a professional person from legal liability, but that is not always the case. Increasingly, there are occasions where the courts are willing to find that professionals have acted negligently even though they followed the accepted practice of the day.

The general legal principle that applies is that the standard of care applicable to a professional in the performance of his or her duties is one of reasonable skill, care and knowledge (Central Trust Company v. Rafuse, 1986). Although the standard is an objective one, the law will tailor it to fit each circumstance. Not surprisingly, there has been much debate about how that standard is to be applied in respect of professionals who, by definition, engage is the trading of their skill and knowledge. The one uncontroverted principle arising from that debate is that a professionals error of judgment will not constitute negligence. The problem, of course, has been how to distinguish misjudgment from negligence.

More to the point, when it comes to determining the importance of professional standards in respect of the legal standard just described, a court considers that a standard practice falls below the legal standard only if the standard practice fails to adopt obvious and reasonable precautions readily apparent to the court. Otherwise, the court will show deference to the standard practice.


Also here are the reasons an inspector will run into trouble:


The report identifies a problem condition, but NOT its significance or
meaning.

The report understates the significance or meaning of a problem condition.

The inspector verbally dilutes the significance or meaning of a problem
condition identified in the report.

The report fails to suggest that the client retain an expert to more fully
evaluate a problem condition.

The report fails to identify a limitation which prevents or hinders a more
thorough inspection of an area.

The inspector does not obtain a signed contract from the client.

The inspector presents the contract for the first time immediately before
the actual inspection.

The contract does not contain a limit of liability provision.

The contract does not identify what services are being offered and excluded.

During a reinspection, the inspector makes some admissions of liability to
the client or agent.

I read a portion of the case / link and that Judge's ruling is absurd. An inspector should have known and reported that some broken or cracked concrete somewhere could have caused mold problems ? You can cause mold problems by forgetting to close a window ! The limited liability contract verbiage does not apply because it was not "explained" to the client ? How does one prove what was "explained" to a client ? Not to mention the fact that the client agreed to all terms and conditions by signing. I suspect foul play from the bench.

Reading through (quickly), I would boil it down to:

The judge looking for a way to side withe the buyer/client/plaintiff, for what ever personal reasons the judge may have had at that time.

It began and ended, as far as the judge was concerned, that the buyer did not have the potential of moisture intrusion explicitly/exhaustively explained during the inspection walk through. In addition, the subsequent potential of that moisture intrusion to promote mold explicitly/exhaustively explained in both the walk through with the buyer and again in the written report.

Not reading the actual report, again I would believe that a definitive statement regarding potential moisture as it may have pertained to the property was not made. This would fall under the "protect yourself from future liability" in a report more is better despite and make no assumptions for other peoples intelligence or experience.

Many years ago I started reading all contracts out loud to those that were contracting with me as they read the contract. It began as a result of having a client that I found to have a low level of literacy and became a standard practice.

The question of the terms of the contract being presented after the inspection is a little bogus, but another twist that the Judge could use. The verbal contract seemed to take president over the written in the area of mold being a deal killer as well as repairs tot the property. The client should have added that language to the inspection contract as well as the Inspector. Granted it goes beyond the normal language in a HI contract, but the Inspector ears should have perked up when speaking with the client or agent and addressed the mold potential issues.

Even though the Inspector looked for mold and did not see any or smell/sense any, he failed to cover himself by theorizing that it may be there (as stupid as it may be to say that). It is back to covering potential liability for the HI.

The issues of a client signing away there legal rights has been set in president before this and in the lower 48 is now a moot subject. Though many still put limits on liability in their contracts it is just wasted ink and space on the paper.

Granted some of the case did revolve around making a psychic prediction on non visitable conditions and on past/current/potential conditions along with cause and effect that may be as a result of an 80 year old property construction methods. Though it still goes back to the clients concerns and statements regarding the purchase and the expectations of the Home Inspection. Even if the expectations are unrealistic you have to still address them in one manor or another if only to cover yourself.

" Know when to hold them and know when to fold them".

Hi Garry

The issues of a client signing away there legal rights has been set in president before this and in the lower 48 is now a moot subject. Though many still put limits on liability in their contracts it is just wasted ink and space on the paper.

I can only relate to you that is not entirely true up here and more so in Ontario where inspectors had their limitation of liability upheld provided the contract was presented and the limitation provision pointed out to the plaintiff prior to start of inspection.

Cheers,

Raymond,
That being the case may be why the Judge took the tact of rejecting the written contract as not a meeting of the minds. Thus removing the limit on liability.

It seems like a work around for the activist/prejudice judge. Rather than deal with the restriction to liability the judge moves the contract from written to oral creating an open playing field for a ruling with liability amounts set by the judge.

I don't believe the judge took the easy way out, because the defendant appealed and the appeal was overturned in favour of the plaintiff.

The mistake committed by the defendant was not having his contract read prior to start of inspection in which case had it been read may have resulted in less liability.

In Canada the onus is on the plaintiff to prove 5 elements of negligent misrepresentation. It appears from the evidence that the 5 conditions were met by the plaintiff.

In Queen v. Cognos Inc. (1993), 99 D.L.R.(4th) 626, the Supreme Court of Canada set out the five elements to be proven in the tort of negligent misrepresentation. These elements are as follows:

1. There must be a duty of care based on a special relationship between the parties.
2. The representation made by one party to the other must be false, inaccurate or misleading.
3. The representation must be made negligently.
4. The person to whom the representation is made must have reasonably relied on the representation.
5. The reliance must have been detrimental to that person with the consequence of his suffering damages.

I also have found out the inspector is not insured and it may not have mattered if he was as insurers will not write E&O policies covering mould. Either way it would appear the inspector would have been SOL anyway even if he had insurance.