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Capelet v. Brookfield Homes (Ontario) Limited

Can the discovery of construction deficiencies in a new home, such as water infiltration leading to mould growth, support a claim for emotional and psychological injuries? While a recent decision of the Ontario Court of Appeal has found that, at least in some circumstances, it does not, the Court of Appeal also makes clear that this decision is based on a very specific set of facts, and does not stand for the proposition that no claim for damages for psychiatric and emotional injury from negligent home construction can ever be advanced.

In Capelet v. Brookfield Homes (Ontario) Limited, 2018 ONCA 742, the Ontario Court of Appeal dismissed the plaintiff’s appeal of the defendant Brookfield’s successful summary judgment motion (2017 ONSC 7283) dismissing his action. Mr. Capelet had sought damages of over $6 million for losses he claimed to have suffered from mould discovered in a property he purchased from Brookfield in 1997 (the “Property”). The mould was discovered in February of 2002 and was remediated by Brookfield approximately one month later. Mr. Capelet commenced an action and claimed several categories of damages, including for psychological and emotional injuries, physical illness, and certain out-of-pocket expenses.

Upon discovery of the mould, Brookfield promptly retained Pinchin Environmental Ltd. to test the Property, and hired contractors to remedy the situation. Approximately eight days after Pinchin’s test was carried out, it conducted a second inspection and concluded that no further work was required and that the Property was fit for occupancy. Mr. Capelet and his wife sold the home several months later, although Mr. Capelet acknowledged he did not suffer any loss on the Property sale due to the mould issue.

Mr. Capelet commenced an action on October 24, 2003, and the matter was set down for trial on May 21, 2009. Examinations for discovery took place in 2008, and further examinations took place in 2015. Brookfield served expert medical reports from a toxicologist, a forensic psychologist, and an opinion on mould impact to household items from Pinchin. These reports concluded that Mr. Capelet suffered no personal injury or damage to personal property. Mr. Capelet had not served medical or other expert reports as of late 2016, prompting Brookfield to bring this motion. Mr. Capelet only served reports from a physician and forensic psychiatrist when required to by the chambers judge, who ordered that if Mr. Capelet did not produce the reports, his action would be dismissed. While the reports provided evidence on his physical, emotional and psychiatric injuries, no reports were provided to opine on issues of property damage or financial losses.

The motion judge found that the damages claimed by Mr. Capelet were either not foreseeable, were unlikely to have been caused by the construction defects in the Property, or were not supported by credible evidence. As there were no genuine issues requiring a trial, the motion judge granted Brookfield’s motion for summary judgment and dismissed the action with costs.

The motion judge relied on the principle set out in Mustapha v. Culligan of Canada Ltd., 2008 SCC 27, in which the Supreme Court of Canada held that “in cases where mental injury is claimed, it must be shown that the injury in question is one that a person of ‘ordinary fortitude’ would suffer in the relevant circumstances.” While there was evidence that the mould created emotional distress for Mr. Capelet that negatively impacted all aspects of his life, it was found that his reaction to the mould was “highly unusual and a product of particular sensitivities on his part.” The loss suffered by Mr. Capelet was found not to be “a reasonably foreseeable consequence of faulty home construction.” Further, the motion judge found that Ontario’s regime for builders and purchasers of new homes does not provide compensation for emotional or psychiatric injuries suffered by purchasers arising from defects in their homes. In addition, after reviewing the expert evidence, the plaintiff failed to provide evidence that it is more likely than not that the mould caused physical injuries.

The sole issue before the Ontario Court of Appeal was whether the motion judge erred in dismissing the claims for psychological and emotional injuries on the basis that they were too remote, and if so, whether Mr. Capelet was entitled to a trial on these claims. The Court of Appeal found that the motion judge had not erred, and dismissed Mr. Capelet’s appeal.

In reaching its decision, the Court of Appeal found that the motion judge had assumed that Mr. Capelet had suffered considerable mental distress flowing from the discovery of mould at the property, and that his current emotional and psychiatric problems could be attributed in whole or in part to the exposure to and discovery of the mould.

The Court of Appeal agreed with the motion judge’s conclusion that Mr. Capelet’s claims for emotional or psychiatric injury were not recoverable as a matter of law. The appellant’s arguments that the motion judge ignored or rejected evidence that he was a person of ordinary fortitude was not accepted.

What was less clear, however, was whether the Court of Appeal agreed with the motion judge’s second ground for dismissing Mr. Capelet’s claim, which was that the warranty in the parties’ agreement of purchase and sale limited Mr. Capelet’s recovery for “damage, loss or injury of any sort”. The motion judge stated that Ontario has long regulated the rights and responsibilities of purchasers and builders of new homes in the province, including warranties regarding the proper construction of the home, a process for conciliation of disputes, and a guarantee fund to provide compensation to purchasers who have suffered losses from breach of warranty. The motion judge found, however, that “this scheme does not provide compensation for emotional or psychiatric injuries suffered by purchasers resulting from defects in their new homes”. As a result, the motion judge found that Mr. Capelet’s claims for emotional or psychiatric injury were not a reasonably foreseeable consequence of faulty new home construction by Brookfield.

While the Court of Appeal considered the motion judge’s finding that the warranty provision in the agreement of purchase and sale limited Mr. Capelet’s right to recovery, and said that it was relevant to refer to the agreement of purchase and sale and what the parties would have anticipated at the time of contract execution, the Court of Appeal also said that “there is no indication that the motion judge treated this part of his analysis as determinative of the negligence claim or the issue of remoteness of damages”. By declining to rule on whether the warranty provision in the new home agreement of purchase and sale was a determinative factor in the negligence and foreseeability analysis, the Court of Appeal’s decision leaves open the question of whether Ontario’s new home warranty regime can conclusively dispose of any and all mental injury claims for negligent construction, to be decided in a future matter.

The Court of Appeal was careful to qualify that the motion judge’s decision did “not rest on the proposition that all claims for damages for psychiatric and emotional injury from negligent home construction are foreclosed”. Although in this case Mr. Capelet did not adduce sufficient evidence to prove his claim, the law of negligence since Mustapha has sought to “impose a result that is fair to both plaintiffs and defendants, and that is socially useful”, and has thus allowed compensation for reasonably foreseeable injuries. It stands to reason that compensation for mental injury might be awarded in future cases where a builder’s negligent construction does indeed affect a person of “ordinary fortitude”, and is therefore foreseeable. Whether such damages can or should be awarded will necessarily be a fact-driven and case-dependent analysis.

Although not addressed specifically by the Court of Appeal, the motion judge’s decision also provides yet another example of the court’s willingness to apply the principles espoused by the Supreme Court of Canada in the decision of Hryniak v. Mauldin, and the view that summary judgment under Rule 20 of the Rules of Civil Procedure should be seen as a legitimate and important means of facilitating access to justice and reducing the time and cost involved in civil litigation. In this case, it had been over 14 years since the litigation was commenced, numerous affidavits and expert reports had been filed by both parties, and extensive cross-examinations had been conducted. It was clear to the motion judge that a sufficient evidentiary record had been filed to determine the issues in the litigation. The motion judge also affirmed the importance of both parties putting their best foot forward on such motions by mustering all their evidence for the motion, instead of attempting to save some for trial.

The motion judge’s decision also illustrates the tendency of the court to shy away from partial summary judgment. In reaching his decision, the motion judge considered the entirety of Mr. Capelet’s claim on this motion, including certain expenses and financial losses that were not, in Mr. Capelet’s view, specifically addressed in Brookfield’s notice of motion. Mr. Capelet’s argument that the motion judge should not deal with these points during the motion would, in essence, have made the motion a motion for partial summary judgment, which the motion judge was not prepared to accept. To support his decision on this point, the motion judge held that the notice of motion was drafted broadly enough to include summary judgment on Mr. Capelet’s claims for financial losses arising from the move to a new home, and included a report dealing with claims for losses to personal property. The motion judge found that Mr. Capelet had ample time and opportunity to submit evidence and argument on this point during the motion, but failed to put his best foot forward.

The decision of Capelet v. Brookfield Homes (Ontario) Limited therefore provides a good example of the use of summary judgment to dispose of long-lingering claims, and a reasoned application of the Mustapha “ordinary fortitude” test to a construction case. The Court of Appeal decision does not, however, definitely rule on whether claims for mental injury stemming from faulty home construction are (or are not) recoverable at law, opting to limit its decision to this particularly unique set of facts. It will take future cases, and a different factual matrix, to reach a conclusion on this interesting legal issue.