West Vancouver, Hacienda Del Norte: Court dismisses appeal; suggests former homeowners who purchased defective leaky rotten house without pre-purchase inspector would win $710,000 damage claim if they sued post-purchase inspectors

COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Cardwell v. Perthen,

 

2007 BCCA 313

Date: 20070606


Docket: CA033932

Between:

Eric Cardwell and Diane Susan Cardwell

Appellants

(Plaintiffs)

And

Juergen E. Perthen and Helga G. Perthen

Respondents

(Defendants)

Before:

The Honourable Madam Justice Prowse

The Honourable Madam Justice Levine

The Honourable Madam Justice Kirkpatrick

 

J.A. Hand, and

W. Sun

Counsel for the Appellants

P. Sandhu

Counsel for the Respondents

Place and Date of Hearing:

Vancouver, British Columbia

March 29, 2007

Place and Date of Judgment:

Vancouver, British Columbia

June 6, 2007

 

Written Reasons by:

The Honourable Madam Justice Levine

Concurred in by:

The Honourable Madam Justice Prowse

The Honourable Madam Justice Kirkpatrick

Reasons for Judgment of the Honourable Madam Justice Levine:

Introduction

[1]                This appeal concerns the liability of a vendor of a residential property for defects and deficiencies discovered by the purchasers after completing the purchase without a professional inspection.  The appellants, the purchasers, claimed a loss of $710,000 suffered on the sale of the home.  The trial judge found the respondent, the vendor, liable for damages of $35,442 for dangerous latent defects which he had failed to disclose.  The appellants claim the trial judge erred in articulating and applying the legal test distinguishing patent and latent defects; failed to consider whether the mitigation efforts of the purchasers were reasonable; and failed to consider the appellants’ claim of negligent construction.  They ask this Court to reassess their damages.

[2]                The trial judge’s reasons for judgment are reported at (2006), 41 R.P.R. (4th) 118 and may be found at 2006 BCSC 333.

[3]                For the reasons that follow, I would dismiss the appeal.  The trial judge did not err in articulating and applying the legal test for distinguishing patent and latent defects.  Whether or not the mitigation efforts of the appellants were reasonable at the time they suffered their loss, the vendor cannot be held liable for their loss.  For the reasons given by the trial judge, it is not necessary to decide the appellants’ claim for negligent construction.  There is no basis for this Court to interfere with the trial judge’s assessment of the damages.

Background

[4]                In May 2000, the appellants agreed to purchase the residence located in West Vancouver, B.C. for $1,350,000.  The appellants viewed the home twice with their real estate agent.  Their second offer, for $300,000 below the asking price, without conditions and for all cash, was accepted by the respondent.  The contract of purchase and sale was not made subject to the appellants completing an inspection of the home, and the appellants did not retain a qualified inspector to inspect the home before closing.  

[5]                Shortly after the closing, the appellants became aware of structural deficiencies, mould growth, and leaks throughout the home.  Six months after the purchase, the appellants sold the home in an “as is” condition for a loss of $710,000. 

The Renovations

[6]                The respondent purchased the residence in 1986.  At that time, it was a 2,000 square foot, single-storey bungalow.  In the following years, the respondent, who had considerable experience in matters of general construction and property management, extensively renovated the property.  Among other modifications, he built a series of retaining walls; relocated the kitchen, added a bathroom and bar to the home; moved an interior wall; added a beam to the dining room; and enclosed an outdoor patio to enlarge the living room area.  The respondent carried out most of the renovations himself, or had them done at his direction. The respondent and his wife lived in the residence throughout the renovations.

[7]                The respondent originally commenced the work without obtaining the necessary permits.  The neighbours became concerned about the work, especially the construction of the retaining walls.  Following complaints from one or more of the neighbours, the District of West Vancouver sent an inspector to the property. Although the District expressed some initial concerns about the deficiencies in the building plan, it granted the required permits to continue with the renovations.  From that point on, periodic inspections were conducted by the District.  Numerous deficiencies were identified over time, and the respondent remedied those deficiencies or allayed the District’s concerns by hiring expert third parties to prepare inspection reports to confirm the integrity of the designs and renovations. 

[8]                In the end, the property was transformed from a modest bungalow into “Hacienda Del Norte”: a spacious, Santa Fe style residence with a partial upper level, extensive pitched and flat-roof areas, a two-storey ornamental bell tower, a covered portico supported by columns and a second garage.  

Discovery of Defects and Deficiencies

[9]                Before moving in, the appellants decided to undertake some minor cosmetic renovations to the home.  They intended to replace the carpet in the living room and home office with tile.  When they lifted the existing floor, they found that the sub-floor had been constructed over old carpeting, the wiring did not go through the floor joists but over it, and a vapour barrier was installed on top of the joists — all of which caused moisture to collect under the floor, resulting in rot and mould.  Flaws were also discovered in the master bedroom: below the sub-floors, the wood timbers were soggy and black fuzzy mould was present on some of the joists.  As the sub-floors were removed throughout the house, the appellants began to realize the extent of their problem.  Underneath the sub-floor in the family room, there was no concrete slab, only soil.  Black water was dripping out of the joists and there appeared to be mould. 

[10]            The appellants sought a report on deficiencies from Gordon Spratt & Associates, consulting engineers.  The two principal contacts at Gordon Spratt & Associates were Mr. Trundle and Mr. van Blankenstein.  The appellants received a report on October 10, 2000 (the “Spratt Report”), which listed numerous deficiencies to the floors, walls, roof structures, outbuildings and retaining walls.  The Spratt Report recommended that the appellants either demolish the house and build a new one, or sell it. 

[11]            The appellants retained cost estimators, Heylar & Associates, to review the Spratt Report and determine the cost to repair the deficiencies.  The estimate was in excess of $1,000,000. 

[12]            The appellants believed their only two options were to either rebuild the home at considerable expense, or sell it and cut their losses.  Based on the Spratt Report and the cost estimate, and motivated by the danger created by the toxic mould, the appellants chose to sell the home. 

Re-sale of  the Home

[13]            The property sold quickly to an associate of Mr. Bebek, a builder, for $700,000. The intention was that Mr. Bebek and his brother would cosmetically restore the house for resale.

[14]            Six months after they purchased the home, the appellants realized a loss of $710,000 (including fees and other charges on the sale).

[15]            At trial, Mr. Bebek testified that he spent approximately $270,000 to cosmetically upgrade the property (including $50,000 to remodel the kitchen and a bathroom).  This amount represented his out-of-pocket expenses, and did not include amounts for wages or management fees for him or his brother.  He estimated that these fees would be about an additional 10-15% of the $270,000. 

[16]            In August 2003, an associate of Mr. Bebek sold the property for $1,265,000 to the McLoughlins.  Prior to the purchase, the McLoughlins commissioned an inspection, which revealed that some flashing had to be added and that other minor work was needed.  None of this was significant.  Shortly after the purchase, the roof began to leak.  The McLoughlins spent approximately $100,000 upgrading the home.  They did not break down how much of this was expended solely on repairing the leaky roof.  The McLoughlins decided to sell the property for $1,350,000 after owning it for only nine months.

The Lawsuit

[17]            The appellants sued the respondent for negligence (including negligent misrepresentation and negligent construction), fraud, and breach of contract.  Before trial, they settled their claims against the respondent’s real estate agent, the realty company for whom she worked, the District of West Vancouver, the engineering company retained by the respondent, and one of its engineers. 

Trial Judge’s Reasons for Judgment

[18]            The trial judge reviewed the background and evidence in detail.  She discussed (at paras. 73-118) the “Details of the Principal Alleged Deficiencies”, with reference to the Spratt Report, the trial evidence of Mr. van Blankenstein, and other experts who gave evidence for each of the parties. 

[19]            The trial judge described the Spratt Report (at para. 73):

In overview, the Spratt Report is a strongly worded condemnation of the construction quality of practically the entire residence and every out-building and the retaining walls.  It describes work as being crude and unprofessional at times achieving an appalling workmanship standard.  With a broad brush it paints a picture of a grievously flawed residence, with massive leaking or potential for significant water ingress, mold, structural defects and settlement concerns.  In effect, it advocates demolition of much of the house.  Also in evidence were videos capturing Mr. van Blankenstein’s criticisms on site taken just before the Cardwells sold and one taken by Mr. Perthen during a weekend break of trial showing the current exterior condition.  I will discuss below, under separate headings, the main areas of concern.

[20]            In reviewing the main areas of concern with the property. as described in the Spratt Report, the trial judge found that neither Mr. van Blankenstein nor the other experts supported the opinions that had been expressed in the Spratt Report.  The trial judge noted that with reference to “Walls and Sub-Floor Deficiencies”, Mr. van Blankenstein “became surprisingly equivocal on the moisture issue” (at para. 75); on “Roof Deficiencies”, he “qualified this statement [about water penetrating the roof] very significantly on cross-examination where he agreed that rain water was in fact not penetrating when he wrote his report and that his report was merely speaking to the potential of that occurring” (at para. 85); on the “Foundations”, “Mr. van Blankenstein’s evidence was insufficient to show that the foundations were inadequate or failing or that there was systemic problems with the walls, roof or floors” (at para. 97).  In the result, the trial judge placed little weight on the Spratt Report (at paras. 116-118):

            In carefully weighing the evidence, I have concluded that the Spratt Report conjures a deeply misleading impression of the true state of the property.  I have already referred to a number of instances where Mr. van Blankenstein’s criticisms were exaggerated or without factual foundation altogether.  Those previously articulated examples do not amount to an exhaustive list.  There were many instances in Mr. van Blankenstein’s cross-examination where he attempted to resile from the recommendation in the Spratt Report that the house be torn down.  In the end, he admitted that a wholesale demolition might not be required.  Mr. van Blankenstein failed to distinguish between areas of the house that had simply gotten worn out (e.g. the flat roofs of the garage) from areas that are alleged to be constructed in a negligent manner.  Allegations of shoddy workmanship are not put in perspective.  While Mr. van Blankenstein agreed that the Spratt Report painted a very bleak picture of the situation for the Cardwells at the same time he agreed that the next step in the process would have been to conduct a more intrusive investigation.  His inspection did not involve any destructive testing except for a hole put through the lower brick wall of the family room and in the ceiling between the family and living rooms.

            It would appear that the standards applied by Mr. van Blankenstein in respect of a substantial number of identified shortcomings were whether the work had been carried out to a high standard for a residence of such cost and whether it represented best practices.  Indeed, at the close of the unedited version of the Spratt Report originally provided to the Cardwells, it states that Helyar & Associates’ costings, which were based on the deficiencies highlighted by Mr. van Blankenstein, were for “remediation, to return 835 Younette Drive into a habitable residence to the high standard which Mr. and Mrs. Cardwell believed they purchased.”

            In all the circumstances, I consider it unsafe to rely on much of the contents of the Spratt Report and give it little weight.

[21]            Having reviewed the evidence of the alleged defects and deficiencies, the trial judge turned to the applicable law. She noted (at paras. 119-120) the continuing application of the doctrine of caveat emptor in the context of the purchase and sale of real estate, and the exceptions to the rule which bring into play the distinction between patent and latent defects (paras. 121-129).  She also considered the law relating to implied warranty of fitness in used homes, negligent misrepresentation, and negligent construction.

 (More)

Caveat emptor: Court rules on Hacienda del Norte, a $1, 350,000 leaky rotten moldy house in West Vancouver

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Cardwell et al v. Perthen et al,

2006 BCSC 333

Date: 20060228
Docket: S006866
Registry: Vancouver

Between:

Eric Cardwell and Diane Susan Cardwell

Plaintiffs

And

Juergen E. Perthen and Helga G. Perthen

Defendants


Before: The Honourable Madam Justice Ballance

Reasons for Judgment

Counsel for the Plaintiffs:

Bruce Lemer

Counsel for the Defendant, Mr. Perthen:

Frank R. Eadie

Date and Place of Trial:

Jan. 11, 12, 13, 14, 17, 18, 19, 20, 21, 24, 25, 26, 27, 28;
Feb. 21, 22; April 18 and 19, 2005

Vancouver, B.C.

INTRODUCTION

[1] The sale of used residential houses is a daily occurrence in this province. Some of those houses are new and in pristine shape. Others are decades old and in poor and or dilapidated condition, while still many others fall somewhere in between. A large number have undergone cosmetic updating or more extensive renovation to their original state. This action arises out of the sale of an older residence which had been substantially renovated over a period of a decade.

[2] The parties entered into a contract of purchase and sale dated May 21, 2000, by which the plaintiffs, Eric and Diane Cardwell, agreed to purchase a residence located at 835 Younette Drive, West Vancouver, B.C., for the sum of $1,350,000. The contract was not made subject to the Cardwells having an inspection conducted and no inspection was carried out before the transaction closed the first week of July 2000.

[3] Most unfortunately for all concerned, soon after the Cardwells took possession of the home they discovered what they allege to be problems ranging from shoddy workmanship, leaks, the presence of mold and faulty retaining walls through to the deterioration of structural components and symptoms of systemic deficiencies. The Cardwells ended up selling the home some 6-1/2 months later in “as is” condition at a significant financial loss. They claim damages in excess of $700,000, the bulk of which represents the difference between the purchase price of $1,350,000, and the selling price of $700,000.

[4] The Cardwells base their claim on negligence, (including negligent misrepresentation), fraud and breach of contract. The principal thrust of their case is the assertion that the renovations were incomplete, and therefore a warranty that the residence and out-buildings were built in a good and workmanlike manner and were reasonably fit for habitation, should be implied in their favour and was breached. They allege also that the renovations carried out by the defendant, Juergen Perthen, were performed negligently. They further assert that during the course of viewing the property prior to purchasing it, Mr. Perthen: held himself out to be an engineer; emphasized that the renovations – largely performed by him – had been done to a very high standard; stated that an independent engineer had been involved; and stated that final approval and permits had been given by the District of West Vancouver (the “District”). The Cardwells further say that during the second viewing of the home Mr. Perthen permitted them to review certain documents such as the District’s final inspection notice, a letter from an engineering firm and what they characterize as an inaccurate disclosure of condition of property statement. According to the Cardwells, in reliance upon these “representations”, they were induced to enter into the contract of purchase and sale and chose to proceed with the transaction without having the house inspected.

[5] Mr. Perthen raises a number of defences of both a legal and factual nature. He denies making any negligent misrepresentation (except for a minor incorrect statement in the disclosure of condition of property statement) and, in particular, insists that he did not hold himself out as an engineer nor commit any fraud. Mr. Perthen contends that the residence was a used, completed house and therefore no warranty can be implied. In broader terms, he says that the Cardwells’ allegations of poor and negligent workmanship are either false or grossly exaggerated.

[6] Mr. Perthen does acknowledge that due to his error there were construction deficiencies in relation to the sub-floors which he laid in two rooms: the family room, and master bedroom, but says he was unaware of their impact at the time of sale. He also says that the Cardwells’ own expert indicated that those deficiencies could have been remedied for approximately $10,000. Mr. Perthen contends that the majority of the other so-called defects were patent and would have come to the plaintiffs’ attention had they carried out a reasonable inspection. It is his position that based on the long-standing doctrine of caveat emptor, the Cardwells have no remedy in respect of those patent defects.

[7] Mr. Perthen’s counsel describes the Cardwells’ decision to sell the house for its lot value as an utterly “bizarre” way to address the manageable problems they faced and argues that the damages flowing from such bizarre conduct must not be visited upon Mr. Perthen.

[8] In addition to suing the Perthens, this action was originally brought against the Perthen’s real estate agent, the realty company for whom she worked, the District, the engineering company retained by the Perthens and one of its engineers. The Cardwells settled their claims against those defendants before trial. The settlement amount was not revealed, however, the Cardwells’ counsel confirmed, quite properly, that they do not seek excess recovery in the event that Mr. Perthen’s liability is established and will not look to Mr. Perthen for any damages that may be found attributable to any former defendant(s).

[9] Mrs. Perthen passed away prior to the trial. No steps were taken to add her estate as a party or to have a representative appointed for her estate in this action. Mr. Perthen’s counsel made it clear that he does not act for Mrs. Perthen’s estate.

[10] Mr. Cardwell suffered a stroke prior to trial and was unable to testify.

BACKGROUND

(a) Overview of Renovations

[11] Near the end of 1969, Mr. Perthen, who had done drafting in an engineering firm, opened his own design company. His company constructed commercial and industrial buildings and hired electrical engineers and other professionals to that end. It was successful and grew rapidly. In around 1975, Mr. Perthen moved into the property management business and eventually established a separate corporate vehicle for that undertaking. In 1985 or 1986, Mr. Perthen sold his design company in order to concentrate on the property management operation which managed 10-15 buildings at its peak. Through his company, Mr. Perthen had considerable exposure to defective building issues including the “leaky condo-crisis”.

[12] The Perthens purchased the Younette Drive property in 1986. At that time, it was about a 2,000 square foot, single storey bungalow. The Perthens were fond of Santa Fe residential architecture found in places like Arizona and wished to incorporate that distinctive look in their proposed renovations to their new home.

[13] Starting around 1987 or 1988, the Perthens began the construction of extensive retaining walls throughout their steeply, sloping site to support the landscaping in front, to the rear and on either side of the house. This series of walls was erected by Mr. Perthen without the benefit of an engineering design. Around the same time, the Perthens relocated the kitchen to a different area of the house, added a bar and bathroom, moved an interior wall and put a beam in the dining room and enclosed the outdoor covered patio off the living room in order to enlarge the living room area. They did so without first obtaining the necessary permits from the District. The work Mr. Perthen was doing on his house, especially the construction of the retaining walls, was a matter of consternation for his neighbours. One or more of them complained to the District and informed it Mr. Perthen had not obtained a permit for his interior work. This permit issue prompted the District to dispatch an inspector to the property and to carry out periodic inspections from that point forward. The Perthens co-operated in complying with requirements and obtaining the appropriate permits. Mr. Perthen testified, rather sheepishly, that he was simply unaware that these non-structural interior changes required a permit from the District. At the same time, he agreed it was like being caught with his “hand in the cookie jar”. Given Mr. Perthen’s experience in matters of general construction and property management, his evidence that he did not know he needed a permit is not believable.

[14] In 1990 Mr. Perthen, working alongside a designer he had retained, sought approval from the District for a variance building permit in respect of his proposed additions to the residence. The Perthens encountered a significant degree of opposition from their neighbours and a flurry of strongly worded correspondence between them, their neighbours, and the District ensued for a time. The Perthens eventually abandoned their variance application and decided to renovate the residence within the confines of the existing bylaws.

[15] In March 1991, the District wrote to Mr. Perthen describing a number of deficiencies requiring his attention. Right away Mr. Perthen obtained positive electrical and plumbing inspection reports for the new kitchen, bar and dining areas. In addition, he retained a structural engineering firm (the “Engineering Firm”) which assured the District in a letter dated April 3, 1991, that the design of the renovations proposed by Mr. Perthen conformed to the structural requirements of the current building by-law and that they would conduct structural field reviews to ascertain that the work substantially conformed in material respects to the plans and engineering documents accepted by the District for the project. Evidently, the District issued a number of permits. An early one pertained to at least some, and perhaps all, the work Mr. Perthen had carried out without a permit. Another building permit was issued on April 22, 1991. It included the new kitchen, family room, enclosure of the front patio and the roof extension over it.

[16] After the April building permit was granted, the District inspectors continued to conduct site inspections where they would make a written report on progress and deficiencies. They always left a copy of the completed inspection form at the site to inform Mr. Perthen of the matters which required his attention.

[17] The April building permit did not include a review of the westerly retaining wall. More than once the District suggested to Mr. Perthen (but did not mandate) it may be prudent to have that wall reviewed by a structural engineer. There was no evidence about whether the District had independently based concerns about the structural integrity of that wall. It was clear, however, that the neighbours of the adjacent property had complained about it to the District. In a letter dated June 3, 1991, the Engineering Firm confirmed to the District that this retaining wall along the west property line was reinforced in a particular way and grouted. The particulars of the steel rebar were stated incorrectly in this letter as being inserted every 2 feet whereas they were inserted about every 3 feet. Mr. Perthen testified that he had not provided the erroneous particulars to the engineer who wrote the letter and may not have seen that letter before the Engineering Firm sent it to the District. The engineer in question testified to the fact that he walked the length of the wall and drew his own conclusions which he then put in that letter.

[18] The District also voiced concerns about the excessive height of another of the retaining walls. Mr. Perthen eventually lowered that over-height wall to bring it in line with the applicable bylaws. Other than the foregoing instances, the walls were not the subject of review or inspection by the District.

[19] On August 9, 1991, the Engineering Firm confirmed by letter to the District Building Inspector that it had carried out the supervisory duty of the structural work outlined in the April 3 letter and found all work satisfactorily completed in accordance with the plans and designs.

[20] Around the same time, Mr. Perthen applied for a second building permit in respect of the next phase of renovations being the master bedroom and ensuite, the addition of a partial upper floor, new garage and bell tower. In a plan check document, the District identified several details of the submitted plans which required modification and requested sealed structural plans by an engineer. Mr. Perthen instructed the Engineering Firm to provide the sealed structural drawings, a site review and a letter of supervision for the renovation work. By letter of October 8, 1991, the Engineering Firm assured the District Building Inspector that the design of the proposed addition conformed to the structural requirements of the applicable bylaw and confirmed that the Engineering Firm would conduct structural field reviews.

[21] Subsequent field inspections were carried out periodically by the District throughout 1992 and, to a lesser extent, 1993, in relation to the framing, electrical and plumbing. As well, the Engineering Firm kept Mr. Perthen informed of outstanding construction details that required his attention.

[22] The majority of the second phase of the renovations were completed by mid-1990 and the renovation activity then tapered off significantly as Mr. Perthen shifted his focus to running his property management business. In 1996, Mr. Perthen renewed his building permit application to finish off the last of the work. Another series of field inspections by the District took place and in December 1998, final inspection and approval of the plumbing, electrical and building were issued by the District.

[23] In the end, the Perthens had transformed the modest bungalow into “Hacienda Del Norte”: a spacious view home with a partial upper level, extensive pitched and flat roof areas, a two storey ornamental bell tower, a covered portico supported by columns and a new second garage. Mr. Perthen had added a small family room area in front of the new kitchen, a pantry and new master ensuite, converted part of the existing living room into a sitting room/office and enlarged the living room. He had carried out most of the renovations himself, although he did hire independent contractors to install skylights, the flat roofs, new gutters and aspects of the new plumbing work.

[24] Some of the work was left unfinished or only partially completed. Missing were: parapet wall cap flashings; gutters; caulking and window sills in places; stuccoing on parts of the two garages; grouting of roof tiles; dry walling on the second level of the bell tower; and stuccoing of the breezeway (between the existing garage and the back of the house) and over a small roof area at the entrance. Nor had stucco been applied to a small area of the exterior of the dining room as Mr. Perthen said he intended to run a security wire through the particular spot, although he never did.

[25] The Perthens lived in the residence throughout the entire renovation period. In time, Mr. Perthen established a home office there where he had at least one steady employee. As well, in conjunction with their daughter, the Perthens ran an accounting business from their home which had four employees.

[26] According to Mr. Perthen, renovating his residence was for him a “labour of love” and his “life’s work” for ten years. I believe him and accept his evidence that he and his wife fully intended to live there until their final days. Sadly, in 1998 Mrs. Perthen’s health began to deteriorate and, in time, she needed a wheelchair. Within this same timeframe, the Perthens’ increasing visits to Europe to visit Mrs. Perthen’s ailing, elderly mother was becoming a financial drain. These factors prompted the Perthens to decide to downsize and sell their beloved Younette Drive property.

(b) Sale to the Cardwells

[27] In January 2000, the Perthens listed the residence for the price of $1,650,000. Mrs. Cardwell had lived on Younette Drive twenty years earlier and had even visited the property when the original owners resided there. It was situated in a school catchment which she considered desirable for her son. She was very interested in the property.

[28] The Cardwells viewed the residence on two occasions in May 2000.

[29] On the first occasion, Mr. Perthen’s real estate agent, Clara Hartree, did not attend and so Mr. Perthen guided the Cardwells and their son around the property. Ms. Hartree testified that because Mr. Perthen worked from an office in the home, it was convenient for him to tour prospective purchasers and he was happy to do so because he was very house proud.

[30] Mrs. Cardwell recalls that during this first viewing Mr. Perthen described the residence as his labour of love. The Cardwells shared the Perthens’ appreciation of the south western look of the home and Mr. Perthen pointed out the many unique design features of it. They viewed the interior of the home, the out buildings, orchard, dog run and grounds, to varying extents. Mrs. Cardwell took a cursory look over the railing at the front of the house but as there was no access down the steep frontage, she did not go down. She did not recall going inside the bell tower or the two garages but believes that her husband may have entered the older garage. They discussed the plants, arbour, and the unique electrical aspects of the house which included a special low voltage lighting system. Mr. Perthen also showed the Cardwells the extensive interior and exterior sound system which included about 40 speakers with karaoke capability. He also pointed out other high-end features such as the heated marble floor in the master ensuite bathroom and full security system. At some point, Mr. Perthen stated there was no crawl space. Mrs. Cardwell recalls that Mr. Perthen mentioned that there was a supply of stucco in the garage for the partially stuccoed breezeway and showed it to her husband.

[31] It was all very pleasant and the Cardwells were not concerned about anything they saw.

[32] Mrs. Cardwell testified that Mr. Perthen represented that he was a retired engineer who was now in property management. The Cardwells’ real estate agent, Allan Angell, who was also present, testified along the same lines saying that while Mr. Perthen escorted them throughout the property he told the Cardwells that he was a retired engineer.

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