Executive Summary: Key Legal and Evidentiary Issues

• The plaintiffs claimed damages arising from foundation defects in a residential property and alleged the inspection company failed to detect or warn about the issues.

• The Superior Court dismissed the claim at a preliminary stage under articles 168 and 51 of the Code of Civil Procedure, citing abusive procedure and lack of legal basis.

• The appeal challenged whether the building inspector’s potential negligence could be decided without a full evidentiary hearing.

• The Court of Appeal emphasized that the apparent or hidden nature of a defect and the inspector’s duty of care involve complex factual questions best resolved at trial.

• The Court ruled that the lower court erred by interpreting preliminary statements as legal admissions and by deciding on liability without a full evidentiary record.

• The appeal was allowed, the dismissal judgment overturned, and the plaintiffs' claim reinstated with costs in both courts.

Facts of the case

In Guérard-Labbé c. 9254-5292 Québec inc. (Al Inspection M), 2025 QCCA 557, the plaintiffs Francisca Guérard-Labbé and Frédéric Turbide sued the former owners of a residential property and a building inspection company for failing to disclose or detect significant foundation issues in the home they purchased in 2019. The plaintiffs alleged that the condition of the foundation had been deliberately hidden by cosmetic repairs and misleading declarations, and that the building inspector was negligent in failing to issue warnings or properly assess the foundation during the pre-purchase inspection.

The inspector’s report had noted minor cracks and signs of humidity but concluded they were repairable and did not raise serious concerns. After the purchase, the plaintiffs hired an engineer who concluded that the foundation was seriously deteriorated and needed full replacement—damage allegedly hidden by resurfacing work. The plaintiffs filed a lawsuit seeking over $500,000 in corrective costs, arguing that both the sellers and the inspector were liable.

Procedural background and lower court ruling

The Superior Court dismissed the claim against the inspection company before trial, granting a motion to dismiss for abuse of process and inadmissibility under articles 51 and 168 of the Code of Civil Procedure. The judge ruled that the plaintiffs had admitted the defect was hidden and not detectable at the time of inspection, meaning no negligence could be attributed to the inspector. The court further concluded that the lawsuit was abusive, since it lacked a reasonable chance of success and would not benefit from further evidentiary steps.

Appeal and analysis

The Quebec Court of Appeal overturned this dismissal. Writing for a unanimous panel, Justice Schrager held that the trial judge erred in assessing the claim prematurely and without a full evidentiary record. The Court emphasized that at the preliminary stage, a lawsuit should only be dismissed when it is clearly unfounded, and all factual allegations must be taken as true.

The Court found that the plaintiffs' allegations—such as the inspector taking less than 30 minutes to complete a report, failing to investigate signs of deterioration, and not alerting them despite expressed concerns—could potentially support a finding of professional negligence. The Court also noted that the classification of a defect as "apparent" or "hidden" is a legal conclusion, not a factual admission, and must be determined based on evidence.

Additionally, the Court reiterated that building inspectors have a duty of reasonable diligence and are expected to alert buyers to visible indicators of serious issues, especially structural ones. Whether the inspector met that standard could not be resolved without hearing expert evidence and witness testimony.

Outcome

The Court of Appeal allowed the appeal, reversed the lower court’s judgment, and reinstated the plaintiffs’ claim against the inspection company. The Court ordered the defendants to pay the plaintiffs' legal costs for both the trial and appeal proceedings. The matter will now proceed to trial for a full evaluation of the inspector’s conduct and potential liability.