As I understand what you are saying, you have sued the building inspector because he failed to identify a building code violation which violation caused a potential buyer to decide not to buy.
Canadian laws might be different than laws which generally prevail in the U.S. so what I am about to tell you may possibly be different in your situation (but I doubt it).
Is the home inspector who you are suing an official governmental inspector? If so, there may be some sort of governmental immunity which shields him from liability.
Yes, his lawyer can contact you and no, you do not have to respond if you don't want to. I suggest, however, that you do respond. It will not hurt to hear what he has to say.
Is it fair that the defendant is represented by a lawyer and you are not? Yes, in my opinion, it fair. You have the right to hire your own lawyer also, if you want. But, more to the point, is it
legal for the defendant to be respresent by a lawyer in small claims court? In
most places yes; although there are some few jurisdictions which don't allow it.
This site suggests that Nova Scotia is not one of those places.