Claim No. SCCH 231266
IN THE SMALL CLAIMS COURT OF NOVA SCOTIA
Cite as: Dupere v. Evans, 2005 NSSM 39
BETWEEN:
ARTHUR AND YVELLE DUPERE
Claimant
‑and –
GREGORY AND JOEY EVANS
Defendant
ADJUDICATOR of the SMALL CLAIMS COURT
David. T. R. Parker
Date of Hearing: January 13, 2005; February 17, 2005; February 22, 2005
Date of Decision: March 7, 2005
Counsel: Gary J. Withrow for the Claimants
Jason McQuaid for the Defendants
DECISION
1. This matter was heard over a three‑day period and the Claimants are requesting a return of their $5000.00 deposit on house closing that did not take placed and damages resulting therefrom.
2. The pleadings of the Claimants state: “The reason for this claim is [an]
Agreement of Purchase & Sale of Defendants’ home [was] not completed. Requesting return of deposit and expenses. Misrepresentation of oil contamination and misleading information.”
3. While it is not clear from the pleadings whether the Claimants are alleging fraudulent or negligent misrepresentation, it became clear in the presentation of their case that they were alleging fraudulent, and if not fraudulent then negligent misrepresentation. I raise this point in the event there is an appeal. While the Supreme Court requires pleadings to be specific pursuant to the Civil Procedure Rules, it is not yet required in the Small Claims Court. This is fortunate, particularly in cases where Counsel is not involved in the drafting of pleadings which, on the surface of the Notice of Claim, appears to be the case here. In this particular case, as well, Counsel for the Defendant, was prepared to deal with fraudulent and negligent misrepresentation. If Counsel had been taken by surprise in preparing their case against the allegations of the other party it would be incumbent upon the Adjudicator to allow time to deal with the matter, including bringing in rebuttal evidence. The basis of this is dictated by Section 2 of the Small Claims Court Act which requires the Court to follow the principles of Natural Justice, or simply put, to allow fair play.
4. The pleadings of the Defendants stated they denied making misrepresentations on the environmental conditions of the property and that statements made concerning the environmental condition of the property were true. The Defendants deny acting negligently in making any statements concerning the environmental condition of the property and further the Claimants were not induced into making an offer on the property by way of any of the Defendants’ statements. The Defendants also deny making any fraudulent misrepresentations in their arguments to the Court.
5. Issues Before the Court
(1) Was there any fraudulent misrepresentation committed by the Defendants?
(2) Was there any negligent misrepresentation?
(3) If the answer is yes to either of the above, what are the damages that flow from the misrepresentation?
(4) Was there a condition precedent that was not fulfilled thereby putting an end to the contract?
6. Facts
(1) The Defendants decided to put their home up for sale.
(2) The Defendants completed a Property Condition Disclosure Statement (PDCS) wherein under the heading Clause 5 entitle “Heating System”, the Defendant wrote “oil tank in basement replaced by outside tank over 20 years ago. Outside tank replaced again about 6 years ago. No major leaks or spills.” This was in response to the question B in the PCDS which asked: “Have any repairs or upgrading been carried out in the heating system in the last 5 years (or since you owned the property if less than 5 years).”
(3) Under the heading, Clause 9, entitled “Environmental”, the Defendants responded “No” to both of the following questions.
“C. Are three any underground oil tanks?” [Response was NO]
“D. Are you aware of any environmental problems or soil contamination of any kind on the property or in this immediate area such as toxic waste, gasoline, fuel tanks, etc.?” [Response was NO]
(4) The Defendants indicated two incidents to the real estate agent: (1) the one involved the oil tank in the basement that had a small leak and was replaced; and (2) the oil tank under the front steps was replaced when there was a smell of oil in the area.
(5) A potential sale of the property did not materialize and the Defendants took it off the market.
(6) On September 17th, the Defendants’ home was re‑listed for sale and this time the notation beside question B concerning repairs to the heating system were the words “New wood boiler in ’99.” There was no reference to the oil tank in the basement being replaced by outside tank and no major leaks or spills as in the previous PCDS completed by the Defendants.
(7) In October 2003, the Defendants hired the firm of Jacques Whitford Limited to perform a “Tier II RBCA Risk Assessment to evaluate the potential risks to receptors as a result of petroleum hydrocarbon impacts in the soil at the Defendants’ home in Halifax.
(8) The Jacques Whitford firm was told by the Defendants there was one spill in basement plus a smell noticed by the Defendant Joey Evans coming from the tank located under the front steps.
(9) In February 2004, The Claimants talked to the Defendants about selling the property. At that time the property was no longer listed. The Claimants were advised that Jacques Whitford was doing environmental testing.
(10) A report by Jacques Whitford was completed and provided to the Defendants on February 25, 2004.
(11) On February 26, 2004, the Claimant Arthur Dupere contacted Jacques Whitford and received assurances that there were no environmental problems.
(12) On February 27, 2004, the claimants made an offer to purchase the property. It was declined by the Defendants because the price was too low.
(13) On March 16, 2004, the Claimants contacted Jacques Whitford and they were told it was safe to inhabit the property.
(14) On March 16, 2004, the Claimants put in an offer to purchase the property. Clause 4 of the Agreement of Purchase and Sale read as follows:
“4. This Agreement is further subject to the following conditions.”
[and the Claimant wrote in these words under clause 4(a)]
“Vendor is to provide to the buyer when available a certificate from¼”
The Defendant then concluded the sentence by writing in the following:
“¼Jacques Whitford stating the environmental condition of the property.”
The clause 4(a) of the Purchase and Sale Agreement in its entirety read:
“4. This agreement is subject to the following terms and conditions.
(a) vendor is to provide to the buyer when available a certificate from Jacques Whitford stating the Environmental Condition of the property”
(15) The closing of the transaction was set for May 25, 2004.
(16) The Defendants then took the offer back to their lawyer and the only substantive change that was made was to increase the deposit from $1,000.00 to $5,000.00.
(17) After agreeing to the closing date of May 25, 2004, the Defendants asked the Claimants if they were prepared to close earlier, which the Claimants agreed to do.
(18) The Defendants agreed to allowing the Claimants to enter the premises prior to closing in April in order to paint and do work on the interior of the premises.
(19) The closing did not take place on April 13, 2004, as verbally agreed to at that time.
(20) Jacques Whitford provided a Record of Site Conditions for Domestic Fuel Oil Spills on April 16, 2004, and dated February 25, 2004. In the document it read in part:
“Concentrations of petroleum hydrocarbons in the soil and underground water at the site are below the applicable SSTLS developed in the RBCA Tier II Risk Assessment carried out for the property.”
(21) The Department of Environment and Labour was submitted this Record of Site Condition report and responded approximately one month later that they wanted further testing before it would receives its approval.
(22) On April 16, 2004, Jacques Whitford told the Defendants the site had to be accepted by the Department of Environment. Final approval for the site from the Department came on October 21, 2004.
(23) The Defendants tendered documents; however, the Claimants refused to close on May 25, 2004.
7. The Law
I am going to make reference to a recent decision of Justice Warner who speaks to the application of Caveat Emptor, Fraudulent and Negligent Misrepresentation, Patent and Latent defects, all of which play a part in this particular matter. In the case, Thompson v. Schofield¸ [2005] N.S.J. No. 66, Justice Warner, in my view, correctly and succinctly articulates these legal principles in paragraphs 16 through 27 which I have reproduced here.
¶ “16 Generally transactions involving the sale of real property are subject to the principle of caveat emptor with respect to the physical amenities and condition of the property. Absent fraud, mistake or misrepresentation, a purchaser takes an existing property as he or she finds it unless the purchaser protects himself or herself by contractual terms. This is set out in several important decisions, some of which were included in the defendant's memorandum, such as McGrath v. MacLean, (1979) 22 O.R. (2d) 784 (O.C.A.), and Edwards v. Boulderwood Development Corporation, (1984) 64 N.S.R. (2d) 395 (N.S.C.A.). It is referred to in Redican v. Nesbitt, [1924] S.C.R. 135.
¶ 17 In Edwards, our Court of Appeal found that the defendant had made an innocent misrepresentation and was not liable to the seller with regards to the condition of a vacant lot of land and further found that the innocent misrepresentation had been made after the contract had been entered into and therefore could not have influenced the entering into of the agreement.
¶ 18 A second legal question requiring clarification, for the purposes of this decision, is, what is a patent defect and what is a latent defect? A patent defect is one which relates to some fault in the structure or property that is readily apparent to an ordinary purchaser during a routine inspection. A latent defect, as it relates to this case, is a fault in the structure that is not readily apparent to an ordinary purchaser during a routine inspection. For the purposes of the decision, it is not disputed that whatever the defect was that caused the flooding in the basement, that it was a latent defect, that is, a defect which was not apparent on an ordinary inspection of the property. The defendants claim that because it was latent, they also were not aware of it. My understanding of the defendant's memorandum is that they acknowledge that, because the basement was finished and because neither building inspector nor the plaintiffs had the right, before the closing, to take the basement apart, their ability to determine any defects in the property was limited to those defects which would be apparent without taking apart the walls or the floors or the panelling that covered the cement walls.
¶ 19 A third legal question requiring clarification is what constitutes negligent and fraudulent misrepresentation.
¶ 20 Fraudulent misrepresentation is dealt with, among other cases, by a decision of Saunders, J., as he then was, in Grant v. March, (1995) 138 N.S.R. (2d) 385. At paragraph 20 of that decision he says:
With respect to the first allegation, that is, that Mr. March fraudulently misrepresented the facts, the law on this subject was canvassed in Carpentier v. Slauenwhite (1971), 3 N.S.R. (2d) 42. In that case, which involved problems with a well, Jones J. (as he then was) cited [at p. 45 N.S.R.] G.S. Cheshire and C.H.S. Fifoot, The Law of Contract, 6th ed. (London: Butterworths, 1964), at page 226:
A representation is a statement made by one party to the other, before or at the time of contracting, with regard to some existing fact or to some past event, which is one of the causes that induces the contract. Examples are a statement that certain cellars are dry, that premises are sanitary, or that the profits arising from a certain business have in the past amounted to so much a year.
And again on page 241, as follows:
Fraud in common parlance is a somewhat comprehensive word that embraces a multitude of delinquencies differing widely in turpitude, but the types of conduct that give rise to an action or deceit have been narrowed down to rigid limits. In the view of the common law "a charge of fraud is such a terrible thing to bring against a man that it cannot be maintained in any Court unless it is shown that he had a wicked mind". Influenced by this consideration, the House of Lords has established in the leading case of Derry v. Peak, that an absence of honest belief is essential to constitute fraud. If a representor honestly believes his statement to be true he cannot be liable in deceit, no matter how ill advised, stupid, credulous or even negligent he may have been. Lord Herschel, indeed, gave a more elaborate definition of fraud in Derry v. Peak, saying that it meant a false statement "made knowingly, or without belief in its truth, or recklessly, careless whether it be true or false," but, as the learned judge himself admitted, the rule is accurately and comprehensively contained in the short formula that a fraudulent representation is a false statement which, when made, the representor did not honestly believe to be true.
¶ 21 At paragraph 21, Justice Saunders quotes The Law of Vendor and Purchaser, 3d ed. by V. DiCastri (Carswell, 1988), as saying that to found a claim for false misrepresentation one must do the following:
"In order to succeed on the ground that a contract was induced by false and fraudulent representations, a plaintiff must prove: (1) that the misrepresentations complained of were made to him by the defendant; (2) that they were false in fact; (3) that when made, they were known to be false or were recklessly made, without knowing whether they were false or true; (4) that by reason of the complained‑of representations the plaintiff was induced to enter into the contract and acted thereon to his prejudice; and (5) that within a reasonable time after the discovery of the falsity of the representations the plaintiff elected to avoid the contract and accordingly repudiated it."
The onus is on the plaintiffs to establish fraud on the part of the defendant. Fraud is a serious complaint to make, and the evidence must be clear and convincing in order to sustain such an allegation.
¶ 22 On the facts in Grant v. March, the trial judge was not satisfied that the defendants knew of the water problems that existed and he further found that any representations that they did make were not made before the contract was entered into.
¶ 23 Another relevant decision cited in the defendants' memorandum is Jung v. Ip, [1988] O.J. No. 1038, 1988 Carswell Ont. 643 (O.D.C.), where the Court, in finding liability against the vendor for failing to disclose a termite infestation, said at paragraph 18:
It is now clear that the law of Ontario is such that the vendors are required to disclose latent defects of which they are aware. Silence about a known major latent defect is the equivalent of an intention to deceive. In the case before this Court, there was nothing innocent about the withholding of the information. It was done intentionally. This was not an innocent misrepresentation.
¶ 24 In finding liability against the vendor for failing to disclose a sediment problem with the well and sewer system in a property disclosure statement, the Court in Ward v. Smith, [2001] B.C.J. No. 2371, 2001 Carswell BC 2542 (B.C.S.C.) discussed the application of the principles of negligent misrepresentation at paragraphs 33 to 39; quoting from paragraphs 33 to 35 of that decision (not as an authoritative decision but simply as one of the many that set out in summary nature what a negligent misrepresentation is), Gotlib D.C.J. said:
... The requirements to establish a claim in negligent misrepresentation were summarized by Mr. Justice Iacobucci in Queen v. Cognos Inc., [1993] 1 S.C.R. 87, 99 D.L.R. (4th) 626 (S.C.C.), at 643:
(1) there must be a duty of care based on a "special relationship" between the representor and the representee;
(2) the representation in question must be untrue, inaccurate, or misleading;
(3) the representor must have acted negligently in making said misrepresentations;
(4) the representee must have relied, in a reasonable manner, on said negligent misrepresentation; and
(5) the reliance must have been detrimental to the representee in the sense that damages resulted.
In their pleadings, the plaintiffs used the expression "reckless misrepresentation" which was understood, during the course of argument, to be negligent misrepresentation. I am satisfied that, in fact, the defendants did negligently misrepresent the quality of the available water by stating that they were not aware of any problems with the quality of the water ....
The defendants owed a duty of care to the plaintiffs to not negligently misrepresent either the quality or quantity of the water supply.
The Court went on to make a determination that the defendants negligently misrepresented the state of the water. He was satisfied that they knew the nature of the problem with the well, even though they may not have known the extent of the problem.
¶ 25 The Court's analysis in Swayze v. Robertson, [2001] O.J. No. 968, 2001 Carswell Ont 818 (O.C.J.), a case involving a flooding problem caused by a defect in the foundation, is similar.
¶ 26 The plaintiffs rely upon the decision of Wright J. in Desmond v. McKinlay (2000), 188 N.S.R. (2d) 211, which decision was upheld by our Court of Appeal at (2001) 193 N.S.R. (2d) 1. In Desmond v. McKinlay, Mr. Justice Wright, like the Court in Jung v. Ip found that silence could constitute a negligent misrepresentation. At paragraph 43, he says:
In the present case, the essential question in my view comes down to this. Was it an actionable misrepresentation for the vendor Joan McKinlay to have held out to the purchaser through her realtor's listing cut (with information provided by her) that the property was only 14 years old without further disclosing the fact that the water supply and sewage disposal systems servicing the property were in excess of 40 years old by an indeterminate length of time? I have concluded that such partial disclosure of the true facts did create such a misleading impression to the plaintiff, on which she relied to her detriment so as to create an actionable misrepresentation at law.
¶ 27 If this court finds that the answers given in the disclosure statement, which was incorporated in the agreement, were either negligent or fraudulent misrepresentations, there is no doubt that (a) they were material, (b) they were made at the time of the entry into the contract or the agreement of sale and were relied upon, and (c) based on the law as set out in Desmond v. McKinlay at paragraphs 48 to 51, they would constitute, in addition to negligent misrepresentations, a breach of a collateral warranty and thereby constitute a breach of the agreement of sale.”
8. If there were a defect, then in this case it would have to be considered a latent defect. That is, any oil spill would not be observable or apparent to an ordinary purchaser during a routine inspection. In fact, it would not even be observable to a purchaser who has experience as a real estate agent, as was the case with the Claimant who had real estate sales experience earlier in his career. If it were a patent defect, then the principle of caveat emptor would be present. The Defendants argue that caveat emptor should be present in this case as the Claimants knew testing was going on with respect to the contamination of the soil. However, even if Counsel is correct in this assertion, it is still necessary to deal with the principle of misrepresentation, which will prevent the application of the principle caveat emptor.
9. In order for there to be fraudulent misrepresentation, there are four elements, which the Claimants must prove as earlier enunciated by Justice Saunders and referred to by Counsel in DiCastri, The Law of Vendor and Purchaser, 3d ed. (Carswell 1988). Overriding these four elements, there must be dishonesty, or as stated by the House of Lords in the leading case of Derry v. Peak (1899), 14 App Cas. 337, that an absence of honest belief is essential to constitute fraud.
10. I have not considered the vehemence of the Defendants’ convictions, in particular Gregory Evans; rather I have considered that as only one factor in determining his credibility. I considered from the Defendant’s evidence, the fact that the Defendants kept the Claimants informed about the report even prior to any conclusions being reached by the environmental specialists, and the explanation he gave for changing the PCDS. Even the fact that the Defendants allowed the Claimants access to their property prior to closing goes to showing the absence of dishonesty. Most real estate lawyers would recommend this not take place; however, this apparently did not occur and the Defendants allowed access to their property prior to closing even while environmental testing was being completed. All of this taken together does not point to dishonesty.
11. I shall deal next with negligent misrepresentation and in doing so I shall be making reference to the elements related to fraudulent misrepresentation as laid down by DiCostri.
12. The first element of negligent misrepresentation is easily met. That is, there is a special relationship that developed between the parties in this action. This was not a one‑shot meeting where the parties entered into an agreement, although, even if it was the case, I believe there is a special relationship between seller and purchaser of property based on the documentation that flows between the parties and the personal nature of a residential property. Certainly, there is a duty of care owed by the seller beyond that envisaged by Lord Atkin when he articulated the neighbour principle.
13. The second element of negligent misrepresentation is more problematic. That is “the representation in question must be untrue, inaccurate, or misleading.”
14. The Claimants contend that the Defendants were aware of two oil spills; however, the Defendants did not make the Claimants aware of two oil spills.
15. How has the Claimant shown that the Defendants knew there were two oil leaks and therefore misrepresented the situation to the Claimants
16. The Claimants base this misrepresentation on the following:
(1) The first PCDS speaks to more than one leak or spill and the second PCDS makes no mention of spills or leaks.
In the first PCDS the Defendants answer the following question: “Have there been any problems with fuel leaks from the lines or tank?” with the following answer:
“Over 20 years ago. Outside tank replaced again about 6 years ago. No major leaks or spills.”
In the second PCDS give to the Claimants while the house was listed, the response to this question was “No”.
The Defendant says there never was a leak with respect to the tank placed under the step. The only leak was the “weeping” leak of the tank in the basement and that never was a problem.
17. The statement provided in the first PCDS is not very clear in that it could mean there were no major leaks when the tank in the basement began “weeping” oil, or it could mean that there was no major leaks in the basement tank, or in the tank that was replaced under the front steps some six years ago.
18. The Defendants contended that any leaks that they were aware of happened some 25 or 50 years ago. Mrs. Evans said she smelt oil fumes some six years ago. Mr. Evans said he didn’t smell the oil, he just decided it was about time to replace the tank under the steps. He did not see or find any leaks. If Mr. Evans did not smell any oil fumes emanating under that steps that night, it is highly unlikely he would be able to determine on his own that oil leaked and there was a spill from the tank. Mr. Evans, prior to his retirement from the government, was apparently a commercial law lawyer, or at least he worked in the civil law area with the Department of Justice. While he was involved in law and an avid fly fisherman, it is doubtful he would recognize a leak or a spill unless it was obvious as in the basement where he could see and smell the leak.
19. Other than having one PCDS make one comment and having a subsequent PCDS omitting to say the same thing, what other evidence does the Claimant have to prove the Defendant knew there was a leak around the oil tank under the front steps. The Claimant uses the Defendants’ own words. The first being the letter to Kelly Lynn Greenwood on September 19, 2003. However, a careful reading of that letter does not confirm that there was a leak from the tank under the steps. In the letter, the Claimant Mr. Evans states in part:
“With respect to the second tank replacement, I’m not sure the triggering event was anything more than a few drops left from a sloppy delivery. In any event, I dug out the soil under and beside the tank and removed it, not because I considered it contaminated, but because I wanted room to improve the replacement tank.
With respect to the second tank replacement, I confirm my belief that no material contaminated by oil remained on the property after the tank replacement was fully completed. Frankly, I doubt if there was any contamination before I dug it out and certainly not after.”
20. This letter does not go to prove that there was a leak or an oil spill in the area of the tank under the steps of the home some six years ago. There may have been a sloppy delivery by the oil company or, as indicated during the trial, it could have been a smell that emanated from the intake pipe which Mr. Evans happened to smell. There is no evidence in this letter or from Mr. Evans’ evidence that he saw or smelled any oil at that time.
21. The next reference point is a letter, also dated September 19, 2003, directed to, it would appear, to a person who made an offer on the home and in care of a law firm. This letter is the most damaging to the Defendants wherein he (Mr. Evans) confirms there were two leaks, one from the basement tank and one from the outside tank. I shall reproduce the parts of that letter, which are detrimental to the Defendants’ position and support the Claimants’ position that there were two separate leaks and the Defendants only revealed one.
“I write to provide additional details respecting the two oil leaks that occurred on the property while I have owned it.
With respect to the first leak, I also confirm that any oil that leaked from the tank was contained to the top of the concrete on the basement floor and did not migrate below the floor, for example through a floor drain or any cracks or gaps in the concrete.
With respect to the second leak, I confirm that any and all soil and other material or surfaces contaminated by oil that had escaped from the leaking tank (emphasis added) were either removed from the property or properly cleaned and decontaminated before the new tank was installed.
I confirm that I am aware that the purchaser is relying on the assurances contained in this letter and my letter dated September 16, 2003, in finalizing her decision to purchase this property and that these assurances shall survive the closing of the sale of the property to the purchaser.”
22. This letter would seem to squarely say there were two leaks. This letter must be looked at in context with the testimony that was given by all the parties, which I shall discuss after I have referenced the letter of September 16, 2003, referred to by Mr. Evans. This letter was directed to Catherine S. Waller, Q.C., the Evans’ solicitor. This letter speaks of one oil leak in the basement some 20+ years ago but not of a leak under the stairs. Again, I reproduce here the relevant portion of that letter.
“When I purchased the residence in 1978, it had one 200 gallon fuel tank in the basement. Within the first year or two I could smell oil fumes in the area where the tank was located. A careful inspection revealed oil had seeped from the tank onto papers I had stored on the floor around it. I immediately called my oil supplier who installed a magnetic patch on the spot where it was weeping and arranged to replace the tank. The tank was replaced by an outside tank one, under the front steps¼
Many years later (probably about 15) my wife could smell oil after a fuel delivery. As the fuel oil tank fill pipe and vent are directly beside the driveway where you get out of the car, the tiniest trace is noticeable. I had the tank replaced immediately¼.”
23. The only evidence that there were two leaks was in the letter of September 19, 2003, directed to Tammy Gamble. However, the thrust of that letter is to give assurances that the property is not contaminated. The letter to the Defendants’ own solicitor who, one might assume, Mr. Evans would be comfortable in describing the situation in detail makes no reference to two leaks. The smell that came from under the steps some fifteen years ago and detected by Mrs. Evans could have been a smell of oil from the in‑fill pipes following delivery of oil as she suggested. There is no clear evidence before me that the Defendant, Mr. Evans, knew what he was saying when he said there were two leaks in the September 16, 2003, letter. He never had the ground testes at the time, he never saw oil spilled on the ground and there was no evidence of a hole(s) in the tank that was replaced some fifteen years ago.
24. I have some difficulty believing that Mr. Evans knew what he was talking about in the first PCDS and the letter to Ms. Gamble on September 19th, or in regards to what he said to the realtor, Ms. King, with respect to a leak from the tank some fifteen years ago. There is no evidence of a leak in the tank under the stairs except through the mouth of the Defendant who really did not know one way or another. He could have suspected there was a leak because his wife smelled oil after a delivery and he could have suspected the soil he removed when replacing the tank was contaminated, but the simple fact is he did not know one way or the other.
25. The next evidence I considered was of Robert McCullough of the firm Jacques Whitford Environmental Limited.
26. The environmental company was advised of one oil spill, that being in the basement; however, they were also advised of the removal and replacement of the oil tank under the steps. They did find a little oil under the tank; however, it was to be expected and below “guidelines”. The also found some levels of oil near adjacent property which was near unacceptable guidelines but below.
27. Mr. McCollough stated this oil was downhill of the old oil tank and “It would have been tough to have contamination on the front steps”. There is no indication from Mr. McCullough’s investigation that there was a spill or leak of oil from a tank under the steps other than normal miniscule amounts from when the tank was being filled.
28. The Claimants content that there were two oil spills and the Defendants deny same. Often in cases where there is misrepresentation the Claimants move into the property and they are able to show the defect which is discovered after the move and that the Defendants must have known of the problem as determined by experts or knowledgeable people in the field. In this particular case, the Claimants did not purchase the property and have not proven there is a defect, that is, there was a second oil spill. They rely on the written words of the Defendant, Gregory Evans, and, in fact, the report of Jacques Whitford goes to show there were not two leaks. Therefore, if the Defendants specifically said to the Claimants there was one leak in the basement, then that is true and the second element of both fraudulent and negligent misrepresentation has not been met. That is, the representation that there was one problem with leaks was in fact true, accurate and not false.
29. Having determined that there was no fraudulent or negligent misrepresentation, I can see how the Claimants would have determined otherwise on the letters written by Mr. Evans and by comments made by the real estate people, and as a result it allowed for a very arguable case in a court of law, which is what happened here. It is perhaps unfortunate that the parties could not have worked out a resolution.
30. With respect to the Claimants’ argument that Clause 4(a) of the Purchase/Sale Agreement is a condition precedent to the sale being completed, once again you have to look at the surrounding facts if the clause is unclear. First, the clause is clear. A certificate was to come from Jacques Whitford, not the Department of Environment and Labour. The claimants were aware that Jacques Whitford was doing the assessment, they were aware that Jacques Whitford approved the property. The only mention of the Department of Environment and Labour came up when Jacques Whitford, as a matter of course, sent it findings on to the Department. The Claimant was a real estate agent in a previous life and if he wanted to make his offer conditional on it being approved by the Department of Environment, or that that the property would not be contaminated by any amount of oil or toxins, he could have said so in his offer. He chose not to do this.
__________________________
David T.R. Parker
Small Claims Court Adjudicator