Law Times

October 31, 2016

The premier weekly newspaper for the legal profession in Ontario

Issue link:

Contents of this Issue


Page 7 of 15

Page 8 OctOber 31, 2016 • Law times 'The key requirement is that the vendor is honest' Case highlights negligent representation BY MARG. BRUINEMAN For Law Times A recent case demon- strates any breakdown in the five-way test required to establish negligent misrepresentation in real estate transactions will re- sult in a failed claim. In Drolet v ReMax Riverview Realty, plaintiff Jean-Sebastien Drolet sought compensation from the real estate agent for money the plaintiff spent pre- paring a piece of property for the development of a home, only for Drolet to find aer the sale closed that he was prohibited from building anything due to the land's proximity to a nearby former landfill. e plaintiff 's claim was un- successful because he was un- able to establish two of the re- quired elements. Lisa Laredo of Laredo Law in Toronto says honesty is indeed the best policy when it comes to defending an accusation of neg- ligent misrepresentation. "e key requirement is that the vendor be honest," observes Laredo. "From a legal point of view, it is better that a vendor say noth- ing rather than a half-truth. If you say something, you need to be forthright and honest. "ere is nothing in law that requires the vendor to say any- thing as to the condition of the property." While the agent clearly owed a duty of care to the purchaser and the information the agent told the purchaser turned out to be false resulting in him suffer- ing damages, Brockville Small Claims Court Deputy Justice Shane A. Kelford determined that the agent didn't act negli- gently and, even if he did, the purchaser didn't rely on that in- formation because he made his own independent inquiries. "In this case, there is no evi- dence which would allow me to conclude that (real estate agent Brittany) Holtzman failed to meet the usual or customary standard of a purchaser's agent with respect to her efforts to verify the accuracy of the ven- dor's information regarding the suitability of the property as a building lot. "Other than perhaps obtain- ing a zoning certificate in respect of the property, no evidence was led by the plaintiff as to the standard practice of real estate agents with respect to confirma- tion of zoning or suitability of a property for building," wrote Kelford. Court heard the agent had gone to the township to confirm the purchasers would be allowed to build on the property. e purchaser also ap- proached the township office. Both were told they would be permitted to build. Aer closing, the purchaser spent $18,000 preparing the property, which included exca- vation, securing the septic per- mit as well as designs and en- tryway permit off the municipal road. He then built the driveway and applied for a building per- mit only to be told he would be prohibited from building because the site was within 500 metres of the former dump. e property owner partly rectified his dilemma by selling the land to the municipality. But he was still out what he spent preparing the property for construction so he sued the agent. Facing two sets of contra- dicting expert opinions le the court to choose between them, observes Matt Maurer, a litiga- tor with Minden Gross LLP in Toronto. e plaintiff presented no witnesses to testify as to what a reasonable agent would have done in the circumstances. But the brokerage led evi- dence that it is not standard practice for a purchaser's agent to obtain a zoning certificate to confirm zoning for a purchase, observes Maurer. "In this case, if the plaintiff led evidence that it's common prac- tice, every purchasing agent goes out and gets a zoning certificate to certify the zoning before they close, things would have been a lot different," says Maurer. Michael Swindley, the Kings- ton, Ont. lawyer who success- fully represented the Real Estate Council of Ontario in defend- ing the agent, says if the link of any of the five required ele- ments is broken, the accusation of negligent misrepresentation fails. "Where the chain breaks is on the reliance and on the neg- ligence," says Swindley. "e court found that be- cause they were told the same thing . . . it wasn't negligence because she [the agent] met the standard of care owed by a real estate agent by going out and do- ing that extra research." ree of those elements were proven: e client is automati- cally owed a duty of care in a relationship with an agent; the representation the agent made turned out to be inaccurate; and the plaintiff suffered damages. But what was missing was any evidence that the agent acted negligently in making the representation and that the cli- ent relied upon the misrepre- sentation. e two that failed — negli- gence and duty of care — result- ed in the failure of the case. Swindley points out that a very large majority of RECO- related claims appear in small claims court, as did Drolet be- cause of its $25,000 limit and few land in divisional court these days. e plaintiff would have had to call expert evidence to prove what the standard of care was. at would have likely been another agent or expert in the field, "and that's pretty tough to do," says Swindley. He says agents are more aware about the standard of care in their business to provide them with guidelines when they are dealing with clients, so when people consider suing the agent if something goes wrong, pur- chasers "will think twice about suing them." LT FOCUS ON REAL ESTATE LAW FOCUS Michael Swindley says a large majority of Real Estate Council of Ontario related claims appear in Small Claims Court. Tel: 905-841-5717 The Proof is in The Precedents Ask for our Trial Report Card Truth in Personal Injury Advertising Begins With Trial Work. Untitled-2 1 2016-10-26 2:00 PM

Articles in this issue

Links on this page

Archives of this issue

view archives of Law Times - October 31, 2016