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SALE OF LAND - Fraudulent misrepresentation - Quality defects

Thursday, June 03, 2021 @ 5:50 AM  

Lexis Advance® Quicklaw®
Appeal by the defendant vendor from refusal of summary judgment dismissing the action by the plaintiff purchaser. The vendor purchased the subject property in 2007. He completed extensive renovations and repairs that did not involve the basement suite. He contracted out the management of the home as an investment property and never resided within it. In 2013, the plaintiff had a series of conversations with the vendor about purchasing the home. The transaction proceeded after the vendor provided a property condition disclosure statement and the plaintiff arranged a home inspection. Three months after taking possession, a guest damaged a basement wall. The plaintiff discovered mould in the insulation and joists that were charred and burned from fire damage. The plaintiff sued the vendor, the home inspector and his company for damages for breach of contract, negligence and misrepresentation. The vendor learned of two fires that preceded his ownership. The defendants sought summary judgment dismissing the claim. The chambers judge allowed the application in respect of the home inspection defendants based on an exclusion clause. The judge directed a trial against the vendor for fraudulent misrepresentation by concealment. The defendant appealed.

HELD: Appeal dismissed. The chambers judge did not err by failing to find that the fire damage was a patent defect rather than a latent defect. Instead, the chambers judge did not reach a finding of fact regarding whether the defect was latent or patent. The judge correctly set out the law regarding the two categories of defects and the doctrine of caveat emptor. In applying that law to the evidence, the judge was not satisfied that she could determine whether there was a patent defect or a latent defect, and, therefore, proceeded on the basis that it was latent. As a result, the chambers judge could not grant the application for summary judgment on the basis that the defect was patent. There was no error in assuming that the defect was latent for the purpose of finding a genuine issue for trial in relation to fraudulent misrepresentation by concealment. The chambers judge’s findings of an absence of reliance by the plaintiff related to pre-purchase conversations with the vendor rather than the misrepresentation through concealment of the fire damage, which remained an open issue for trial.

Smith v. Hawryliw, [2021] S.J. No. 151, Saskatchewan Court of Appeal, G.R. Jackson, J.A. Tholl and J.D. Kalmakoff JJ.A., April 7, 2021. Digest No. TLD-May312021008