Focus On

SALE OF LAND - Quality defects

Wednesday, June 30, 2021 @ 5:43 AM  

Lexis Advance® Quicklaw®
Appeal by the vendors and White, a structural engineer, from trial judgment finding them liable to the purchasers for damages. The respondents purchased a home from the vendors in 2010. A home inspection prior to closing revealed a crack on a basement wall. The vendors had experienced water ingress at the north end of the basement foundation in 2007. They had a crack in the foundation repaired in 2007 and experienced no further water ingress. This repair was disclosed to the purchasers and White. The vendors had obtained a 2005 Pillar to Post report from the previous owners which included the author’s recommendation that the grade on the property be adjusted in several low areas to reduce the possibility of moisture intrusion into the basement. The vendors recalled its existence but could not locate it at the time of the sale in 2010 and could not recall exactly what the contents were. The purchasers retained White, who determined that the foundation was structurally sound. The purchasers took possession of the home. Four months later, they noticed a musty smell and water stains in the basement. Ultimately, they determined the crack extended the length of the west wall and to parts of the north and south walls. The west foundation wall was replaced, and portions of the north and south walls were repaired. The trial judge found White liable for negligent misrepresentation and the vendors liable for breach of contractual warranty. The trial judge concluded that the issues of water ingress and structural integrity were not mutually exclusive, and that White should have removed the drywall to fully examine the issue of water ingress through the horizontal crack or should have qualified his statements and conclusions to indicate he had not done so. The trial judge found that the vendors turned a blind eye and were reckless to the fact that the Pillar to Post report might have contained pertinent information about possible latent defects in the home. She found that the purchasers were owed disclosure on all potential latent issues, so they could decide for themselves whether to take the risk of foundation failure.

HELD: White’s appeal dismissed. Vendors’ appeal allowed. The trial judge correctly found White’s retainer included a detailed examination of the horizontal crack on the west wall and advice whether it constituted a risk of water penetration. White was inaccurate or misleading when he said the drainage problem on the property would not cause distress for a very long time. Water ingress occurred in early 2007, and again by October 2010, five months after White’s reports. It was also inaccurate and misleading for him to say that the horizontal crack was merely a minor flaw. White was unaware of or failed to notice evidence of historical water damage, significant concrete deterioration, and spalling. White’s representations were untrue, inaccurate or misleading. He did not qualify his report with appropriate limitations and disclaimers to indicate he had not removed any drywall. There was insufficient evidence to establish betterment. There was no evidence before the trial judge that the vendors were aware of any problem with the foundation, latent or patent, other than the water ingress and repair on the north wall in 2007, which was disclosed. The trial judge did not indicate how she determined that the elongated horizontal crack, spalling, and history of water damage were latent rather than patent defects. The concrete deterioration, spalling, and horizontal crack along the west wall onto the north and south walls, were readily apparent, visible or discoverable through a reasonable inspection. There was no evidence that the vendors were aware of any defects not visible that might render the property dangerous. They had no obligation to do more than they did.

Kent v. MacDonald, [2021] A.J. No. 719, Alberta Court of Appeal, S.J. Greckol, D. Pentelechuk and K.P. Feehan JJ.A., May 25, 2021. Digest No. TLD-June282021005