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SALE OF LAND - Misrepresentation - Fraudulent misrepresentation - Quality defects - Latent - Remedies - Damages

Tuesday, April 10, 2018 @ 8:48 AM  

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Claim by the plaintiff vendor, Wang, for payment of the deposit and damages from the failed sale of a property. Counterclaim by the defendant purchaser, Shao, for return of the deposit and damages for breach of contract. Wang entered into a contract of purchase and sale with Shao for the purchase of a residential property for the price of $6,138,000. Shao failed to complete the purchase and Wang sold the property to another buyer for the price of $5,500,000. Wang said Shao breached the contract and claimed that she was entitled to the deposit of $300,000 and additional damages of $338,000. Shao submitted that Wang's failure to disclose the violent death of her son-in-law, Huang, at or near the front of the property entitled her to repudiate the contract. Shao contended that the death was a material defect in the property as Huang was a gang member. Alternatively, Shao said Wang owed her a duty to make full and complete disclosure of all material facts regarding the property, including Huang's involvement in organized crime and his unsolved murder. She maintained that Huang's violent death was a latent defect that rendered the property dangerous, or potentially dangerous, to its occupants. Shao counterclaimed for repayment of the deposit and for damages for breach of contract to compensate her for the costs of legal advice and representation.

HELD: Claim dismissed and counterclaim allowed. Huang’s death was not a latent defect rendering the property dangerous or uninhabitable. Huang's death was not a defect related to the physical or intrinsic qualities of the property. Even if the death was a defect, it was a patent, rather than a latent defect, which Wang was not obliged to disclose to Shao. However, Wang made a representation of fact to Shao that the reason she was selling the property was that her grand-daughter had moved to a new school. That representation was incomplete because it failed to mention the death of Huang as a factor in the decision to move. Shao was entitled to an accurate answer. For Shao, the representation was material, and she relied upon it as an inducement for her purchase of the property. Wang’s fraudulent representation vitiated the contract of purchase and sale and precluded her from relying upon the “no representations” clause in that contract. The action was dismissed and Shao was entitled to the return of her deposit. Shao was entitled to damages of $4,040 for legal fees incurred with respect to the conveyance.

Wang v. Shao, [2018] B.C.J. No. 406, British Columbia and Yukon Judgments, British Columbia Supreme Court, P.J. Pearlman J., March 9, 2018. Digest No. TLD-April92018003