Latent defects - endangered bird species and heritage designation #387

By Gerry Neely
B.A. LL.B.

An Ontario real estate salesperson learned more than he ever expected or wanted to about the Loggerhead Shrike (eastern population), “a songbird that hunted like a small hawk,” on the federal and provincial endangered species lists. He acted as dual agent on a 129-acre parcel of land, under an agreement not to disclose confidential information that compromised either party’s bargaining position. The one exception was a latent defect known to either the seller or the agent.

The purchase price of $34,000 reflected a 400-foot hydro easement and Canadian Pacific Railway line crossing the property, the southerly part of which was wetland unsuitable for building. The buyers were interested in the property because the northerly portion contained a building site and adjoining land apparently suitable for their plans. When they submitted their plans to the township, they were told they would be liable for prosecution if they proceeded to build their home and workshop there. The reason: they would be within the 400-metre radius circle of suitable habitat preserved for known Shrike nests.

The buyers sued the agent for damages. The agent had received from the sellers a video and brochure concerning the Shrike, but decided not to disclose the significance of this to the buyers because he didn’t consider it important enough. That was a mistake—the judge decided this limitation on building sites was a latent defect that should have been disclosed to enable the buyers to make their own investigation. (1)

A precedent referred to in this case concerned the non-disclosure by an agent of a city’s intention to designate property as heritage. The seller and agent knew the buyers wanted to demolish buildings on the property, an action the designation would have prevented. The intended designation was held to be a latent defect the agent had a duty to disclose. (2)

A decision in a provincial court case handed down on August 9, 2005 will be interesting to licensees with pets. The plaintiff sued the breeder from whom she had purchased an eight-week Samoyed puppy at the low price of $350, because it was born tailless. The breeder had given the buyer an oral guarantee that the puppy was healthy. However, as the puppy matured, she discovered she had to cope with many special needs, the most significant of which was a congenital dermoid cyst not discovered until age two. The cost of the surgery was the major part of the more than $10,000 the buyer had spent on the Samoyed’s medical problems.

The judge decided the action was governed by the BC Sale of Goods Act and the purchase of the dog should be treated as any other purchase of a consumer product. The warranty was limited to the problem the Samoyed had at the date of purchase, the dermoid cyst, and damages were limited to those reasonably resulting from the breach.

Was it reasonable for the buyer to have spent $10,000 on her dog’s care? The breeder’s lawyer argued the amount spent exceeded the commercial value of the dog and the buyer had a duty in the legal sense to limit damages by declining to have the surgery done. She, and not the breeder, should bear the costs. The judge agreed, awarded damages of $350 to the buyer and gave her an alternative the judge was sure she wouldn’t want to exercise: to have the breeder replace the dog. (3)

	1.	Hennessy v. Russell, Ontario Superior Court of Justice, Bellville, [2005] O.J. No. 2612.
	2.	Goldstein v. Davison, (1994) 39 R.P.R. (2d), p. 61.
	3.	Pezzente v. McClain, 2005 BCPC 0352, North Vancouver Registry, Reasons for Judgment, August 9, 2005.

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