Legal Advice – The Pitfalls of Giving #59

By Gerry Neely
B.A. LL.B.

Adam entered his solicitor's office with a writ in his hand and an expression on his face which his solicitor, as Adam's old golfing partner, recognized. It was the "how did this happen to me" look that appeared on Adam's face when, after playing faultless golf for seventeen holes, he sliced off the tee and three putted home. Adam was the president, director and nominee of A. Lurt Listing Services Ltd., whose motto was "Stay Alert and Stay Ahead." He sat down, handed to his solicitor the writ and said, "You won't believe this, Noel, but I'm being sued by two purchasers who bought a house through me and who now claim that the bad legal advice I gave them cost them $6,000.00. You know I couldn't have done that - after all, I've taken the pre-licencing course, the post-licencing course, the agent's course, have a library full of self-help legal publications and I've managed to stay awake through almost all of the educational seminars put on by the Board."

Refraining from reminding Adam of Adam's comments when Noel had given some advice to a client about the value of a piece of property, Noel examined the writ and then invited Adam to tell him what had happened.

"I prepared an offer for my purchasers which was subject to the sale of their property. I had to present the offer on Sunday, August 31, because the listing salesman was going on holidays the next day and after one quick counter-offer by the vendor which the purchasers accepted that day, I had a deal. On Tuesday, September 2nd, I agreed to guarantee the sale of the purchasers' home, and I had the purchasers sign a new offer. I tried to reach the vendors to advise them that the subject clause had been removed and when I was unsuccessful, on Wednesday, I gave the offer with the subject removed to the listing agent's sales manager for signature by the vendor. On Thursday I was able to sell the purchasers' home. They were reluctant to accept the offer for their home until I assured them that they had an enforceable agreement to purchase the vendor's home. Then to my horror I was advised that the vendors had repudiated the deal on the ground that the contract was void since it was signed on a Sunday. I couldn't reach you, because you were playing golf, but another lawyer to whom I spoke, together with a few friends in the business with whom I discussed this matter, all agreed that the vendor was right. I even spent the week-end reading my law books and came to the conclusion that I had given the purchasers the wrong advice."

"You can imagine that they were a little unhappy when I told them that they didn't have a deal and the reason why. However, they accepted my advice again. Since they couldn't find a place to move that they could afford, two weeks later they paid $6,000.00 more to the same vendor to get the house they wanted. They say that they wouldn't have paid the extra $6,000.00 if I hadn't reversed my opinion as to the enforceability of the contract. Where do you think I stand?"

"In the water hazard on the eighth fairway, old buddy," said Noel. "While the contract was made and accepted on a Sunday, it did not become a binding contract until the condition was removed on Tuesday. Although I can't recall at this moment the name of the case that states that the Lord's Day Act does not apply to these facts, I think if you dig back through your seminar material, Adam, you'll find a reference to it. So you see that the advice you gave the purchasers that the contract was binding was good advice even if you didn't realize why. Because you had your mind changed for you, I'm afraid that you are liable for payment of the additional $6,000.00 it cost the purchasers, oddly enough because of the high standard expected of persons licenced under the Real Estate Act. The point is, if you are not expected to know much of anything, then your liability is correspondingly limited. However, you are a person possessed of the special skills which you, as a licencee, are deemed to have because of the educational requirements you have had to meet. Since the purchasers relied upon your advice, your negligent though honest misrepresentation forms the basis for an action for damages for their financial loss."

"Well," questioned Adam, "what can I do to protect myself in the future?" To that Noel said, "the best thing you can do when you are asked for legal advice, and I know this may be difficult, is to persuade the purchasers or the vendors at their expense to see their own lawyer. In that way, he is responsible and not you for bad legal advice. And if that fails, maybe you would like to rent a pager for me so that you can reach me on the golf course."

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