Aug 01, 1996

Negligence by Licensee #256


By Gerry Neely
B.A., LL.B.

Small mistakes lead to big problems, which proves yet again that eternal vigilance is the price to be paid to avoid having to check your E. & 0. insurance to see what the deductible is.

Buyers under a conditional Contract of Purchase and Sale, asked the agent to obtain extensions for the completion date and the date for removal of conditions. The contract already contained one change of the completion date, which had been initialed by both parties. The agent prepared an amending agreement which the buyer signed. When the sellers declined to extend the completion date, that clause was crossed out, and the sellers signed one copy of the amending agreement.

The agent's office had two versions of the contract, one of which contained the completion date the parties had agreed upon, (March 18th) and the other the proposed completion date which the sellers rejected (March 25th). The documents forwarded by the real estate office to the conveyancer, included the copy of the contract showing the March 25th completion date, the copy of the amending agreement extending both dates, but signed only by the buyer, and a sales record sheet showing that completion was March 25th.

The conveyancer, mislead by the sales record sheet, failed to notice the ambiguities in the documents he received, with the result that the conveyancing documents were not ready on March 18th. An attempt to complete the day following was rejected by the sellers, who declared the contract terminated because of the failure to pay the sale price on March 18th.

What standards of care did the judge conclude arose from these facts?

With respect to the real estate agency, when it undertook to send the relevant documentation to the conveyancer, it had an obligation to send all of the documents which contained the agreement made by the parties. Sending the contract containing the March 25th date, accompanied by the sales record sheet with the same error, and failing to send the fully executed amending agreement, were all evidence of conduct below the standard of care to be expected of a real estate agent.

The conveyancer's obligation was to become familiar in a timely manner with the terms of the agreement, usually by examining the relevant documentation. If parts of the contract, or amendments to it were not signed or initialed by both parties, or if there were apparent ambiguities on the face of the document, the conveyancer had to discover through discussions with the clients or the agent what the parties understood the agreement to be.

Failing to question the absence of the seller's signature on the amending agreement, as well as the absence of a second set of initials beside the second change to the completion date, was conduct that fell below the standard of care expected of a conveyancer in British Columbia.

Another point of interest arose from this decision. The buyer's conveyancer had telephoned the seller's conveyancer on March 18th to ask for a one-day extension. The conveyancing secretary who answered said "OK". The judge concluded that all she really meant was that the sellers would probably not object to an extension. There was no evidence presented to the judge that conveyancing secretaries ordinarily have authority to extend a completion date and he was unwilling to assume that they do. Both the licensees and the conveyancer were held to be liable to the buyers for damage resulting from their respective acts of negligence.

The defendants were represented by two insurance companies, each of whose interests would have been directed at persuading the judge that it was the other party's negligence, that caused the plaintiff's loss. The buyers had intended to build a gas station and the damages claimed were the costs thrown away for architect and surveyor's fees, legal fees, appraisal and other mortgage costs for borrowed money, and interest on that money totaling about $30,000. Once the finding of joint and several liabilities were made the insurers agreed to split the damages.1

 1. Kwok v. Griffiths, B.C.S.C., Reasons for judgment, January 19, 1996.

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