Negligence in Measuring Area of Commercial Property, Commission Claim Successful #196

By Gerry Neely
B.A. LL.B

An Ontario real estate agent who was found by a judge to have negligently measured the area of his client's commercial property, was still held to be entitled to payment of the commission earned upon the sale of the property. The agent based his calculations of the area of the five parcel property partly upon the dimensions of three parcels listed in the, local board's computer data base. This information had been obtained-from the city's assessment rolls to which the agent went for the dimensions of the remaining two parcels. The agent advised the vendor that the area was 5.72 acres.

The vendor refused to accept anything less than $4,900,000, a price which the purchaser agreed to pay, but at the per acre equivalent of that price. It was a condition of the purchase that the property be surveyed at the vendor's expense. If the area surveyed was less than the area represented by the vendor, the purchase price was to be reduced proportionately.

When the surveyor advised the vendor that the area was actually 5.662 acres, the vendor commented that it was probably the result of the city taking part of the property for road widening. This reduced the price by approximately $50,000. The vendor paid part of the commission and the agent sued for the remainder.

What could or should the agent have done? The judge thought that the agent might have searched title, although he acknowledged that this would probably not have been helpful. The agent might have asked the vendor's lawyer who had acted on the assembly of the five properties, for any information he had. This might have been more productive than searching title. The agent had walked the boundaries of the property with the owner, which would have been an appropriate time to ask the vendor if he was aware of highway expropriation or if he had sold any part of the property. This request would either have elicited the information the agent needed, or if the vendor remained silent, provided the agent with a defense to the complaint of negligence.

Instead, the agent relied solely upon the information contained in the board's data base and the city assessment rolls, without verifying whether that information was accurate, and without any understanding that the city's assessment information might not be up-to-date. That failure is why the judge held the agent to be negligent.

Since the vendor incurred a $50,000 reduction in the purchase price because he relied upon the agent's negligent calculation of the area, he wanted damages which he could then use to offset the agent's claim for commission. Damages were to be measured however, by the difference between what he received and the fair market value of his property, rather than between what he was paid and what he hoped to receive. The evidence indicated that the price received was well in excess of the fair market value of similar property in the area prior to this sale.

The vendor was aware when he signed the agreement that he was to be paid on a per acre basis, and he received the exact price per acre for which he had contracted. On the basis of how damages were to be measured, he suffered no loss and judgment was given to the agent.

The problem faced by the agent in Ontario is one that probably could be avoided in British Columbia by a search of title. Column #27 published in October, 1982 referred to the lack of information on a title of whether a portion of the property had been taken for highway purposes. I am told that now there should be notations on title or actual removals from the title, of the area expropriated or which may be subject to expropriation for road widening. If you can't find the notations, but believe from your examination of the property that it may be smaller than represented, the miscellaneous note section of the title search may disclose rights of way and gazette references.

How could the agent have protected himself? In the judge's opinion the agent should have advised the vendor of the source of the information upon which he relied, and told the vendor that if he wanted to be certain of accuracy, he should obtain a survey.¹

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