Untruthful Property Disclosure Statement Deceitful #364

Oct 01, 2003

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By Gerry Neely
B.A., LL.B

Paragraph 18 of the Contract of Purchase and Sale excludes liability for misrepresentations made outside it and the Property Disclosure Statement (PDS), when the PDS forms part of the contract. However, it does not protect a party against whom an action for deceit is brought.

This issue is discussed in a case where the seller stated in his PDS that he was unaware of roof leakage or unrepaired damage, and there were no problems with the septic system. These statements were untrue.

The seller had explained water stains by saying they occurred before he repaired the roof. However, when the buyer had it repaired, the roofer found the seller's repairs were minimal and the plywood subsurface, applied over old plywood, was rotten. Before the sale, the septic system failed and the health department gave the seller a special permit to replace it with a 6,000-gallon holding tank. The continued use of the tank was contingent upon the seller advising a buyer of the permit's existence and the health department monitoring the removal of sewage.

The seller attempted to use Paragraph 18 as a defense. It can protect a party against a negligently-made representation of fact, but offers no protection for deceit. In law, that means a person who makes a false statement knowing it is untrue, or not knowing but not caring whether it is true or false. The seller's statements in the PDS fell within this definition of deceit and damages were awarded to the buyer.1

* * *

Legally Speaking 334 examined a case where an unlicensed person was able to enforce payment of a $50,000 finder's fee, despite the prohibition against payment of compensation to unlicensed persons found in s.47 of the Real Estate Act. The finder had introduced the buyer to the sellers, provided financial and other information to prospective buyers, but otherwise left the parties to settle the terms of the purchase agreement. The judge decided that the finder was only a middleman, not an agent or broker, and therefore entitled to payment of the fee.

This decision was appealed unsuccessfully to the British Columbia Court of Appeal, which held the finder did not exercise the same skills as a licensed agent by merely delivering information.2

* * *

The time of year approaches when a homeowner's thoughts turn to cleaning out the eavestroughs, right? And it is helpful to volunteer to hold your neighbour's ladder when he cleans them. Luckily, a promise to perform this volunteer act is one you can withdraw from without liability--except possibly to the relationship.

However, based on English decisions made as far back as 1703, once you start a voluntary act liability for injury may arise if you perform it improperly--say, by walking away from the ladder without warning your neighbour, and he falls.

This happened to a dairy farmer atop a 16-foot ladder standing on a slippery, manure-covered concrete passageway. The volunteer's defence was that his agreement to hold the ladder did not mean he had agreed to hold it for the entire time the farmer was on the ladder. This was rejected, and the volunteer was ordered to pay 30 per cent of the $759,000 damages awarded to the farmer, who sustained severe brain injuries.3

  1. Baynham and Baynham v. Terry and Black, BCSC, Chilliwack Registry, Reasons for Judgment, March 19 2003.
  2. Lindholm Land & Investment Corporation et al. v. Danzo et al., BCCA, Reasons for Judgment, September 9, 2002.
  3. Wiens et al. v. Krahn, Wiens et al. v. Krahn.

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