Cardwell v. Perthen, 2007 BCCA 313

• Judge: Prowse, Levine and Kirkpatrick, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: March 29, 2007
• Jurisdiction: British Columbia
• Citations: 2007 BCCA 313;(2007), 243 B.C.A.C. 135 (CA)

Cardwell v. Perthen (2007), 243 B.C.A.C. 135 (CA);

    401 W.A.C. 135

MLB headnote and full text

Temp. Cite: [2007] B.C.A.C. TBEd. JN.017

Eric Cardwell and Diane Susan Cardwell (appellants/plaintiffs) v. Juergen E. Perthen and Helga G. Perthen (respondents/defendants)

(CA033932; 2007 BCCA 313)

Indexed As: Cardwell v. Perthen

British Columbia Court of Appeal

Prowse, Levine and Kirkpatrick, JJ.A.

June 6, 2007.

Summary:

The purchasers purchased the vendors' residence for $1,350,000. They did not retain a qualified inspector to inspect the home before closing. Shortly after the closing, the purchasers became aware of structural deficiencies, mould growth, and leaks throughout the home. Six months after the purchase, the purchasers sold the home in an "as is" condition for a loss of $710,000. The purchasers sued the vendors and others for negligence (including negligent misrepresentation and negligent construction), fraud and breach of contract. Before trial, they settled their claims against the vendors' real estate agent, the realty company for whom she worked, the District of West Vancouver, the engineering company retained by the vendors, and one of its engineers.

The British Columbia Supreme Court, in a decision reported at [2006] B.C.T.C. 333, allowed the action in part. The purchasers appealed.

The British Columbia Court of Appeal dismissed the appeal.

Damages - Topic 1065

Mitigation - In particular matters - Sale of land - The purchasers purchased the vendors' residence for $1,350,000 - They did not retain a qualified inspector to inspect the home before closing - Shortly after the closing, the purchasers became aware of structural deficiencies, mould growth, and leaks throughout the home - The purchasers accepted an engineering report that they sell the house in lieu of renovating (or demolishing and rebuilding) - Six months after the purchase, the purchasers sold the home in an "as is" condition for a loss of $710,000 - The purchasers sued the vendors for negligence (including negligent misrepresentation and negligent construction), fraud and breach of contract - The trial judge awarded damages for undisclosed dangerous latent defects - The purchasers appealed, asserting that their decision to accept the recommendation in the report was a reasonable decision at the time they made it, and should have been accepted by the trial judge as reasonable mitigation of their damages, even if it turned out later to be wrong - The British Columbia Court of Appeal held that the actions of a person attempting to mitigate damages were to be judged at the time the actions took place, and where the decision was based on expert evidence, the decision was still a reasonable one, even if the advice was later found to be inaccurate - However, it was only if the vendor was found to be liable that considerations of damages, including mitigation, came into play - The vendors' liability was limited, by the law of caveat emptor and its narrow exceptions, to damages for undisclosed dangerous latent defects - The vendors' liability could not be extended to losses suffered from other causes, such as the negligent, or simply exaggerated, opinion of the purchasers' expert - See paragraphs 54 to 57.

Sale of Land - Topic 7414

Remedies - General - Mitigation - Duty of injured party - [See Damages - Topic 1065 ].

Sale of Land - Topic 8626

Remedies of purchaser - For quality defects - Patent defects - The purchasers purchased the vendors' residence for $1,350,000 - They did not retain a qualified inspector to inspect the home before closing - Shortly after the closing, the purchasers became aware of structural deficiencies, mould growth, and leaks throughout the home - Six months after the purchase, the purchasers sold the home in an "as is" condition for a loss of $710,000 - The purchasers sued the vendors for negligence (including negligent misrepresentation and negligent construction), fraud, and breach of contract - The trial judge found that the sub-floors of the family room, master bedroom and ensuite bathroom had latent defects negatively affecting the habitability of the home, and that the vendors knew of or were reckless in failing to disclose those defects - Further, the trial judge found that the vendors knew of the leaks in the roof at a skylight area and between the living and family rooms - She determined that the remaining deficiencies were patent defects that were discoverable upon a reasonable inspection and by making reasonable inquiries - She awarded the purchasers damages of $35,441.99 - The British Columbia Court of Appeal affirmed the decision - See paragraphs 34 to 39.

Sale of Land - Topic 8626

Remedies of purchaser - For quality defects - Patent defects - The purchasers purchased the vendors' residence for $1,350,000 - They did not retain a qualified inspector to inspect the home before closing - Shortly after the closing, the purchasers became aware of structural deficiencies, mould growth, and leaks throughout the home - Six months after the purchase, the purchasers sold the home in an "as is" condition for a loss of $710,000 - The purchasers sued the vendors for negligence (including negligent misrepresentation and negligent construction), fraud, and breach of contract - The trial judge awarded damages for undisclosed dangerous latent defects - She found that the remaining deficiencies were patent defects that were discoverable upon a reasonable inspection and by making reasonable inquiries - The purchasers appealed, asserting that the trial judge erred in her articulation of the test for distinguishing patent and latent defects - The British Columbia Court of Appeal dismissed the appeal - The purchasers' interpretation of the trial judge's articulation of the test for distinguishing patent and latent defects resulted from taking the phrase in which she referred to "a qualified person" out of context - In the context in which she used that phrase, there could be no objection - The cases made it clear that the onus was on the purchaser to conduct a reasonable inspection and make reasonable inquiries - A purchaser might not be qualified to understand the implications of what he or she observed on personal inspection - A purchaser who had no knowledge of house construction might not recognize that he or she had observed evidence of defects or deficiencies - In that case, the purchaser's obligation was to make reasonable inquiries of someone who was capable of providing the necessary information and answers - A purchaser who did not see defects that were obvious, visible, and readily observable, or did not understand the implications of what he or she saw, could not impose the responsibility, and liability, on the vendor to bring those things to his or her attention - See paragraphs 41 to 48.

Sale of Land - Topic 8631

Remedies of purchaser - For quality defects - Latent defects - [See both Sale of Land - Topic 8626 ].

Sale of Land - Topic 8772

Remedies of purchaser - Damages - Latent defects (incl. contaminated soil remediation costs) - [See first Sale of Land - Topic 8626 ].

Cases Noticed:

Fraser-Reid v. Droumtsekas et al., [1980] 1 S.C.R. 720; 29 N.R. 424, refd to. [para. 22].

McCluskie v. Reynolds et al., [1998] B.C.T.C. Uned. 939; 65 B.C.L.R.(3d) 191 (S.C.), refd to. [para. 23].

Winnipeg Condominium Corp. No. 36 v. Bird Construction Co. et al., [1995] 1 S.C.R. 85; 176 N.R. 321; 100 Man.R.(2d) 241; 91 W.A.C. 241, refd to. [para. 31].

514953 B.C. Ltd. et al. v. Leung (2007), 236 B.C.A.C. 191; 390 W.A.C. 191; 2007 BCCA 114, refd to. [para. 36].

Larocque v. Lutz (1981), 29 B.C.L.R. 300 (C.A.), refd to. [para. 37].

Tony's Broadloom & Floor Covering Ltd. et al. v. NMC Canada Inc. et al. (1996), 95 O.A.C. 358; 141 D.L.R.(4th) 394 (C.A.), refd to. [para. 45].

Kamlee Construction Ltd. v. Oakville (Town) (1960), 26 D.L.R.(2d) 166 (S.C.C.), refd to. [para. 54].

Khaira v. Nelson et al., [2002] B.C.T.C. 1045; 2002 BCSC 1045, refd to. [para. 57].

Counsel:

J.A. Hand and W. Sun, for the appellants;

P. Sandhu, for the respondents.

This appeal was heard on March 29, 2007, at Vancouver, B.C., by Prowse, Levine and Kirkpatrick, JJ.A., of the British Columbia Court of Appeal. Levine, J.A., delivered the following judgment of the court on June 6, 2007.