Fraser-Reid and Fraser-Reid v. Droumtsekas, Ken Droumtsekas Construction Ltd. and Ken Droumtsekas Investments Central Ltd., (1979) 29 N.R. 424 (SCC)

• Judge: Martland, Ritchie, Dickson, Estey and McIntyre, JJ.
• Court: Supreme Court (Canada)
• Case Date: November 20, 1979
• Jurisdiction: Canada (Federal)
• Citations: (1979), 29 N.R. 424 (SCC);[1979] CarswellOnt 652;9 RPR 121;1979 CanLII 55 (SCC);103 DLR (3d) 385;29 NR 424;[1979] SCJ No 125 (QL);[1980] 1 SCR 720

Fraser-Reid v. Droumtsekas (1979), 29 N.R. 424 (SCC)

MLB headnote and full text

Fraser-Reid and Fraser-Reid v. Droumtsekas, Ken Droumtsekas Construction Limited and Ken Droumtsekas Investments Central Limited

Indexed As: Fraser-Reid and Fraser-Reid v. Droumtsekas, Ken Droumtsekas Construction Ltd. and Ken Droumtsekas Investments Central Ltd.

Supreme Court of Canada

Martland, Ritchie, Dickson, Estey and McIntyre, JJ.

November 20, 1979.

Summary:

This case arose out of action by the purchasers of a house for damages resulting from the flooding of their basement. It was discovered that the house had no foundation drainage as required by a municipal bylaw. The agreement for sale provided for a closing of the transaction "providing that the vendor has disclosed to the purchaser all outstanding infractions and orders requiring work to be done on the premises issued by any municipal or provincial or federal authority . . .". A deed passed on closing, which did not incorporate the warranty, and the vendor did not inform the purchasers of its failure to provide foundation drainage. The purchasers brought an action against the vendor for damages. The Ontario High Court dismissed the action on the ground that there was no implied warranty of fitness in the purchase of a completed house. The Ontario Court of Appeal dismissed the purchasers' appeal. The purchasers appealed.

The Supreme Court of Canada allowed the appeal and held the vendor liable for damages. The Supreme Court of Canada held that the proviso in the agreement for sale constituted a warranty that it would inform the purchasers of the failure to comply with official building requirements, which it failed to do. The Supreme Court of Canada held that the warranty was not merged in the conveyance and survived it, rendering the vendor liable for its breach.

Courts - Topic 28

Stare decisis - Authority of judicial decisions - Modification of common law rule - In 1931 the courts modified the doctrine of caveat emptor by ruling that there was an implied warranty of fitness for habitation in the sale of an uncompleted house - In 1979 it was argued before the Supreme Court of Canada that the Court should extend the modification to include a new completed house - The Supreme Court of Canada considered the issue in the context of modern practices in house building and sale and decided that the modification should not be made judicially, but legislatively - See paragraphs 11 to 20.

Sale of Land - Topic 946

Contract - Conditions and warranties - Warranty - What constitutes - An agreement for sale provided for completion of the transaction "providing that the vendor has disclosed to the purchaser all outstanding infractions and orders requiring work to be done on the premises issued by any municipal or provincial or federal authority" - The Supreme Court of Canada held that the proviso in the agreement for sale constituted a warranty that the purchaser would be informed if any official building requirement was not complied with - The Supreme Court of Canada held that the seller was liable for damages for breach of the warranty, where the purchaser was not informed that no foundation drainage was provided for as required by a municipal bylaw - See paragraphs 21 to 28.

Sale of Land - Topic 1832

Contract - Implied terms - Fitness of houses - The Supreme Court of Canada held that there was an implied term of the fitness of a house for habitation only where the house was purchased before completion and not after completion - See paragraphs 11 to 20.

Sale of Land - Topic 4006

Operation and interpretation of the contract - Whether terms of deed supersede terms of the contract - An agreement for sale provided for the closing of the transaction provided that the vendor disclose to the purchaser all outstanding infractions respecting official building requirements - A deed was delivered on closing which did not incorporate the warranty and the vendor failed to disclose that the house had no foundation drainage as required by a municipal bylaw - Water damage resulted - The vendor argued that, even if the proviso constituted a warranty, the warranty was merged in the conveyance and extinguished - The Supreme Court of Canada held that the warranty was not extinguished by the conveyance and that the vendor was liable for its breach - See paragraphs 28 to 37.

Cases Noticed:

Batty v. Metropolitan Property Realizations Ltd., [1978] 2 All E.R. 445 (C.A.), refd to. [para. 9].

Dutton v. Bognor Regis United Building Co. Ltd., [1972] 1 All E.R. 462 (C.A.), refd to. [para. 9].

Miller v. Cannon Hill Estates, Ltd., [1931] 2 K.B. 113, appld. [para. 12].

Hoskins v. Woodham, [1938] 1 All E.R. 692 (K.B.D.), appld. [para. 12].

Croft v. Prendergast, [1949] O.R. 282 (C.A.), refd to. [para. 12].

Scott-Polson v. Hope (1958), 14 D.L.R.(2d) 333 (B.C.S.C.), refd to. [para. 12].

Smith v. Melançon, [1976] 4 W.W.R. 9 (B.C.S.C.), refd to. [para. 12].

Schipper v. Levitt & Sons Inc., 207 A. (2d) 314, consd. [para. 15].

Carpenter v. Donohoe, 388 P.(2d) 399, consd. [para. 15].

Loraso v. Custom Built Homes, Inc., 144 So.(2d) 459, consd. [para. 15].

Bethlahmy v. Bechtel, 415 P.(2d) 698, consd. [para. 15].

Rothberg v. Olenik, 262 A.(2d) 461, consd. [para. 15].

Perry v. Sharon Development Co. Ltd., [1937] 4 All E.R. 390 (C.A.), consd. [para. 17].

Pasley v. Freeman (1789), 3 T.R.51 (K.B.D.), appld. [para. 22].

De Lassalle v. Guildford, [1901] 2 K.B. 215 (C.A.), appld. [para. 22].

Heilbut, Symons & Co. v. Buckleton, [1913] A.C. 30 (H.L.), appld. [para. 23].

Richview Construction Co. Ltd. v. Raspa (1975), 11 O.R.(2d) 377, consd. [para. 27].

Hashman v. Anjulin Farms Ltd., [1973] S.C.R. 268, appld. [para. 30].

Brennan v. Schellhamer, 13 N.Y. Supp. 558 (1891), folld. [para. 31].

Goodspeed v. Nicholls, 204 N.W. 122 (1925), folld. [para. 31].

Levin v. Cook, 47 A.(2d) 505 (1946), folld. [para. 31].

Redican v. Nesbitt, [1924] S.C.R. 135, consd. [para. 32].

Anns v. London Borough of Merton, [1977] 2 All E.R. 492, consd. [para. 9].

Barak v. Langtry (1954), 12 W.W.R.(N.S.) 691 (B.C.S.C.), consd. [para. 32].

Statutes Noticed:

Ontario New Home Warranties Plan Act, S.O. 1976 (2nd Sess.), c. 52 [para. 18].

Authors and Works Noticed:

Bearman, Caveat Emptor in Sales of Realty - Recent Assaults Upon the Rule (1961), 14 Vand. L. Rev. 541 [para. 14].

Dunham, Vendor's Obligation as to Fitness of Land for a Particular Purpose (1953), 37 Minn. L. Rev. 108 [para. 14].

Dworkin, Consumer Protection and The Problems of Substandard New Houses (1964), 28 Conv.(N.S.) 276, 385, 478 [para. 12].

Fridman, The Law of Contract in Canada (1976), p. 285 [para. 22].

Roberts, The Case of the Unwary Home Buyer: the Housing Merchant Did It (1967), 52 Cornell L. Rev. 835 [para. 16].

Williston On Contracts (1963), vol. 7, paras. 926, 926A [para. 14].

Counsel:

F.S. Finch and D.C. Downie, for appellants;

D.A. McIntyre and J.D. Sutton, for respondents.

This case was heard on March 28 and 29, 1979, at Ottawa, Ontario, before MARTLAND, RITCHIE, DICKSON, ESTEY and McINTYRE, JJ., of the Supreme Court of Canada.

On November 20, 1979, the judgment of the Supreme Court of Canada was delivered and the following opinions were filed:

DICKSON, J. - see paragraphs 1 to 37;

RITCHIE, J. - see paragraphs 38 to 39.

MARTLAND, ESTEY and McINTYRE, JJ., concurred with DICKSON, J.