Brian Madigan LL.B., Broker
BRMadigan@iSourceRealEstate.com

RE/MAX West Realty Inc.,
Brokerage
Independently owned and operated

96 Rexdale Blvd. 
Toronto, Ontario 


Phone: 416-745-2300
Toll Free: 1-888-507-0817

 

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Liability for Consequential Losses

August 30, 2016 - Updated: August 30, 2016

Liability For Consequential Losses

 

We are still looking at Drolet v ReMax Riverview Realty Ltd (2016). In this case, the plaintiff purchased a property which he believed to be a “buildable lot”. In fact, that turned out not to be the case.

 

The Buyer then sued the real estate agent that acted for him in the transaction.

 

Even though the case itself was unsuccessful on the liability issue, the Judge is nevertheless charged with the responsibility of figuring out the damages. So, if the case were reversed on appeal by a higher Court, they would know what the damages were, and how much the Judgment should be.

 

The Progression in the Case

Set out here are the paragraphs from the Reasons for Judgment which deal with the damages and the computation of the Plaintiff’s losses:

 

"11.  The Plaintiff ultimately submitted an offer in April 2013 which was accepted by the Purchaser, and the Plaintiff purchased the Property for $23,000 on October 28, 2013 after selling his own home.

 

12.  Subsequent to the closing of the Plaintiff’s purchase, and after spending approximately $18,000 in preparation for the construction of his new home, he was advised by the Township that he could not obtain a building permit for the Property because it was located within a “no build” buffer which extended 500 meters around a former dump/waste site.

 

13.  The Plaintiff threatened to sue the Township for damages based on alleged negligent misrepresentations made to the Plaintiff’s wife by Township staff before and after the purchase of the Property. 

 

The Plaintiff subsequently negotiated a settlement with the Township, the terms of which included the Township’s purchase of the Property from the Defendant for $25,000 – which covered the Plaintiff’s acquisition costs for the Property.

 

14.  The Plaintiff is now claiming against the Defendants for funds expended in a fruitless effort to ready the Property for building of his home, including costs relating to a construction mortgage, septic permit, building permit application, driveway and septic excavation, insurance and storage costs.

…….

 

23.  I take note of the fact, however, that the Township ultimately settled a potential claim by the Plaintiff against the Township by purchasing the Property for $25,000, and obtaining as a condition of the settlement a full and final release of the Township and Mackeler and Lavigne, from any claims relating to the Plaintiff’s purchase of the Property.

…….

 

31.  I accept that the Plaintiff suffered damages as a result of the misrepresentation, and had the Plaintiff’s claim succeeded I would have reduced the Plaintiff’s damage claim by $1,500.00 (the approximate value of building plans that the Plaintiff ultimately used in respect of a new home subsequently constructed) and assessed the Plaintiff’s damages at $17,979.53.

 

Review of the Damages

 

Sale of First Property. You will notice here that the Buyer sold his own home. Obviously, there were costs and expenses incurred in respect to the sale, but those are not part of this lawsuit. They could be in another case, but you will also note that the Buyer purchased another property where he was able to use the plans. So, in that regard, this Buyer was moving anyways.

 

Purchase Price of New Property. You will see that the buyer paid $23,000.00 for this property. He was given false information from the Township and as a result the Township actually bought his property for $25,000.00, meaning that he suffered no financial loss here on the purchase. While the property might have had “no value” because it was not a “buildable lot”, there was no financial loss incurred. There could be, of course, in another case.

 

Funds Expended to Ready the Property. There were also some additional unnecessary costs including:

 

·        construction mortgage,

·        septic permit,

·        building permit application,

·        driveway and septic excavation,

·        insurance and storage costs.

 

These were matters that the Judge believed to be reasonable.

 

Deduction for Plans. The Buyer incurred an expense of $1,500.00 for plans related to the new house. However, the Trial Judge deducted that amount from the claim, since the Buyer was able to use them on another property which he purchased.

 

No Claim for Carrying Charges. It is difficult to determine where the carrying charges went in this claim. This would be mortgage interest and municipal taxes. Possibly, they were included in the additional $2,000.00 that the Township paid.

 

Real Estate Commission on Sale. Usually, you would have a real estate commission on the sale of this property. In this case, the Township acquired the property directly, so there was no sales commission here, and no matter what, Drolet would have paid a commission on the sale of his first property.

 

Total Losses Accepted By the Court. When all the calculations were done, this left us with $17,979.53.

 

Small Claims Court Jurisdiction

 

The limit of the Small Claims Court is $25,000.00. You can easily see, that this case, had the Township been involved, would have been $42,979.53, well within the range of the Superior Court of Justice.

 

Damages

 

You will note that the amount is calculated based upon the specifics of the fact situation. Some amounts would be compensable in one case and not in another.

 

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com


Tagged with: drolet remax riverview losses calculation small claims court ontario law
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Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

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