The network said that by choosing John King to fill its 7 p.m. slot, it was “doubling down” with its hard news strategy.

Lou Dobbs, the CNN anchor whose views on immigration made him a lightning rod, is leaving the network.

Lou Dobbs, the CNN anchor whose views on immigration made him a lightning rod, is leaving the network.

By Brian Madigan LL.B.

Well, that’s what the TD Bank says! Maybe, we should just bailout now. The TD Bank just released a report on 10 November 2009 about the Canadian economy over the next 20 years. The prospects are dismal.

And, don’t forget that this is the bank, (just like every other bank) that missed the opportunity to predict the world financial crisis just 3 months before it happened. So, what makes them think that they can come up with a good 20 year projection? Who knows! But, they did, so we may as well deal with it.

This type of report is one of those economic reports based upon “all things being equal”. Of course, they never are. Also, in 20 years, is anyone going to remember this projection? So, we’ll really never know whether it’s right or whether it’s wrong.

But, in the meantime, let’s have a look at some of the comments, points, predictions and projections in the TD Bank report:

• “A combination of post-recession adjustments, the aging population and low productivity will limit Canada’s potential growth to about two per cent over the next 10 years

• Things will not simply return to how they were

• Very slow potential growth in the next three years averaging 1.6 per cent

• Canadian economic growth potential will be half of the historic average

• Better, but still modest 2.1 per cent expansion expected in the 2013-2019 period

• Restructuring challenges facing corporations will act as a speed bump to Canada’s growth

• This presents a ‘new normal’ for the budgets of households and governments, with annual nominal growth to average around 4 per cent

• But since the economy is currently operating well below potential, actual growth rates in the next few years will likely exceed the 1.6-per-cent potential

• The aging population in Canada will slow labour force growth and the country will need significant productivity gains just to keep the economy on track

• In the near term, the restructuring challenges for major sectors, resulting in displaced workers and obsolete production capacity, will slow potential growth substantially

• Unemployment will result in the atrophying of certain skills and, with the permanent closure of plants

• Certain work experience that is process specific will become obsolete

• Unemployed workers’ success in retraining is crucial to boosting the longer-term growth in labour quality

• Successful training will not happen overnight

• As the labour force ages, Canada’s future growth will rely increasingly on productivity

• Productivity gains will be well below those achieved in the boom of the late 1990s

• We do not see a compelling case for a major productivity resurgence, given Canada’s poor record on innovation

• Slumping expenditures on research and development and low investment in high-tech capital by Canadian businesses appear the prime culprits for Canada’s lack of innovation and overall slowing of productivity growth

• Growth in aggregate corporate profits for domestically-focused firms will be restrained by the growth rate of the economy

• Household income similarly cannot outpace economy-wide growth over the long haul

• Investors must increasingly look abroad for better returns, but high-growth emerging markets will be volatile and more risky

• The new normal is sluggish growth going forward

• The slower economic growth will impact Canadians’ standard of living

• Household income cannot outpace economy-wide growth over the long haul

• Households cannot continue to borrow at rates exceeding income growth and prospective asset appreciation

• Canada is poised to benefit further from a relative protection of its banks from the still-festering wounds of the financial crisis

• Benefits will continue to flow from large public infrastructure investments in recent years, which were enhanced substantially in this year’s round of stimulus budgets”

Really, I don’t know what that says, and I don’t know what it means. Canada as a country will do better than other countries. The reason is simple, there are more natural resources. Our immigration policy encourages substantial growth. That is in the works right now. Lots of money is being spent on infrastructure. Sure, there could always be more, but foreign investment is welcomed. So, that will increase.

Oh, by the way, if they were so smart why didn’t they know about the world financial crisis?

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com

By Brian Madigan LL.B.

The Cartwright and Fournier lawsuit is another in the series of Property Disclosure Statements giving rise to litigation after closing. The parties entered into an agreement in November 2003 to close 14 April 2004.

The matter came on for trial in the Provincial Court in Calgary, Alberta.

The purchaser claims damages for alleged misleading and fraudulent statements regarding basement water leakage.

As part of the agreement, the following provision was included:

Vendor to supply Property Disclosure Statement satisfactory to Buyer’s approval.”

A Property Disclosure Statement was in fact executed by the vendors and the information contained in the Property Disclosure Statement (PCS) formed representations but not warranties.

The vendors answered “no” to the following questions which are relevant to the issues in this matter:

“19. Where you aware of any roof leakage or unrepaired damage?

The Seller states that the above information is true based on the Seller’s current actual knowledge as of the above date. Any important changes to this information made known to the Seller will be disclosed by the Seller to the Buyer prior to Completion Day.”

There was significant water damage in the basement at the Completion Day. The purchaser discovered water damage in the basement within a few days of taking possession after she had initiated steps to commence renovations in the basement.

Court Analysis

The Court reviewed the issues as follows:

• The key question to be decided by this Court is whether the water damage was within the Defendant’s current actual knowledge at the time of completion of the sale.

• The Purchaser emphasized there was a misrepresentation in the Property Disclosure Statement with regard to any past roof leakage problems.

• Based on paragraph 19 of the Property Disclosure Statement I am of the view that there is not a misrepresentation with regard to the roof since paragraph 19 deals with a 3 year old asphalt roof which in fact did not have any leakage or unrepaired damage to it.

• Even if there was a misrepresentation made with regard to past roof leakage it was not fraudulent and not related to the damages claimed.

Accordingly, the purchaser’s case was dismissed.

COMMENT:

There are several matters to note. There was an obligation on the part of the vendor to update the Property Disclosure Statement right up to the closing date. In this case, actual knowledge was in issue. The Court did not look to the issue of whether the vendor reasonably ought to have known.

There was simply insufficient evidence to prove actual knowledge. This is quite unlike many septic system cases where there is clear evidence that a vendor sought to repair or replace a damaged system, but simply concluded that the property should be placed on the market instead.

Indeed, there was water damage, but that appeared to occur after the completion of the transaction. While there might have been earlier damage, there was no evidence of that before the Court.

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com

By Brian Madigan LL.B.

The Karwandy and Sebastien case is another in the series of improperly completed Property Condition Statements.

This was an action heard in the Small Claims Court at Regina, Saskatchewan in 2002.

In the spring of 2001, Albert Sebastien, sold a quarter section of land with a dwelling on it to the plaintiffs. The purchasers claim that Albert and Lorraine Sebastien failed to disclose deficiencies in:

a) the electrical system in the dwelling, and
b) the existence of a garbage dump on the property.

The plaintiffs claim $5,000.00 as damages for correcting the deficiencies in the electrical system and cleaning up environmentally hazardous and other material in the garbage dump.

There were several conditions attached to the offer. These are set out in Schedule “A” of the Contract of Purchase and Sale. Three of the conditions are relevant to this claim.

Conditions 1 and 2 related to a Water Quantity and Quality Report and a Furnace and Chimney Inspection Report, respectively.

Condition 5 read as follows: “Buyers are aware and accept the condition of surrounding yard site”.

On June 7, 2001, the plaintiffs signed a document entitled “Amendment to Contract of Purchase and Sale And/Or Notice To Remove Conditions” the effect of which was to remove all the conditions.

This amendment was signed by Albert and Lorraine Sebastien on June 8, 2001, and the sale was complete.

The plaintiffs received a Property Condition Disclosure Statement signed by the Sebastiens and dated May 25, 2001. The Disclosure Statement specifically provided that it did not form part of the Contract of Purchase and Sale.

The offer was subject to the buyers obtaining mortgage financing. As part of the application process, Farm Credit Corporation (the first mortgagee) required that the sellers or purchasers complete an Environmental Assessment. This form was signed by the Sebastiens on June 6, 2001 and the financing condition in the offer was removed on June 7, 2001, by the purchasers.

It should be noted that the purchasers’ own real estate agent provided them with a document entitled “Ancillary Services In The Purchase Of A Home”.

This document advised was of a general nature and advised purchasers of the “more common reports or inspections usually requested” by buyers of property.

The document listed 12 types of reports or inspections that the buyers should consider, including:

• a Property Condition Disclosure Statement
• a Water Quantity and Quality Inspection
• a Furnace and Chimney Inspection
• a Home Inspection, and
• an Electrical Inspection

Claim for electrical deficiencies

Here was the question in the PCS:

“Are you aware of any problems with the electrical system?” The answer provided was “No”.

Obviously, there were some electrical problems.

The Court concluded:

“I find that the statement made by the Sebastiens in the Property Condition Disclosure Statement with respect to the electrical system was in fact misleading. As the Property Condition Disclosure Statement was not made part of the Contract of Purchase and Sale, the defendant is not liable on the basis of a breach of contract. However, I find that the defendant is liable for making a negligent misrepresentation as to the facts which was relied upon by the plaintiffs. It is part of our common law that an action for negligence based on negligent misrepresentation lies if damage results.”

The Court went further to provide the following commentary:

• “While I find the defendant liable to the plaintiffs for the negligent misrepresentation, the plaintiffs must also take part of the responsibility for their loss.

• The SaskPower inspector testified that many of the electrical deficiencies were clearly visible.

• The 12 pages of photographs confirm that an inspection by the plaintiffs themselves would have revealed that there were problems with the electrical system.

• The plaintiff, Bernard Bedard, makes his living installing and repairing electronics. He did concede he saw some problems with the electrical system the one time he visited the yard but testified the deficiencies were much more extensive.

• The Property Condition Disclosure Statement advised buyers to make their “own inquires after receiving the disclosure statement”.

• The Ancillary Services document, as noted in paragraph 4, suggested to the plaintiffs that they should consider obtaining an “Electrical Inspection”.

• I find that a prudent and reasonable buyer, given the circumstances of this case, would have retained an expert to do an electrical inspection prior to purchasing the property.

• I find the plaintiffs were negligent in failing to do so. As a result, I find the plaintiffs are 30% at fault for their damages respecting repairs to the electrical system.

Claim for the presence of the garbage dump

Here was a question in the PCS:

“Are you aware of any additions or alterations made without a required permit?” Answer “No”.

The Judge stated:

“Further, I find that the Sebastiens’ answer to the question was not a negligent misrepresentation. The question is simply not specific enough as to the existence of the garbage dump to constitute a basis for the tort of negligent misrepresentation. As a result, the defendant is not liable in either contract or negligence with respect to this statement.

There was one other possible claim for the garbage dump.

The plaintiffs also rely on the Environmental Assessment form completed for the Farm Credit Corporation mortgage application by the sellers as a basis for the defendant’s liability.

This form was actually filled out by Belinda Ferguson, the sellers’ realtor, by asking questions of Mr. and Mrs. Sebastien. The purchasers rely on the “No” answers given to questions with respect to whether chemical waste, waste oil, pesticides, herbicides or fertilizers were ever used, dumped, stored or disposed of on the property.

Clearly, the answer to these questions would be yes in nearly every farm in Saskatchewan. Ms. Ferguson testified she found some of the questions on the form very confusing. It was the first time she had used the form.

The Court concluded as follows:

“Although the signatures of both Albert Sebastien and Lorraine Sebastien were on the FCC form, in the circumstances of the case, I find their answers to Ms. Ferguson’s questions do not constitute a basis for the tort of negligent misrepresentation. It was the responsibility of the buyers to properly inspect the property before making an offer to purchase. The responsibility for cleaning up the garbage dump is that of the plaintiff buyers.”

COMMENT:

This case ends up being split. The answers under the PCS relating the electrical system were clear and established liability. However, there was no liability in contract, the liability was in tort. And, that means that the trial Judge could assess contributory negligence as against the purchasers. This finding cannot be made unless it is set out in the pleadings. Obviously, it was, and the trial Judge found that the buyers were 30% responsible for their own loss.

However, when it came to the garbage dump claim, the PCS form was just not specific enough. It is interesting that there was a possibility that the mortgage application statements completed by the vendors could have given rise to liability.

Another point worth noting is the fact that the Ancillary Services Document provided to the purchasers even before they put in an Offer came back to haunt them. This was a document they received from their own real estate agent. It said get an inspection. They didn’t and the trial Judge ended up dismissing this part ot their claim.

So, what should the purchasers’ agent do? What should the vendor’s agent do? Not supply this document? Would this not lower the level of service to their client? Fortunately, in this case, the agents were not sued.

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com

By Brian Madigan LL.B.

This was a case heard in the Supreme Court of British Columbia and it involved the Property Condition Disclosure Statement.

Briefly, the plaintiff as purchaser acquired a condominium unit for $133,000 but the unit leaks, as do others in the complex. Obviously, this problem has become well known in Vancouver. No one wants to buy, particularly with so many others available. The value has dropped to $22,000 and the purchaser, Sask faces a special assessment of $60,000 for her share of common ownership repairs.

In a nutshell, this is a mess!

Naturally, the condominium owners are suing the builder but that will take time. In this case, Sask claims that the vendors made false or negligent representations in the Property Condition Disclosure Statement (PCDS).

The trial Judge expressed the issues in the case as the following questions:

1. Did Michael Brooke and Ursula Wenzel misrepresent the condition of their condominium at the time of sale?

2. Was Shirley Sask induced to purchase the condominium by those misrepresentations?

3. What damages has Shirley Sask suffered?

The agreement of purchase and sale included several conditions including financing, perusal of the strata council minutes and the sellers’ Property Condition Disclosure Statement.

In many cases, the PCDS is made to form part of the agreement by attaching it to the agreement as a Schedule or Addendum. Here, it was simply a condition.

The sellers answered “No” to the following questions:

H. Are you aware of any structural problems with the premises or other buildings on the property?

K. Are you aware of any damage due to wind, fire, water?

M. Are you aware of any roof leakage or unrepaired damage?

The preamble to the document is worth noting, according to the trial Judge:

“THE SELLERS ARE RESPONSIBLE FOR THE ACCURACY OF THE ANSWERS ON THIS DISCLOSURE STATEMENT AND WHERE UNCERTAIN SHOULD REPLY “DO NOT KNOW”. THIS DISCLOSURE STATEMENT CONSTITUTES A REPRESENTATION UNDER ANY CONTRACT OF PURCHASE AND SALE IF SO AGREED IN WRITING BY THE SELLERS AND BUYERS.”

In addition, there is a statement that appears in the document above the seller’s signature:

“The sellers state that the above information is true, based on the sellers’ current actual knowledge as of the above date. Any important changes to this information made known to the sellers will be disclosed by sellers to buyers prior to closing. The sellers acknowledge receipt of a copy of this disclosure statement and agree that a copy may be given to prospective buyers.”

Further, just above the buyers’ signature on the same document is the following disclaimer:

“The buyers acknowledge that they have received and read a signed copy of this disclosure statement from the sellers or the sellers’ agent on the 24th day of February, 1997. The prudent buyers will use this disclosure statement as the starting point for their own inquiries. The buyers are urged to carefully inspect the property and, if desired, to have the property inspected by an inspection service of their choice.”

The Judge in analysing this case said that “The more important questions concern the extent to which the sellers represented the condition of the property and the extent to which Shirley Sask relied upon their representations.

A copy of the disclosure statement, dated February 17, 1997, was given to Shirley Sask before she signed the contract of purchase and sale on February 24th, and the sale was subject to Sask “perusing & approving” the strata council’s minutes, bylaws, and financial statements.

Sask has not proved reliance upon the disclosure statement in isolation from the strata council minutes which were provided to her at the time of sale. Sask has failed to prove that the sellers intended to mislead her in any way, particularly when the disclosure statement is read in conjunction with the strata council minutes.

It should be noted that the strata council minutes detailed the problems and expenditures of the condominium in respect to the premises.

The tort of negligent misrepresentation is now an established principle of Canadian law: Queen v. Cognos Inc. (1993), 99 D.L.R.(4th) 626 (S.C.C.). Five requirements must be met:

(1) there must be a duty of care based on a “special relationship” between the representor and the representee;

(2) the representation in question must be untrue, inaccurate, or misleading;

(3) the representor must have acted negligently in making said misrepresentation;

(4) the representee must have relied, in a reasonable manner, on the said negligent misrepresentation;

(5) the reliance must have been detrimental to the representee in the sense that damages resulted.

In this case, the first three requirements were met including negligence on the part of the sellers in making the statements.

The trial Judge stated:

“However, whether or not the sellers were negligent in purporting to confine their representations to the condition of their own unit is not, in my view, determinative of this claim. In light of their concurrent provision of minutes from strata council meetings where leakage problems were discussed, the sellers’ disclosure obligations were fulfilled in a manner that should have alerted a prudent purchaser to the need to make further inquiries.”

And further commented:

“In my view, the fourth requirement of the mentioned test in Queen v. Cognos Inc. has not been met, as I cannot conclude that Shirley Sask acted in a reasonable manner by relying upon the property condition disclosure statement without reference to the information provided in the strata council minutes. The sale was subject to a condition precedent that contemplated perusal and approval of the strata council’s minutes, bylaws and financial statements, and in complying with that condition the sellers were effectively providing Shirley Sask with the history of water leakage problems in the complex. In light of her opportunity to review those documents, Ms. Sask had the right to refuse to close the transaction as a consequence of that information, but chose not to do so.

On the whole of the evidence, it has not been proven that the sellers misrepresented the condition of unit #206, and the claim is dismissed”.

COMMENT:

So this is an interesting case. The sellers made a misrepresentation. That misrepresentation was made negligently, but the Judge concluded that all in all, the purchaser did not rely on that the document that contained the errors.

There was ample opportunity for the purchaser to find out the correct facts from the strata council minutes. As a result, there was no liability on the part of the vendors. However, rather than being saved by the signing of the Property Condition Disclosure Statement, they were in fact saved because there was a condition in the agreement permitting the purchaser to peruse the strata council minutes, and the correct information could be found there. The mere fact that the Purchaser failed to look, is her fault, and does not establish liability on the part of the vendors.

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com