Negligent Misrepresentation

Gladu v Robineau, 2017 ONSC 37 (CanLII)

[283] Even where the representation is not made to mislead, there will be liability in negligence if the representation was not a “full, frank, and accurate” disclosure: see Krawchuk, at para. 39.

[284] The duty to speak truthfully and completely is not limited to the completion of a SPIS. Information not required to be disclosed, but actually disclosed in an agreement of purchase and sale will trigger the duty. Lord Cairns said this about half-truths: “a partial and fragmentary statement of fact as that the withholding of that which is not stated makes that which is stated absolutely false.”: see Alevizos, at para. 22.

[285] In order to succeed in a claim based on negligent misrepresentation, a plaintiff has to establish that:

(a) The defendant owed the plaintiff a duty of care based on a “special relationship:

(b) The defendant made a statement or representation that was untrue, inaccurate or misleading;

(c) The defendant acted negligently in making the statement;

(d) The plaintiff reasonably relied on the statement; and

(e) The plaintiff suffered damages as a result.

See Krawchuk, at para. 68, citing Queen v. Cognos Inc., 1993 CanLII 146 (SCC), (1993) 1 S.C.R. 87 (S.C.C.), at p. 110.

[286] The standard of care extends beyond honest intentions. Honest intentions, by themselves are insufficient to avoid liability for inaccurate representations. The obligation is to provide, to the extent possible, accurate and complete information: see Krawchuk, at para. 79.

[287] The words “buyers must still make their own inquiries” in the SPIS, although alerting a purchaser to the possibility that the information in the document may be lacking in some way and putting an onus on a purchaser to make reasonable inquiries, does not “absolve the seller of liability for misstatements.”: see Krawchuk, at para. 85.

[288] Paragraph 86 of Krawchuk refers to McQueen v. Kelly (1999), 25 R.P.R. (3d) 248 (Ont. S.C.), where Kurisko J. held at paras. 63-64:

Ordinarily the [principle of] caveat emptor would have required the Plaintiffs to inspect the basement. If they had done so, the water stains in the Laundry Room would have been discovered. However, I accept the Plaintiffs’ explanation for not inspecting before and after signing the Agreement, namely, they relied on the Information Statement and oral assurances of Mr. Kelly [the vendor] there had never been any water problems in the basement.

[289] A warranty in the standard form agreements of purchase and sale, with the words “to the best of the Seller’s knowledge and belief” is not an absolute warrantee. It is a qualified warrantee: see Vokey v. Edwards, [1999] O.J. No. 1706 (S.C.).

[290] In John Levy Holdings Inc. v. Cameron & Johnstone Ltd. (1992), 26 R.P.R. (2d) 130 (Ont. Gen. Div.), the court considered whether the qualifying phrase was reasonably fair and truthful to the best of that person’s knowledge and belief: see para. 64.

[291] In Carrington v. Thom, [1977] O.J. No. 1099 (C.A.), the court considered whether the person was reckless in making the statement not caring whether it was true or false, or, whether the person could be said to have had an honest belief in its truth.

[292] The distinction between patent and latent defects is described in Halsbury’s Laws of England, at para. 51: Defects of quality may be either patent or latent. Patent defects are such as are discoverable by inspection and ordinary vigilance on the part of a purchaser, and latent defects are such as would not be revealed by any inquiry which a purchaser is in a position to make before entering into the contract for purchase.

[293] A home inspection is not intended to find latent defects. At para. 76 of Lyle v. Burdess, 2008 YKSM 5 (CanLII), Cozens Terr. Ct. J. agreed with the comments of Killeen J. in Kaufmann v. Gibson (2007), 59 R.P.R. (4th) 293 (Ont. S.C.), stating:

In circumstances where there is no [Property Disclosure Statement] prepared, a prudent purchaser would be expected to contract for a more thorough home inspection if the buyer wished to avoid future costly surprises. Where a PDS has been prepared, however, the buyer should be able to rely on the truthfulness and accuracy of the representations in the PDS in deciding the extent to which a contractor will be instructed to conduct a home inspection.