Power v. Goodram, 2012 ABQB 50

Court of Queen ’ s Bench of Alberta Citation: Power v. Goodram, 2012 ABQB 50 Date: 20120124 Docket: 0801 12533 Registry: Calgary Between: Cheryl Power Plaintiff - and - John D. Goodram, Kathryn C. Goodram, Dwayne Poitras, Seabolt Holdings Ltd., Seabolt Holdings Ltd., operating As Sutton Group-Canwest (Vista Branch) and Vista Geomatics Ltd. Defendants And Between: John D. Goodram and Kathryn C. Goodram Defendants Plaintiffs by Counterclaim - and - Cheryl Power Plaintiff Defendant by Counterclaim - and -

Douglas C. Dartnell Third Party _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice M.C. Erb _______________________________________________________ [ 1 ] In August 2006, the Plaintiff, Cheryl Power, purchased one unit of a duplex in southeast Calgary. She was 24 years old at the time and it was her first step into the real estate market. The Plaintiff had planned to renovate the unit with the help of a friend, then flip it in the lucrative real estate market of the day.

However, not long after the purchase the location of the property line and the shared party wall between the two units in the duplex became an issue which triggered a catalogue of legal issues culminating in these proceedings. [ 2 ] In brief, the party wall between the duplex units is irregular in that the neighbouring unit, which was purchased some years previous, encroaches into the Plaintiff's property on three levels of the unit to different degrees, totalling 208.6 square feet of lost space.

When the Plaintiff’s unit was listed for sale, it was incorrectly assumed that the two duplexes in the century-old building were similarly sized and that the common wall followed the property line in the ordinary course. [ 3 ] The Defendants are: the Goodrams, who are the owners of the adjoining unit, Dwayne Poitras, the Vendor of the unit purchased by the Plaintiff, Sutton Group, the Vendor’s realtor, and Vista Geomatics, the author of a defective real property report.

The Goodrams are also Plaintiffs by Counterclaim, claiming, among other things, that the demising walls between the units should remain as they are because their configuration was established by a predecessor in title and was registered on title and continues to reflect the existing state of the shared walls. [ 4 ] The action against the third party, the Plaintiff’s conveyancing lawyer, has been discontinued and the Defendant Poitras has been noted in default. His whereabouts at the time of trial were unknown. [ 5 ] The issues to be determined are:

a) Has the Plaintiff brought her claim within the relevant limitation period?

b) What is the effect of the pre-existing Party Wall Agreement regarding the two units?

c) What, if any, liability reposes with Goodrams, the owners of the adjoining unit?

d) What, if any, liability reposes with Vista the author of the defective Real Property Report?

e) What, if any, liability reposes with the Sutton Group, the Vendor’s real estate agent?

f) What is the appropriate remedy under the current circumstances for this property?

i) trespass as remedy; ii) reconciliation of the party wall to the property line; iii) a court-ordered easement; iv) damages

g) If the Goodrams bear no responsibility, are they entitled to compensation if the party wall must be rebuilt and payable by whom? Factual Narrative [ 6 ] The history of the building housing the two duplex units is rather vague. What is clear is that the building was constructed in 1911 and originally had a courtyard located between the two units. There are no records which disclose when or why the previous unknown owner enclosed the courtyard, including it as part of the interior of the duplex.

There is some suggestion that this alteration took place around 1980 and is no doubt the reason why the party wall between the units is irregular today. [ 7 ] There appears to have been a single owner of the building until Alonzo Maraboli bought the duplex and subsequently sold one unit to the Goodrams in 1991. Prior to the completion of the deal with the Goodrams, and possibly with the intention of preventing future issues over the irregularity of the common wall between the units, Mr. Maraboli registered a Party Wall Agreement on title to divide the building into two units separated by a common party wall.

He then sold the larger of the two units to the Goodrams on October 11, 1991, for $75,000. The Goodrams took possession on December 24, 1991. At some later point, Mr. Maraboli sold the other unit to the Defendant Poitras. [ 8 ] Under the terms of the Agreement the party wall between the units is considered to be jointly owned and maintained by the owners of both properties. [ 9 ] In June 2006, Mr. Poitras retained James Webber, a realtor operating with Sutton Group, to list his unit for sale.

The realtor assembled a listing, describing the unit in MLS #C3218032 as follows: “This 1388 square foot 2 story home is located on a beautiful tree-lined street in Inglewood, and is mere minutes to downtown. The main level features 9 ft ceilings and extensive hardwood flooring. The upper level is currently suited, but could easily be converted into a traditional 3 bedroom floor plan with a minimal investment. Property offers many outstanding views of the city and is just a block from both the Inglewood Community Association, and Inglewood Wildlands Park.

A little TLC could go a long way”. [ 10 ] The listing for the half duplex located at 2523 16A Street SE, Calgary, also included the following reference added by the realtor: “Showings daily from 3-7 pm only. Call lister to show. All measurements and other information important to the buyer to be verified by Buyers agent and/or buyer.” [ 11 ] At the bottom of the MLS listing was a reference noting: “Information herein deemed reliable but not guaranteed.”

[ 12 ] The listing caught the Plaintiff’s eye and she retained Lindsay Bell of Coldwell Banker as her realtor. [ 13 ] On July 11, 2006, the Plaintiff purchased the unit from Mr. Poitras for $260,000, with a possession date of July 31, 2006. The Purchase Contract was subject to financing but this condition was removed on July 18, 2006. The offer was subject to no other conditions. The Plaintiff although invited, elected not to engage a home inspector. Douglas Dartnell acted as the conveyancing solicitor for the Plaintiff, while Lois Lewis acted for the Vendor, Poitras. Although Mr.

Dartnell placed title insurance on the property on behalf of the mortgage company, the Plaintiff elected not to add insurance to protect her own interests. [ 14 ] As part of the terms of the transaction, on July 21, 2006, Ms. Lewis asked Vista Geomatics Ltd. to prepare a Real Property Report on the unit. Due to the busy real estate market of the day the RPR was not available until after closing. As a result Ms.

Lewis, on behalf of the Vendor, undertook to provide the RPR and a Certificate of Compliance as soon as they became available, in addition to using her best efforts to obtain an Encroachment Agreement/Relaxation Permit, should that be necessary. [ 15 ] There was also a hold-back of $2,000 to cover off the expectation that the Vendor would not clean out the very substantial amount of refuse in the unit. The unit was generally referred to as a “crack house”, filled with garbage, junk and refuse. Evidence at trial indicated that the place was filthy and stank from human and animal presence.

There were also dubious characters present, as well as dogs. [ 16 ] Vista produced an RPR for the unit on August 11, 2006, but the Report disclosed nothing unusual about the property and stated that the party wall followed the property line. [ 17 ] After the closing date the Plaintiff left Calgary to travel overseas until the end of August, 2006. Upon her return and with the help of her friend, Jack Woodfield, who agreed to help renovate the unit, the Plaintiff started to clear out the refuse.

It was not disputed at trial that the unit was packed top to bottom with garbage to the point where it was difficult to see the configuration of the rooms on the main and upper floors, as well as the basement. It was also not disputed that the unit had been used by “druggies”. [ 18 ] Sometime following the closing date the Plaintiff discovered that the party wall separating the duplexes did not follow the property line.

Specifically, the wall was found to be irregular such that areas on all three levels of the Plaintiff's unit were enclosed and accessible only through the neighbouring unit owned by the Goodrams. [ 19 ] There is no dispute that the irregularity creates an encroachment by the Goodrams’ unit into the Plaintiff's unit totalling 208.6 square feet, including 22.7 square feet on the main floor, 90.7 square feet on the upper level and 95.2 square feet on the basement or lower level. [ 20 ] The Plaintiff’s counsel for the transaction, Mr.

Dartnell, eventually retained Measure Masters Ltd. to prepare a measurement report to clarify the configuration of the party wall of the duplex. That report was provided on October 25, 2006, and a copy was forwarded to the Goodrams on November 27, 2006. The existing encroachments were confirmed in that report. [ 21 ] Vista later revised its RPR on the Plaintiff’s unit due to indications that its earlier report was not accurate. This updated report was dated December 2, 2008. The Issues

a) Has the Plaintiff brought her claim within the relevant limitation period? [ 22 ] To assess whether the Plaintiff’s Action is statute barred, as the Defendants claim, the provisions of the Limitations Act , RSA 2000, c L-12, must be reviewed together with the basic facts affecting each Defendant. The Plaintiff filed her Action on October 10, 2008, which the Defendants say was after the Plaintiff knew she had a claim and as such her Action is statute barred.

[23] In Alberta, limitations on pursuing civil actions are set out in the Limitations Act as follows: 3(1) Subject to

section 11, if a claimant does not seek a remedial order within (a) 2 years after the date on which the claimant first knew, or in the circumstances ought to have known, (

i) that the injury for which the claimant seeks a remedial order had occurred, (ii) that the injury was attributable to conduct of the defendant, and (iii) that the injury, assuming liability on the part of the defendant, warrants bringing a proceeding, or (b) 10 years after the claim arose, whichever period expires first, the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of theclaim. Limitation period as it affects the Goodrams [24] Section 3(1)(

b) of the Limitations Act, the 10-year provision, limits an action based on the date the conduct or act occurred,not when the injury or damage was suffered. As such, the limitation period can begin to run prior to the date when a problem is actuallydisclosed.

Accordingly, negligence that results in injury or damage which does not occur until years later can still be barred under theLimitations Act: Bowes v Edmonton (City), 2007 ABCA 347 at para 151. [25] An exception to this limitation period arises, however, in situations of adverse possession of real property where the possessorfails to take proceedings to have title quieted or fails to file a caveat on title to protect their interest in the property in their possession.

Insuch cases the possessor’s rights may be lost as against a bona fide purchaser as the limitation period for recovering possession starts torun again from the date a new title is issued: Lutz v Kawa (1980), 1980 ABCA 112 , 23 AR 9 (ABCA); Boulding v Crowe, 1998ABQB 732 at paras 21-23; O’Brien v Fox, 2000 ABQB 1002 at paras 37-39.

Accordingly, the adverse possession of real property willtrigger the commencement of the limitation period, however, if such possession is not registered, when a bona fide purchaser buys theproperty adversely possessed the limitation period will begin to run anew. [26] Section 3(5) of the Limitations Act requires that the defendant bear the burden of proof to demonstrate that a remedial orderhas not been sought within the 10-year limitation period. [27] In this case the Goodrams claim that in 1980 the then owner of both duplexes had an exterior courtyard patio enclosed byextending the rear walls of the existing two wings, which brought the space into the interior of the building.

When Mr. Maraboli dividedthe residence into two properties in 1991 the duplex units that were created were separated by a party wall that did not follow theproperty line.

[ 28 ] The Goodrams argue that since 1991, when they purchased their unit, the configuration of the existing duplex was already in place. They note that they possessed the duplex without complainant by the adjoining property owner, Mr. Maraboli, and all successors in title, until the Plaintiff purchased the neighbouring unit in 2006.

The Goodrams also assert that they paid more for their unit in 1991 because it was larger. [ 29 ] While the Plaintiff may have believed in 2006 that she was purchasing a duplex unit which followed the property line in the ordinary course, the conduct that gave rise to the alleged damage occurred much earlier. The Goodrams’ claim that the event which caused the alleged injury to the Plaintiff occurred in 1991 when the duplex was divided based on an irregular party wall. The Plaintiff’s claim did not arise until 2006, however, when she bought the unit, which puts her action outside the 10-year limitation period.

The Goodrams say that this, on its face precludes the Plaintiff from proceeding against them today. [ 30 ] As noted though, when a bona fide purchaser for value takes title from a party against whom a limitation period is running, the period begins to run anew: Lutz v Kawa ; Boulding v Crowe ; O’Brien v Fox .

If the Goodrams did nothing to assert their claim to the property in their possession, the limitation period would restart once title was registered to the Plaintiff. [ 31 ] Counsel for the Goodrams argues that they did in fact assert their claim to the property contained in the encroachments by registering the 1991 Party Wall Agreement on title, which effectively asserted the Goodrams’ claim to the existing walls and area encapsulated in their half of the duplex, including the portions encroaching on the Plaintiff’s property. [ 32 ] It is clear from the evidence as I understand it, however, that Mr.

Maraboli caused the Agreement to be registered on title. The Goodrams did nothing themselves to assert their claim over the portions of the neighbouring property in their possession. While they may have been unaware of the issue until the Plaintiff bought the neighbouring property, the fact remains that nothing was done by the Goodrams to quiet title. As a result, the 10-year limitation period began to run again once the Plaintiff purchased her unit from Poitras in 2006, and her Action is therefore within the 10-year limitation period. [ 33 ] In terms of section 3(1)(

a) of the Act , which contemplates a two-year limitation period, the Plaintiff argues that the

section does not apply because she is seeking a remedial order for the possession of real property which is exempt from the two-year limitation period: see Limitations Act , s. 3(4). [ 34 ] A remedial order is defined in

section 1(

I) of the Act as a judgment or order made by a court in a civil proceeding requiring a defendant to comply with a duty or to pay damages for the violation of a right. [ 35 ] The Plaintiff in her Statement of Claim seeks an order that the party wall between the duplex units be moved to the property line, thereby adjoining the portions of property currently in the possession of the Goodrams to the Plaintiff’s unit, or, in the alternative, an award of damages.

If successful, the result of her Action would be to oblige the Goodrams to acknowledge and comply with the property right of the Plaintiff, or compensate her for her loss. This claim therefore falls within the statutory definition of a remedial order. [ 36 ] The Alberta Court of Appeal in Daniels v Mitchell , 2005 ABCA 271 at para 55 , noted that the effect of section 3(4) of the Limitations Act is to render the two-year limitation period in section 3(1)(

a) inoperable with respect to a remedial order for possession of real property. By implication this ruling makes the 10-year period referenced in section 3(1)(

b) the only applicable limitation regarding the possession of real property. [ 37 ] Accordingly, I find that the two-year limitation period does not apply to the Plaintiff’s claim for possession of the property encroached on by the Goodrams. [ 38 ] That noted, even if the two-year limitation still applies to possession of real property, I find that on the facts that the claim was still filed within the two-year period. I also find that sufficient knowledge for the claim did not occur until late October, at the earliest. [ 39 ] The Action against the Goodrams may proceed.

Limitation period as it affects Vista and Sutton Group [40] An injury or damage which arises from a single act or event may give rise to separate limitation periods: Gayton v Lacasse,2010 ABCA 123 at para 25, citing Sun Gro Horticulture Canada Ltd v Alberta Metal Building Sales Inc, 2006 ABCA 243.

In suchsituations, a claim must be made within the relevant limitation period which may be different from other claims against other partiesarising from the same event. [41] The encroachments that the Plaintiff discovered after purchasing her duplex were sourced in the division of the duplex in1991, based on the irregular party wall. Vista and Sutton Group did not become exposed to liability, however, until their involvement inthe transfer of the property in August 2006. [42] The Plaintiff claims that Vista failed to produce an accurate RPR of her property when required, which resulted in financialloss to her.

It is not disputed that Vista’s first report was inaccurate. [43] As against Sutton Group, the Plaintiff claims it did not properly disclose the issue of the irregular party wall before thepurchase, as it was obligated to do, which also caused her financial loss. [44] Both Vista and Sutton respond to the Plaintiff’s claims by arguing that her Action has been filed outside the relevantlimitation periods and is therefore statue-barred. [45] Section 3(1)(

a) of the Limitations Act creates a two-year limitation period which is based on the principle of discoverability.Discoverability is established on the date the claimant knew or ought to have known: (

I) the injury occurred, (ii) the injury wasattributable to the conduct of the defendant(s), and (iii) the injury warrants bringing a proceeding: De Shazo v Nations Energy Co, 2005ABCA 241 at para 28. Unlike section 3(1)(

b) which is calculated from the date the claim arose, the limitation period in section 3(1)(a)starts to run from when the claimant discovers her injury, even if it is discovered long after the event which precipitated the injury. [46] I note the approach to assessing discoverability in Borchers v Kulak, 2009 ABQB 457 at para 38 (per Verville J.): “Although mere suspicion does not suffice, the discoverability principle does not require perfect knowledge or certainty. Nasrin KarimProfessional Corp. v. Bank of Nova Scotia, 2007 ABCA 10 , 2007 ABCA 10, 404 A.R. 303 at para. 56.

The Supreme Court ofCanada has held that in determining whether a plaintiff knew or ought to have known that the matter warranted bringing proceeding,time begins to run when: ‘in light of the plaintiff's particular situation, the bringing of the suit is reasonably possible, not when it wouldbe ideal from the plaintiff's perspective to do so.’ Novak v. Bond, (S.C.C.), [1999] 1 S.C.R. 808 at para. 84. (emphasisadded) [47] While this test for discoverability is objective in that it is based as it is on the “ought to have known” standard, it alsocontemplates a claimant’s personal circumstances.

In Alberta, this objective/subjective approach applies to all three of the criteria set outin section 3(1)(a): Gayton v Lacasse, at para 20, citing N(

J) v Kozens, 2004 ABCA 394. [48] Accordingly, the criteria drawn from the Limitations Act require a plaintiff to have suffered injury which they knew or oughtto have known was attributable to the conduct of the defendant, in light of their particular situation, and which warrants bringing anaction. [49] In determining whether a party can be said to know or ought to have known they have suffered an injury, Counsel for SuttonGroup relies on Hill v Registrar of South Alberta Land Registration District (1993), 1993 ABCA 75 , 135 AR 266.

In Hill, theAlberta Court of Appeal, citing Central Trust and Cordon v Rafuse, (SCC), [1986] 2 SCR 147, stated at para 8: [The discoverability rule of limitations] does not call for perfect certainty. It does not require discovery at all: it says something else willdo instead. It suffices that ‘the material facts on which [the cause of action] is based ... ought to have been discovered by the plaintiff by

the exercise of reasonable diligence...’. [50] Sutton Group also relies on Peixeiro v Haberman, (SCC), [1997] 3 SCR 549, in which the Supreme Court ofCanada rejected the notion that lack of knowledge of the full extent of a claim will prevent the limitation period from running. InPiexerio, at para 18 the Court stated that the exact extent of the loss to the plaintiff does not need to be known for the cause of action toaccrue; once the plaintiff knows that some damage has occurred and has identified the tortfeasor the cause of action has arisen.

Neitherthe extent of damage nor the exact type of damage need to be known with certainty. [51] For the injury suffered to be attributed to a Defendant, however, a court must still inquire into when a reasonable person in theclaimant’s circumstances ought to have known that the injury could be attributed to the actions of the defendant: Gayton v Lacasse, atpara 29. [52] In terms of whether the injuries suffered warrant bringing a proceeding, the Court in Kozens at para 15 approaches theproblem by determining when it is not reasonable for a plaintiff to bring an action.

Viewed objectively, but with regard to a plaintiff’sown circumstance, the Court found that a proceeding may not warranted where: (

a) the costs and strains of litigation would be overwhelming to the litigant, (

b) the possible damages recoverable would be minimal or speculative at best, or (

c) other personal circumstances combined to make it unfeasible to initiate an action. [53] In proving that a claim is properly made within two years of the discovery of an injury, the claimant bears the burden ofproof: see Limitations Act, s. 3(5). [54] In support of its position, Sutton Group notes that the Plaintiff and Mr. Woodfield began clearing out the newly purchasedduplex in the autumn of 2006 and would have become aware of the unusual layout of the unit at that time. Likewise, Sutton Groupclaims that Mr.

Woodfield, although only 24 years of age, had some experience renovating properties and would have realized quicklythat the party wall was irregular once the unit was cleared. [55] They also point to the fact that Mr. Woodfield painted the exterior of the Plaintiff’s unit and it was evident, since the unitswere painted different colours, that the property line extended through the middle of a window accessible only to the Goodrams, whichraised an issue about where the party wall reposed.

I find that the painting took place in late-October. [56] Sutton Group also argues that as soon as the Plaintiff knew that the unit was not a rectangle, which had been her initialunderstanding, she must have been aware there was an error in the property listing. They maintain the Plaintiff was aware of thisirregularity in September, 2006, as well as the knowledge of who was potentially responsible and that an action might therefore bewarranted.

Accordingly, Sutton Group claims that by filing her pleadings on October 10, 2008, she was outside the two-year limitationwindow. [57] The Plaintiff responds by arguing that she could not have discovered the problem with the party wall until, at earliest, thedefects in the Real Property Report by Vista were confirmed on October 25, 2006 by Measure Masters Ltd., who established the truedimensions of the property. Similarly, even though the Plaintiff’s conveyancing lawyer reviewed the defective RPR with Mr.

Woodfieldon September 11, 2006, his investigations into any potential problems did not culminate until he received the Measure Masters Report onOctober 31, 2006, and therefore the Plaintiff could not have been aware of the issue prior to that date. [58] The challenge in determining the correct application of section 3(1)(

a) in this case is that it is not entirely clear when thePlaintiff actually became aware, or ought to have been aware, that a problem existed brought about by the irregular party wall betweenthe two units and that the irregularity warranted legal action.

[ 59 ] Given that the standard for evaluating discoverability is not based on certainty, the Plaintiff is obligated to show that the evidence brought forward is insufficient on a balance of probabilities to fulfill the three necessary elements to trigger the limitation period set out in section 3(1)(a). [ 60 ] After Vista’s initial RPR was released and sometime prior to October 4, 2006, the Plaintiff’s conveyancing lawyer started investigating the potential existence of a problem with the unit. As part of this investigation he attended the property with Mr.

Woodfield where he saw the location of the party wall on all three levels of the unit. Shortly thereafter he told Mr. Woodfield that an encroachment and a trespass likely existed, but also that the Plaintiff might want to consider an encroachment agreement and seek financial compensation. Is this enough to fulfill all three elements of section 3(1)(a)? [ 61 ] The existence of the irregularity and the extent of the alleged encroachments in this case unfolded over a period of many months.

The Plaintiff was a first time home buyer and although she may have been alive to the possibility of a problem in the fall of 2006, at the age of 24 and with no prior experience purchasing real estate, I find she was not sophisticated enough to know what in fact the problem was and who was responsible. [ 62 ] There was no point before Measure Master’s Ltd. confirmed the true dimensions of the property that it was reasonably clear that a problem existed and that the Plaintiff knew or ought to have known about it – quite the contrary.

Not only was the Plaintiff a first- time property owner, but the first RPR issued by Vista describing the property suggested that the party wall did not cross the property line.

Whether the Plaintiff relied on this assurance or not is a separate question, but the fact remains that the circumstances at the time did not clearly suggest a problem existed with the duplex until many months after the Plaintiff had purchased the property. [ 63 ] Moreover, even if the Plaintiff knew or ought to have known that a problem existed with the party wall, finding that the situation warranted taking action prior to October 25, 2006 is problematic. [ 64 ] In N(

J) v Kozens at para 11 , the Alberta Court of Appeal noted that: Appreciation of the nature of the wrong [...] requires an understanding of the Appellant’s blameworthiness for the acts in question: M. (K.). v. M.(H.). , [1992] 2 S.C.R. 6 (S.C.C.) . Absent that understanding, the Respondent can hardly be expected to appreciate that a proceeding against the Appellants was warranted. [ 65 ] After purchasing the property the Plaintiff left the country until the end of August 2006 on holiday. When she returned to Calgary she spent several more weeks clearing out the vast amount of refuse left inside the duplex unit.

It was not until sometime after October 25, 2006, when Measure Masters Ltd. verified the measurements of the duplex, that it became clear that an encroachment into the Plaintiff’s unit existed, despite the prior evidence to the contrary. [ 66 ] Even though the Plaintiff’s conveyancing lawyer suggested there was potential for an actionable claim in early October 2006, he was not aware of who might bear the legal responsibility for the irregularity because the extent of the issue was still unknown until an accurate measurement of the unit was completed. [ 67 ] Accordingly, I find on a balance of probabilities the Plaintiff has shown that the earliest date upon which the requisite elements required for discoverability set out in section 3(1)(

a) could be established is October 31, 2006. The Plaintiff’s claim, filed October 10, 2008, is therefore brought within the limitation period set out in section 3(1) (

a) of the Limitations Act . [ 68 ] In terms of section 3(1) (b), the ten-year limitation period, although the event precipitating the injury alleged by the Plaintiff originated in 1991, her claim against Vista and Sutton Group did not arise until they became involved in the property transaction in 2006. As such, the Action filed in October 10, 2008 remains within the 10-year limitation period. [ 69 ] The Action against the Vista and Sutton Group may proceed.

b) What is the effect of the pre-existing Party Wall Agreement? [ 70 ] The Land Titles Act , RSA 2000, c L-4, sets out the basis for creating a party wall agreement, as follows: 71(3) A person who is the registered owner of adjoining parcels of land may register a declaration (

a) declaring certain existing walls or walls that are to be constructed on those parcels to be party walls, and (

b) setting out the rights, privileges, easements and covenants that exist in respect of the party walls.

(4) When land under this Act is subject to, or has an appurtenant to it, or enjoyed with it, any rights, privileges, easements and covenants under a party wall agreement, those rights, privileges, easements and covenants are deemed to run with the land . ( emphasis added ) [ 71 ] On October 11, 1991, Mr. Maraboli, the owner of both duplex units at that time, registered a party wall agreement on title to the property. Before that point the duplex units appear to have only been owned together. [ 72 ] The intent of Mr.

Maraboli in registering the Party Wall Agreement seems to have been to subdivide the original property and create two distinct parcels of land, each with one duplex unit. By doing this, Mr. Maraboli was able to sell the larger of the two units, #2525, to the Goodrams in December, 1991. [ 73 ] In addition to dividing the properties, the Party Wall Agreement also established a number of obligations and privileges regarding the walls common to both units.

Clause 3 of the Party Wall Agreement sets out the following: The single centre wall and foundations thereof located both above and below ground level on and adjoining the common boundary existing between Parcel "A" [the Plaintiff Property] and Parcel "B" [the Goodram Property] is and is hereby declared to be a party wall between the building erected on Parcel "A" and the building erected on Parcel "B" and shall be used and maintained as a party wall and owned jointly by the owners of the Parcels upon which such party wall has been constructed.

The middle line of the party wall is on the dividing line between Parcel "A" and Parcel "B" and shall coincide with the common boundary existing between Parcel "A" and Parcel "B" . ( emphasis added ) [ 74 ] Clause 4 of the Agreement deals with encroachments, as follows: Any encroachment by the party wall or the fire wall or lot wall located on, near or adjoining the common boundary between Parcel "A" and Parcel "B" where such wall extends beyond the party wall and which wall has been solely erected and constructed for the purpose of support of the roof of one of the dwelling units only (which said fire wall or lot wall shall be deemed to be included in the definition of "party wall" but is sometimes hereinafter referred to as an "extension wall") and the foundation and footings thereof and any existing projection such as roof eaves, eaves troughs, gables, overhangs, trims or exterior cladding shall constitute a perpetual right, privilege and easement insofar as it encroaches on the dominant and servient tenements respectively . ( emphasis added ) [ 75 ] Clause 5 requires that the party wall must not be moved from its current location.

Similarly, under clause 7, the owners of the adjoining units are prohibited from altering or changing the party wall other than for interior decoration.

[ 76 ] Clause 9 provides that no part of the estate in fee simple of either unit is to become vested in the other. [ 77 ] Clause 16 establishes that the rights, privileges and easements granted, and the restrictive covenants and conditions made within the Party Wall Agreement, are to run with the land of both properties – a reconfirmation of section 71(4) of the Land Titles Act . [ 78 ] At trial the parties agreed that the existing party wall that separates the two units was in its present configuration when the Plaintiff purchased her unit in July, 2006.

The Goodrams also claim it was in that same configuration when they purchased their unit in late 1991. It is also agreed that it was Mr. Maraboli who caused the party wall agreement to be prepared and registered on title, as he was entitled to do pursuant to the Land Titles Act .

The validity of that registration is not disputed. [ 79 ] Based on Vista’s replacement RPR of December 2, 2008, what exists structurally at present is a party wall that largely follows the property line, but with encroachments on the first and second floors of the duplex and in the basement, totalling 208.6 square feet in favour of the Goodrams. There is no dispute that the encroachments, or “cut-ins”, do not cross the property line between the adjoining units.

Plaintiff’s position on the Party Wall Agreement [ 80 ] The Plaintiff claims that the Party Wall Agreement is a standard form agreement that was intended to confirm that the party wall was to follow the property line.

She further contends that easements that deal with access and repairs to the party wall and the foundations supporting it are irrelevant to a consideration of where the wall was intended to be located. [ 81 ] She also points to the recitals of the Party Wall Agreement which describe the subdivision of the properties based on a “straight line” between the western and eastern boundary of the original property. She also argues that the party wall itself is described as “on and adjoining” the common boundary of the properties.

Based on these facts, the claim is that notice was given to the world that a single common wall is created under the Party Wall Agreement that follows the newly created property line, which runs straight from west to east. Defendant Goodrams’ position on the Party Wall Agreement [ 82 ] The Goodrams maintain that when Mr. Maraboli entered into the Party Wall Agreement as the owner of both units in 1991, the Agreement was drafted to reflect the common wall already in existence.

They argue that the Agreement must be construed or, if necessary, rectified, to give effect to that intent. [ 83 ] In support of this position the Goodrams rely on Gilchrist v WesternStar Trucks Inc , 2000 BCCA 70 , in which the Court found that the goal of interpreting an agreement is to discover objectively the parties’ intention at the time the contract was made. To do this, courts should look at the language of the agreement itself, read in context and in light of the surrounding circumstances at the time the contract was made.

Analysis [ 84 ] As noted, clause 3 of the Agreement states that the party wall is to be located on and adjoining the boundary “existing” between the two units. It goes on to state that the middle line of the party wall is to be located on the dividing line between the units, coinciding with the common boundary. [ 85 ] This appears on its face to suggest two things: 1) the party wall is intended to be located in its existing location between the two units, and 2) the party wall is intended to coincide with the common boundary of the two units.

As the parties have come to learn, however, these two propositions are mutually exclusive. [ 86 ] When interpreting a contract a plain meaning should be given to the language of the agreement unless it would result in

absurdity: Suncor Inc v Norcen International Ltd (1988), (AB KB), 89 AR 200 (ABQB) at paras 93-94.

Generally, thetest for interpreting a contract is based on the intention of the parties as determined by reference to the surrounding circumstances at thetime the contract was signed: Grand Trunk Pacific Coast SS Co v Victoria-Vancouver Stevedoring Co (1918), (SCC), 57SCR 124 (SCC); Alberta Treasury Branches v Leahy (1999), (AB KB), 252 AR 135 (ABQB) at para 20. [87] The recitals of the Party Wall Agreement clearly state that the subdivision of the two parcels of property is to be based on astraight line from the western boundary to the eastern boundary of the original property.

When discussing the separation of the duplexunits, however, the Agreement does not reference the property line but rather the “common boundary line existing between [the twounits]”. The problem with this description is that the wall separating the properties is described as being on and adjoining the commonboundary line existing between the units, even though that is not the case. [88] In defining what is to be considered the “party wall”, the Agreement does not make any reference to the property line.

Instead,the Agreement uses the term “common boundary” and states in clause 3 that the party wall is located on and adjoining the “existing”“common boundary”. The plain meaning of these words suggests that the party wall is to be located at the existing boundary between theunits, which is where the current party wall reposes. [89] There is no language in the Agreement that the party wall is to be a straight line, bisecting the property into two identicalunits.

The recitals only discuss a straight line in respect to the division of the property and contemplate the use of a “common wall”between the units instead, without reference to configuration. [90] In assessing the intention of the contracting parties, it seems unlikely that Mr. Maraboli intended to divide the duplex unitsbased on the property line simply because the common wall was not located on the property line.

Rather, it seems much more likely thatthe intention was to divide the duplex based on the common wall that already existed. [91] There was no evidence given at trial indicating that there was ever any intent to move the common wall by Mr. Marabolibefore the Goodrams acquired unit #2525, that the Goodrams had any involvement in the construction of the common wall, or that theyaltered the wall in any way since they acquired their unit in 1991.

I also note that clause 5 clearly states that the party wall is not to bemoved from the place where it stood when the Agreement was made. [92] Based on this, it is difficult to believe that Mr. Maraboli intended to divide the duplex based on the property line, given thatthe configuration of the party wall would exclude the owner of the smaller unit from portions of their property. Whether or not Mr.Maraboli believed the party wall followed the property line is irrelevant to determining the intent of the Agreement. Mr.

Maraboli ownedboth units at the time the Agreement was made and he would have been aware of the configuration of the duplex. It is logical that hewould want to confirm what actually existed at that time, to circumvent future disputes between the owners of the two units.

Conversely,it seems unlikely that he intended to create a discrepancy between the legal and the physical configuration of the duplex, keeping in mindthe fact that the party wall and the property line are not entirely adjoining. [93] Based on the evidence, I find that the intent of the Agreement was to confirm the party wall as it existed at the time theAgreement was signed. I also find that no fundamental changes have been made to the party wall since the Goodrams purchased theirunit in 1991. Accordingly, the Party Wall Agreement confirms the location of the party wall as it exists today.

c) What, if any, liability reposes with the owners of the encroaching unit? [94] The Plaintiff’s claim against the Goodrams is founded on an allegation that they knew the party wall deviated from theproperty line causing the encroachments into the Plaintiff’s property and they failed to take any steps to correct the problem. [95] The Plaintiff claims that based on indefeasibility of title, her property interest is subject only to registered encumbrances andstatutory exceptions, as confirmed by

section 62 of the Land Titles Act. Accordingly, since the Goodrams did not register their claim onthe portions her property in their possession, the Plaintiff can rely on the title as an accurate reflection of her interest in the property.

[ 96 ] It is clear that under our Torrens system a bona fide purchaser for value can rely on the land registry – that is, what is on title – and in the absence of fraud such title is subject only to registered encumbrances and statutory exceptions. There is no suggestion of fraud here, however, since the Party Wall Agreement is registered on title. [ 97 ] Counsel for the Goodrams argues that in 2006 when the Plaintiff purchased her unit she knew or ought to have know about the provisions of the Party Wall Agreement since it was registered on title.

They also maintain that she knew or ought to have known that the party wall in the interior of the duplex was offset from the property line. For these reasons a remedial order should not be granted to the Plaintiff because she had notice of the qualification to her interest in the property and chose not to investigate at the appropriate juncture. [ 98 ] The Plaintiff is correct in noting that the information registered on title is considered to be accurate and generally a person’s interest in land is not subject to any competing claims which have not been registered on title.

That is to say, if a party is a bona fide purchaser title is considered to be “indefeasible”. This principle is important because it permits property owners and property purchasers to rely on title as an accurate reflection of the state of any claims on a specific titled property. [ 99 ] The principle of indefeasibility is not absolute, however, and several exceptions to the principle exist: see general exceptions, s. 61(1), Land Titles Act . In Alberta,

section 74 of the Land Titles Act sets out a specific exception, which permits a person to obtain title by adverse possession against a registered owner. Once a party has fulfilled the requirements of asserting adverse possession, they may gain a legal interest over the registered owner. [ 100 ] Claiming indefeasibility as a response to adverse possession effectively attempts to assert that title to land may not be acquired by adverse possession in Alberta, and that is not the correct application of the law as it stands today: Lutz v Kawa at para 13 .

While the Plaintiff may rely on her title, alone it is not enough to defeat the Goodrams’ claim of adverse possession. [ 101 ] I note, however, that the Goodrams are not the registered owners of the adversely possessed property since they made no effort to quiet title.

As discussed by the Alberta Court of Appeal in Lutz v Kawa , even if the limitation period has lapsed and the right to the recovery of land has been extinguished, if title is not quieted a bona fide purchaser may still gain the root of a valid title: at para 42. [ 102 ] This leaves us in a situation where the Plaintiff is the legal owner of the property in question, even though the Goodrams were on their way to gaining ownership of the portions of property at issue through adverse possession. [ 103 ] It does not appear that the Plaintiff was aware that the party wall separating the two units was irregular until sometime near the end of October, 2006.

Due to the state of the property it was not possible for the Plaintiff to closely examine the configuration of the party wall, or much else for that matter, until some months after she had purchased the property. Undoubtedly, other parties experienced the same problem (such as Vista, for one). [ 104 ] No evidence suggests that the party wall was not in its present location when the Goodrams purchased their unit in 1991, nor that they had anything to do with its placement.

I also note that the Goodrams have had continuous use and enjoyment of their unit for more than a decade prior to Plaintiff purchasing of the adjacent unit. [ 105 ] While the Plaintiff was not aware of the problems with the location of the party wall relative to the property line and the consequences of this irregularity until late October, at the earliest, this irregularity was not caused by the Goodrams. The Goodrams are not among the defendants ordinarily seen in cases where one party erects something which causes an encroachment.

The Goodrams purchased a unit offered to them, noted the Party Wall Agreement in place, paid extra for the larger unit and had no difficulties until more than a decade later when the Plaintiff purchased her unit. [ 106 ] To hold the Goodrams liable for the condition of the property today would not be fair or equitable. The remedy for adverse possession is a remedial order for possession by the rightful owner which is what the Plaintiff is attempting to do.

Nevertheless, while the party wall and the property line are not entirely adjoining, the Goodrams are not the source of the problem. [ 107 ] The Party Wall Agreement reflects the configuration of the units as they existed when the Agreement was signed, and as they

still exist today. While the Plaintiff may not have had an adequate opportunity to investigate the potential problems with the Party WallAgreement and ultimately with her title before purchasing the property, liability for that issue is unrelated to the Goodrams. [108] This Court finds that the Goodrams bear no responsibility for the irregularity of the party wall and therefore bear no liability.

d) What, if any, liability reposes with the Vista, the author of the defective Real Property Report? [109] In her Statement of Claim , the Plaintiff alleges that Vista knew, or had reasonable foreseeability, that she would rely on theReal Property Report prepared for the Vendor as part of the 2006 real estate transaction. [110] Specifically, she alleges that on August 11, 2006, Vista provided an inaccurate RPR which placed the party wall between thetwo units along the property line and indicated no visible encroachments from any improvement situated on an adjacent property.

As aresult, she claims that the errors contained in the RPR produced by Vista amount to breach of contract and negligence, resulting in lossand damage to her. Breach of Contract [111] Privity of contract is a well established common law principle which prevents a contract from conferring rights or obligations onanyone other than the contracting parties: Fraser River Pile & Dredge Ltd v Can-Dive Services Ltd, (SCC), [1999] 3SCR 108; London Drugs Ltd. v Kuehne & Nagel International Ltd, (SCC), [1992] 3 SCR 299; Greenwood ShoppingPlaza Ltd v Beattie, (SCC), [1980] 2 SCR 228.

Unless an exception exists to the principle of privity, generally anon-party to a contract may not enforce it: Greater Toronto Airports Authority v Mississauga (City) (1999), (ONSC), 43 OR (3d) 9 (ON GEN DIV); affirmed (2000), (ON CA), 50 OR (3d) 641 (ONCA); leave to appeal refused,[2001] SCCA No 83 (SCC). [112] One exception to the general principle of privity of contract is agency.

If a party to a contract acts as agent for a third-party, thethird-party may in certain cases gain contractual rights or obligations vis-a-vis the other contracting party: Greenwood Shopping PlazaLtd v Beattie at 238; Napev Construction Ltd v Lebedinsky (1984), 7 CLR 57 (ONHC) at para 22. [113] This exception to the principle of privity is generally only applied where a third-party uses a contract to defend an action ratherthan advancing a claim: Fraser River Pile & Dredge Ltd v Can-Dive Services Ltd; London Drugs Ltd v Kuehne & Nagel InternationalLtd; 375069 Alberta Ltd v 400411 Alberta Ltd, 2000 ABQB 29. [114] Here, the Vendor, through his lawyer, retained Vista to produce an RPR which was required as part of the sale of the property.The Plaintiff alleges that the Vendor and his lawyer acted as her agent in contracting with Vista to produce an accurate RPR. [115] On July 29, 2006, Vista attended the unit to physically conduct a survey required for drafting the RPR.

After inspecting theproperty, Vista failed to note the true configuration of the party wall between the two units, noting the wall followed the property linewhen the opposite was true. [116] At trial, Counsel for the Plaintiff noted that the RPR indicated that the purpose of the report was to “benefit the property owner,subsequent owners and any of their agents for the purpose of a real estate transaction.” Counsel further argued that because the Vendor’slawyer acted as her agent, the errors in the RPR which resulted in loss and damage to her form the basis of a claim of breach of contract. [117] Counsel for Vista responded by suggesting that if Ms.

Lewis, solicitor for the Vendor, could also be said to be acting for Ms.Power, she would be in breach of her fiduciary duties as a lawyer. They argue that clearly this cannot be the case, and as a result there isno direct contractual arrangement between Vista and the Plaintiff.

[118] To determine when a relationship of agency exists, in Thorne Riddell Inc v Rolfe et al. (1982), (AB KB), 44AR 161, citing B & M Readers’ Service Ltd v Anglo Can Publishers Ltd, (ON CA), [1950] OR 159 (ONCA), this Courtnoted at para 9: In order to ascertain whether the relation of agency exists, the true nature of the agreement or the exact circumstances of the relationshipbetween the alleged principal and agent will be regarded, and if it be found that such agreement in substance contemplates the allegedagent acting on his own behalf, and not on behalf of a principal, then, though the alleged agent may be described as an agent in theagreement the relation of agency will not have arisen. [119] Under clause 4.3 of the Real Estate Purchase Contract, the Vendor Poitras was required to provide the Plaintiff with a realproperty report, which counsel for Poitras requested on July 21, 2006.

The clause also notes that the “Buyer’s lawyer must have anopportunity to review the real property report” before the transaction is closed. As noted earlier, the Plaintiff waived this condition andthe RPR was not produced by Vista until after the transaction was completed. [120] What the Purchase Contract contemplates is that the parties were acting on their own behalf, and with somewhat adverseinterests at that.

The Contract obligated the Vendor to give the Plaintiff enough time to review the RPR with her solicitor to identify anyproblems – a condition which was ultimately waived by the Plaintiff, likely due to the very robust real estate market of the time. [121] Under these circumstances it is difficult to interpret the relationship between the Plaintiff and the Vendor as one of agency. Oneparty can not be acting on behalf of the other because as parties to the Purchase Contract their interests were not the same.

Furthermore,the condition requiring enough time for the Plaintiff’s solicitor to review the Contract was to ensure due diligence in protecting her owninterests. The Plaintiff made the choice to waive this protection of her own accord. [122] Accordingly, I find that Vista was not the Plaintiff’s agent for the purposes of providing an RPR as part of the real estatetransaction.

Negligent misrepresentations by Vista [123] The Supreme Court of Canada in The Queen v Cognos Inc, (SCC), [1993] 1 SCR 87, set out the five generalrequirements for imposing liability for negligent representations (which are adjusted to meet the facts of this case): (1) duty of care basedon a special relationship between the representor and representee; (2) inaccuracy of the representation; (3) negligent conduct in themaking of the representation; (4) reliance on it by the representee; and (5) resulting detriment in the form of damages arising fromreliance. [124] A plaintiff and defendant can be said to be in a special relationship if the defendant ought reasonably to foresee that the plaintiffwould rely on his or her representation, and that such reliance would be reasonable: Hercules Management Ltd v Ernst & Young, (SCC), [1997] 2 SCR 165 at para 24. [125] In this case Vista prepared the RPR for the real estate transaction, which it knew or ought to have known would be relied uponby the parties to that transaction.

It was not preparing the Report in a vacuum, and was well aware of its intended purpose and the factthat the parties would rely on their representations. Based on this, I find that there was a special relationship between Vista and thePlaintiff. [126] The parties do not dispute the fact that Vista’s August 2006 RPR was not correct and that Vista later issued a new report whichcontradicted its first effort. The revised RPR also mirrored what Measure Masters Ltd. found earlier that year – that encroachments intothe Plaintiff’s property existed on all three levels of the duplex.

Based on this, the inaccuracy of representation is established. [127] In terms of whether Vista was negligent in their representation of the property at issue, Counsel for the Plaintiff argued at trialthat Vista was obligated to fulfill the Standard of Practice for Surveys and Plans, which sets out the professional standards for surveyors

in Alberta. The Plaintiff’s position is that Vista’s conduct did not meet these standards. [ 128 ] Counsel for Vista rightly noted, however, that the biggest challenge for the Plaintiff was not whether Vista was negligent in their representation, but instead whether she actually relied on the Report produced by Vista, and if so, whether the resulting detriment could be quantifiable in damages. [ 129 ] The question of reliance is directly related to the evidence of the Plaintiff and her conduct. I note that the Plaintiff did not claim at trial that she relied on Vista’s inaccurate RPR.

Furthermore, the Plaintiff waived the condition in the Purchase Contract requiring the Vendor to provide the RPR prior to closing. Consequently, the inaccurate RPR was not released until after the real estate transaction closed, making it very difficult to see how the Report could have been relied on by the Plaintiff before she made the decision to purchase the property, even if the Report was ultimately found to be incorrect. In the absence of reliance, the Plaintiff’s claim of detriment is therefore difficult to sustain. [ 130 ] Based on the evidence I can find no reliance on the RPR by the Plaintiff.

The Plaintiff’s claim against Vista is dismissed.

e) What, if any, liability reposes with Sutton Group, the Vendor’s realtor? [ 131 ] In her Statement of Claim the Plaintiff alleges that the Vendor’s realtor Mr. Webber, representing Sutton Group, had full knowledge of the fact that one unit was encroaching on the other and failed to bring that information to her attention prior to the transaction closing.

Negligent Misrepresentation [ 132 ] The same five requirements for negligent misrepresentation from Cognos are also relevant to Sutton Group, namely: (1) duty of care based on a special relationship between the representor and representee; (2) inaccuracy of the representation; (3) negligent conduct in the making of the representation; (4) reliance on it by the representee; and (5) resulting detriment in the form of damages arising from reliance.

Duty of Care and Inaccuracy of the Representation [ 133 ] Counsel for Sutton Group did not dispute that a special relationship existed between the Vendor’s realtor and the Plaintiff giving rise to a duty of case. He also accepted the assertion that the measurements taken by the Realtor were not accurate. [ 134 ] Counsel did argue, however, that the remaining elements in Cognos – that the measurements were negligently performed, and that the Plaintiff as purchaser relied on the representation to her detriment – are not met. Negligent conduct in the making of the MLS listing [ 135 ] It was Mr.

Webber’s evidence at trial that he measured the exterior of the building and that he walked through the interior of the unit with the Vendor. He stated that he did not notice anything unusual about the party wall between the two units, but did note that the place was “very messy”, and that there was “a lot of stuff, junk, people and animals there.” [ 136 ] Counsel for the Plaintiff responded by pointing out that the Goodrams attempted to warn Mr. Webber that the units were not the same size, which they did as soon as they saw the neighbouring unit being listed.

Rather than speaking to them or exploring further what this might mean, Mr. Webber simply measured the units from the exterior and went ahead with preparing the listing after pulling the Certificate of Title. Mr. Webber agreed at trial that he did not check the Party Wall Agreement registered on title.

[137] It is well established that a real estate agent acting for a party in a property transaction must provide his or her services to thestandard of a reasonably competent real estate agent and must exercise reasonable care, skill and knowledge: McInerny Realty Ltd vAcademy Aluminum Products Ltd (1980), 1980 ABCA 173 , 25 AR 84 (ABCA) at para 14; Styles v Rogers Realty Ltd (1987),1987 ABCA 193 , 80 AR 288 (ABCA) at para 9; Charter-York Ltd v Hurst (1978), 2 RPR 272 (ONHCJ) at para 30; Phelan vRealty World-Empire Realty Ltd (1994), (BC SC), 38 RPR (2d) 128 (BCSC) at para 45. [138] Further, realtors may also be held liable for providing false or inadequate information of various sorts, including informationabout the size and dimensions of the property, or the existence of undisclosed encumbrances on title: Winsham Fabrik Canada Ltd vRe/Max All Stars Realty Inc, [2001] OTC 283 (ONSCJ); Komarniski v Marien (1979), (SK KB), 100 DLR (3d) 81(SKQB); Flandro v Mitha (1992), (BC SC), 93 DLR (4th) 222 (BCSC), additional reasons at 7 BLR (2d) 280. [139] In this case, the MLS listing stated: “All measurements and other information important to buyer to be verified by Buyers Agentand/or buyer”.

The bottom of the one-page listing further noted: “Information herein deemed reliable but not guaranteed”. [140]

Article 6.4 of the Purchase Contract is also relevant.

It states: The Seller and the Buyer each acknowledge that, except as otherwise described in this Contract, there are no other warranties,representations or collateral agreements made by or with the other party, the Seller’s brokerage and the Buyer’s brokerage about theProperty, any neighbouring lands, and this transaction including any warranty representations or collateral agreement relating to thesize/measurements of the Land and Buildings or the existence or non-existence of any environmental condition or problem. (emphasis inoriginal) [141] Even with these disclaimers, however, a Vendor’s real estate agent cannot completely avoid professional responsibilities andduty of care. [142] The Goodrams gave evidence at trial that they spoke with Mr.

Webber once they discovered the neighbouring unit was beingput up for sale. They stated that they told Mr. Webber, who was initially under the impression that the units were mirror images, that theunits were in fact not the same size or dimensions. They also referred him to the Party Wall Agreement registered on title. The Plaintiffargues this should have put Mr. Webber on notice that there was an issue with the configuration of the unit he was listing. [143] The issue here is whether Mr.

Webber, having been told by the Goodrams that the units were not identical, had an obligation tosay something to the Plaintiff or her conveyancing lawyer knowing it could very well make a difference in whether she purchased theunit. Whether it was simply an oversight or inexperience is difficult to say. What is clear though, is that Mr. Webber did not say anythingto the Plaintiff and by doing so he left the situation where it was – that a reasonable person would generally expect to be able to rely onthe information he provided. [144] Mr. Webber testified that he asked Mr.

Poitras, the Vendor, whether there were any “defects or issues” with the property. Mr.Poitras identified none and then signed off on the Listing Agreement. Mr. Webber went on to say that even though the place was in verybad shape, nothing raised a red flag. This testimony is rather self-serving though, given the way Mr. Webber described the unit himself,describing it as a disaster, a mess, but that he saw no “illegal activity”, suggesting that he knew the place was a crack house as witnessesat trial described it. [145] Mr. Webber stated that he could not see the party wall himself. There was no evidence that Mr.

Webber explained to theVendor, who may have been an addict or frequent user of drugs, exactly what he was inquiring about when he asked him about any“defects or issues”. [146] On this point, Counsel for Sutton Group has suggested that to prove negligence the Plaintiff must first establish what wouldhave been the standard of care imposed on a listing real estate agent. To establish such a standard, Counsel suggested that the Plaintiffshould have called expert evidence and that failing to do so was fatal.

[147] I disagree. While as a general rule a determination of professional negligence requires expert evidence, external indicators ofreasonable conduct, such as custom, industry practice, and statutory or regulatory standard, may be used to discover the standard:Krawchuk v.

Scherbak, 2011 ONCA 352 at paras 131-132. [148] In determining the standard of care for a real estate agent, the Ontario Court of Appeal noted in Krawchuk that the due diligencerequirements found in the Real Estate Council of Ontario’s Code of Ethics, while not dispositive, were of considerable importance ininforming what is expected of real estate agents in terms of verifying information about a property listed for sale: at para 147. [149] In this case the standard of care for a reasonably prudent realtor is set out in the Real Estate Council of Alberta’s Real Estate ActRules, which mandate the professional obligations for all licensed realtors in Alberta. [150] Under the Rules, when a realtor makes a claim or puts forward any fact or information, they are required to make certain it iscorrect and accurate.

A realtor is not permitted to make representations or to act recklessly in a way that misleads or deceives any personor is likely to do so: see Real Estate Act Rules, s. 1(1)(t), s. 41(j), s. 42(a). [151] Realtors are also required to act with competency on a continuing basis in all areas in which the realtor provides service: s.41(b). Realtors are not permitted to participate in the creation of any contract or document the realtor knows or ought to know is notlegally binding, confusing or does not reflect an agreement already in place.

Realtors also are required to act fairly, honestly and withintegrity when dealing with non-clients. [152] Based on all the surrounding circumstances of this case, the fact that the MLS listing was incorrect, that Mr. Webber wasinformed by the Goodrams of the potential issue with the party wall and that he did not investigate nor mention any potential issues tothe Plaintiff, I have no difficulty concluding that Mr. Webber’s listing information was not only inaccurate, but that he negligentlymisrepresented the property being sold.

Reliance and Detriment comprising damages [153] The Plaintiff claims that she relied on the representations of the Vendor’s realtor to her detriment, although she agreed at trialthat she did not have a home inspection conducted, despite the suggestion of her own realtor. [154] The Plaintiff stated that the MLS Listing was not only incorrect but it also described the property as a “half duplex”.

Based onthis, she maintains that a reasonable purchaser would not think about whether a problem existed with the party wall or encroachments. [155] Counsel for Sutton Group responded by arguing that the Plaintiff admitted on cross-examination that she did not care about thesquare footage of the unit, which was supported by the fact that she did not have a home inspection conducted. They also argue that shedid not rely on the measurements proffered by Mr.

Webber. [156] The converse argument could also be made, however, that the Plaintiff may not have retained an inspector because she wasconfident about the information provided by the Vendor’s realtor about the property.

The lack of concern about the overall squarefootage is something quite different than accepting that she would only be able to access areas pf her basement by walking through theneighbours’ property or that the walls jutted out in odd places on all three levels in excess of 200 square feet. [157] Counsel for Sutton also stated that there was information on the MLS agent detail view, which the Plaintiff saw, that shouldhave put a reasonable person on notice that it might contain incomplete information.

This position fails to take into consideration that thereal estate agent still has a duty to “validate material representations about the property listed”, however: Fletcher v Hand (1994), (AB KB), 156 AR 142 (ABQB) at para 37. [158] Mr. Webber testified that this was his first duplex transaction and he had only been a realtor for a year and a half at that point.He had no prior experience with party walls and did not think to pull the Party Wall Agreement that was registered on the title. Further,Mr. Webber did not have any familiarity with the specific property and did not even see the party wall himself.

The evidence indicatesthat there were people, animals and refuse in every room of the unit, making it very difficult to view the property. On this point, I also

note that nothing from the evidence suggests that Mr. Webber ever asked the Vendor to clean up the unit to permit potential purchasersto properly view it. [159] At trial, Counsel for Sutton also argued that even if information was provided that one unit was larger than the other, there wasno “discussion of square footage”. Surely the link between the two would have been obvious and a matter of common sense.

Had thePlaintiff known the configuration of the property was so very far from what would ordinarily have been expected, she may well havefound another property to purchase or negotiated a different price. [160] I find that the Plaintiff did rely on the information provided by the realtor for Sutton Group and that she did this to herdetriment. Accordingly, Sutton Group is liable for a portion of the losses to the Plaintiff.

f) What is the appropriate remedy under the current circumstances for this property? [161] Counsel for the Plaintiff submits that the Goodrams are unlawfully in possession of portions of the Plaintiff’s property and suchpossession should be remedied with a mandatory injunction to prohibit their continuing trespass. The Plaintiff also requests the relocationof the party wall to the property line to eliminate the encroachments and reflect the configuration contemplated by Vista in the originalRPR.

Attendant with the costs of moving the wall, the Plaintiff also requested damages for the loss of value of the property aftercompleting any of the renovations and repairs necessary to accommodate moving the party wall.

The Plaintiff also maintains thatbecause the structure of the duplex is not entirely stable at this point, re-configuring the party wall would also resolve that problem. [162] Additionally, the Plaintiff also seeks compensation for her loss of profit due to the inability to sell the property within a year, asshe had originally planned. [163] Due to the age and nature of the building, the Defendant Goodrams request an easement for the encroachments that have beenpart of their unit since 1991. In terms of any structural issues, they argue that teleposts or beams would be the most cost-effectivesolution.

They also note, as do the other Defendants, that moving the party wall would result in excessive and unreasonable costs andtherefore should not be ordered.

i) Trespass [164] Counsel for the Plaintiff argued at trial that this case deals with the unjustifiable interference with the possession of property bya party who was not the registered owner, commonly referred to as trespass: see definition in Didow and Knox v Alberta Power Ltd(1988), 1988 ABCA 257 , 88 AR 250 (ABCA) at para 6.

Counsel noted that the usual remedy for a trespass, particularly whereit is continuing, is a mandatory injunction: Lim v Titov (1997), (AB KB), 208 AR 338 (ABQB) at para 18. [165] The Goodrams argue that a mandatory injunction is not appropriate, however, because they did nothing to interfere with thePlaintiff’s property since the party wall was erected by a predecessor in title. They also note that until the Plaintiff purchased her unit,there were no objections to the Goodrams’ possession of the encroachments. Accordingly, a simple continuation of

an act done legally,the possession of their unit following the registration of the Party Wall Agreement, cannot transform into

an act of trespass at a latertime: Ross v Hunter (1882), 1882 CanLII 27 (SCC), 7 SCR 289 (SCC) at 342-344. [166] I accept that the current situation was not created by the Goodrams; it was a condition of the property when they became ownersand was unchanged at the time the Plaintiff purchased her unit. That noted, the status of the encroachments must still be resolved. [167] A mandatory injunction is characteristically awarded in circumstances where a trespass is present and continuous.

The rationalebehind granting an injunction is that the trespass essentially amounts to an expropriation of property: Lim v Titov at para 18. Even incases of continuing trespass, however, equity can intervene to substitute damages for injunctive relief. The general principle is that if theencroachment is innocently made, trifling in character, and is capable of being estimated in money so as to adequately compensate theplaintiff, an award of damages rather than a mandatory injunction is the appropriate remedy. The consideration of whether it would be

oppressive to the defendant to grant an injunction can also be taken into account: Lim v Titov, citing Shelfer v City of London ElectricLighting Co, [1895] 1 Ch 287 (ENG CH DIV), at 322-3, referred to in Gross v Wright (1922), (SCC), [1923] SCR 214(SCC) at 222. The application of such principles involves a careful consideration of the facts particular to the individual case. [168] In considering the Didow definition of trespass, there is no dispute that the Goodrams are in possession of unit space that issituated on the Plaintiff’s side of the property line and of which the Plaintiff, is the registered owner.

The situation is to the Plaintiff’sdetriment. The difficultly however, is whether such interference is unjustifiable. [169] The Defendant Goodrams were not the source of the irregularity in the party wall and are in innocent possession of theencroachments. Furthermore, as discussed earlier the Party Wall Agreement was intended to reflect the configuration of the two units inthe duplex as they existed when Mr. Maraboli. registered the Agreement on title. Although the party wall and the property line so notalign entirely, the Goodrams took their property as it had been created.

They relied on the Party Wall Agreement to confirm theconfiguration of the units that existed in 1991, and that exists today. To hold the Goodrams responsible for the condition of the propertywould not be appropriate and therefore I find that no trespass. [170] I would also note that even if a trespass did exist, a mandatory injunction would not be an appropriate remedy. Again, I find thatthere is no evidence that the Goodrams were involved in the placement of the party wall nor that they moved it at any time prior to thePlaintiff purchasing her unit.

Moreover, the scope of the encroachments do not seriously impair the enjoyment of the Plaintiff’s unit,other than denying access to certain utilities in the basement which I will deal with shortly. As illustrated in Vista’s updated RPR, theencroachments consist of cut-ins totalling 22.7 square feet on the main floor, 90.7 square feet on the upper level and 95.2 square feet inthe basement.

I find these encroachments to be minor in nature. [171] Accordingly, based on a careful consideration of the facts of this case I find that the encroachments made were done soinnocently by the Goodrams and the nature of encroachments is trifling. As such, a mandatory injunction would not be appropriate. ii) Reconciliation of the party wall to the property line [172] In addition to requesting a mandatory injunction, the Plaintiff also seeks an order that the party wall between the units mustfollow the property line.

In connection with this, the Plaintiff also seeks reimbursement for all such repairs as are necessary to carry outthe relocation of the party wall. [173] Reconciling the party wall with the property line would clearly resolve the status of the encroachments at issue.

Reconciliationis not the only possible resolution, however. [174] Where a mutual wall has been built so as to encroach on the property of one of the two adjoining owners, but was built in goodfaith under some mistake as to title and with the knowledge of, but without any protest from, the party on whose land it encroaches, theowner of the building may not be compelled to remove the wall back to the boundary line in all circumstances – the appropriate remedymay instead be in damages: Mayfair Property Co v.

Johnston, [1894] 1 Ch 508. [175] In 344408 Alberta Inc et al v Fraser (1999), 1999 ABQB 84 , 239AR 325 (ABQB), this Court found that due to thevery high costs involved in reconstructing a building encroaching in part on a neighbouring property, a remedy in damages was moreappropriate and a lien was ordered on title of the encroached property. [176] Similarly, the Court in Sidiropoulos v. Sullivan, 2002 BCSC 1271, also decided against removing an encroachment due to thehigh costs involved.

In that case the neighbours’ house encroached on an adjacent property by 1.5 feet since its construction in the 1920s.The encroachment, totalling approximately 48.9 feet, was not discovered until the spring of 2000, and litigation ensued. In its decisionthe Court stated: It is clear from the circumstances that removal of the encroachment is not feasible, nor was that remedy suggested. The best remedy forthe parties is to make a vesting order or an order granting an easement to the defendants, with appropriate compensation to the plaintiffs:at para 16.

[ 177 ] In the case at bar, a contractor was retained to estimate the cost of relocating the party wall to the property line. In his report he estimated the cost to be approximately $110,000. In addition, there would also be significant costs to replace any renovations done by the Plaintiff which would have to be removed as part of the relocation of the wall.

Undoubtedly, the Goodrams would also experience significant corresponding costs in their unit if the wall was moved. [ 178 ] An engineer who gave expert testimony at trial also noted that the wall on the second floor of the Plaintiff’s unit, which supports the roof, requires remedial structural work to provide better support.

He noted, however, that the work did not necessarily require relocation of the party wall and could be completed by using a beam or teleposts. [ 179 ] If the party wall were to be relocated, it would deny the Goodrams more than 200 square feet that they have enjoyed as part of their unit for more than a decade. According to the evidence they also paid more for the larger unit, believing that they had bought that extra space. I accept that when they had a choice of purchasing either unit from Mr.

Maraboli, they opted for the larger unit, despite its higher costs, because it better suited their needs. [ 180 ] While I have sympathy for the predicament the Plaintiff finds herself in, moving the party wall would not only cost a great deal of money, but it would also create a layout in the building different than what has existed when both unit owners purchased their respective properties.

I also note that the case law suggests rectification of physical irregularities such as this one must be decided by keeping in mind the practical realities of the situation. [ 181 ] While relocating the party wall is certainly possible, the cost of doing so would be more than Goodrams paid for their unit in 1991 and almost half of what the Plaintiff paid for her unit in 2006.

This solution would not be reasonable, and as noted by the expert engineer, there are less costly options for ensuring the structural integrity of the building. [ 182 ] After considering the evidence and the relevant case law, I do not accept the Plaintiff’s position that the best remedy is a declaration that the party wall should follow the property line.

I do not interpret the Party Wall Agreement to require this. iii) Court ordered easement [ 183 ] In their Counterclaim the Goodrams ask this Court to order an easement to formalize the status of the encroachments in accordance with the provisions of the Law of Property Act . [ 184 ] In looking at the provisions of the Act , I first note that prescription, or the acquisition of rights through long-continued enjoyment of those rights, is not applicable in Alberta by virtue of section 69(3).

Accordingly, no prescriptive remedy is available. [ 185 ] That noted, land described in a certificate of title granted under the Land Titles Act is subject to any right of way or other easement granted or acquired under any Act or law in force in Alberta: section 61(1)(f). [ 186 ]

Section 69 of the Law of Property Act permits this Court to order a lien or easement in situations where improvements on land have been made under the mistaken belief as to the true ownership of that land: see also 344408 Alberta Inc v Fraser at para 14. Specifically, the

section states: 69(1) When a person at any time has made lasting improvements on land under the belief that the land was the person’s own, the person or the person’s assigns (

a) are entitled to a lien on the land to the extent of the amount by which the value of the land is enhanced by the improvements, or

(

b) are entitled to or may be required to retain the land if the Court is of the opinion or requires that this should be done havingregard to what is just under all circumstances of the case.

(2) The person entitled or required to retain the land sha

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