Sieben v Tremmel, 2016 ABQB 686

Court of Queen’s Bench of Alberta Citation: Sieben v Tremmel, 2016 ABQB 686 Date: 20161205 Docket: 1314 00387 Registry: St. Paul Between: Glen Sieben and Leah Sieben Plaintiffs - and - Frank Tremmel and Patti Tremmel Defendants - and - Ryan Topley Third Party _______________________________________________________ Reasons for Judgment of W. Breitkreuz , Master in Chambers _______________________________________________________ Introduction [ 1 ] The Plaintiffs, Glen and Leah Sieben, purchased a home from the Defendants, Frank and Patti Tremmel, in the fall of 2012.

Ryan Topley acted as the Tremmels’ real estate agent for the purposes of the sale, and is the Third Party Defendant in this action. [ 2 ] The Plaintiffs now allege that the house contained pre-existing defects leading to water problems in the basement, and that these defects were not adequately disclosed over the course of the sale. Specifically, the Plaintiffs claim that the Tremmels and Mr. Topley failed to disclose this latent defect; misrepresented the state of the property; and are in breach of their contractual duties pursuant to the Contract of Purchase and Sale [Purchase Contract].

The Plaintiffs seek damages for the cost of repairs to the property. [ 3 ] In addition to the Plaintiff’s claim, the Tremmels have sought contribution and indemnity from Mr. Topley through a Third

Party Claim. The Tremmels allege that Mr. Topley failed to meet his contractual obligations to the Tremmels pursuant to the Listing Contract; failed to meet the standard of care required of a real estate agent in the circumstances, and made representations, either negligently or fraudulently, regarding the water seepage issues. [ 4 ] Mr. Topley now applies for

summary judgment dismissing both the Plaintiffs’ and the Defendants’ claims against him. [ 5 ] For the reasons that follow, I dismiss Mr. Topley’s application for

summary dismissal of both the Plaintiffs’ and Defendants’ claims. Background Facts [ 6 ] The parties agree on the majority of the facts, although there are a few significant exceptions. [ 7 ] The Tremmels purchased a house in Lloydminster, Alberta in 2005. They were the original owners of the property. [ 8 ] In 2007, the Tremmels experienced a water leak in their basement. Mr. Tremmel excavated a small hole in a corner on the outside of the house and found that the tarring on the wooden foundation wall was thin. He re-tarred the foundation, and patched the drywall and carpet underlayerment.

Subsequently, the Tremmels landscaped their backyard, and did not experience further water issues. [ 9 ] In 2012, the Tremmels decided to sell their house, and hired Mr. Topley as their real estate agent. The Tremmels met with Mr. Topley and entered into a Listing Contract on March 29, 2012. The Listing Contract also incorporated the Property Condition Disclosure Statement (PCDS), through which the Sellers were to disclose any defects or issues with the house. [ 10 ]

Section 3(

g) of the PCDS, which asks, “[a]re you aware of any roof leaks or moisture or water problems or unrepaired water damage in the dwellings/improvements?” was answered “No”. Similarly, 3(h), “[a]re you aware of any past or present flooding or drainage problems on the property” was answered “No”. Under

section 6, “Additional Comments and Explanations”, the following was recorded in Mr. Topley’s handwriting: In 2007, seller had small seepage into basement due to unlandscaped yard. Was very small + dried quickly. Seller landscaped + laid sod immediately after + has not had any H20 problems since. (Emphasis in original). [ 11 ] The PCDS form contained clauses indicating that the Sellers acknowledged that all of the information in the form was the Seller’s own information, and was true.

There was also a clause releasing the real estate agent from any liability arising from inaccurate or omitted information. [ 12 ] The Plaintiffs ultimately became interested in purchasing the Tremmels’ property. They submitted an offer on September 15, 2012. The offer was conditional on receipt of a satisfactory PCDS. The PCDS was provided to the Plaintiffs. [ 13 ] The Plaintiffs noted the comments in paragraph 6 of the PCDS and asked their own real estate agent, Candace Bosch, to follow up with Mr. Topley regarding the water issue.

She did so. [ 14 ] The Plaintiffs subsequently removed their conditions on their offer on September 24, 2012. The transaction closed and the Plaintiffs took possession of the home on October 11, 2012. [ 15 ] In April 2013 the Plaintiffs discovered a water leak in one of the basement bedrooms of the house. Upon investigation, they learned that the home had a pre-existing water problem in the basement stemming from inadequate sealing of the entire preserved wood foundation. This has resulted in significant expenses for the Plaintiffs in order to repair the issues.

Contested Facts [ 16 ] There are two main factual disputes. The first concerns the extent of the information that Mr. Topley and the Tremmels discussed during the completion of the PCDS. [ 17 ] It is common ground that Mr. Topley assisted the Tremmels in filling out that portion of the form, and Mr. Topley does not dispute that he penned the comments in paragraph 6. However, Mr. Tremmel and Mr. Topley differ as to what information regarding the water leakage was provided to Mr. Topley in the course of completing the statement. [ 18 ] Mr.

Tremmel’s evidence is that he fully explained the extent of the water issue and the steps taken to rectify it during the completion of the PCDS. At paragraph 8 of his affidavit, he deposed: Patti and I explained to Topley that there had been a water issue in 2007. We explained to him that we noticed a small wet patch in one of the bedrooms of our basement. I excavated a corner on the outside of the house. After excavating a small hole, I found that the tarring on the outside foundation wall was thin. I re-tarred the foundation and filled in the small hole I excavated.

After re-tarring the foundation, I patched the drywall and underlayerment. Later that summer, we landscaped the backyard. We never had further water issues. All of this was explained to Topley and he completed the PCDS form which is attached to my affidavit as Exhibit A. I relied on Topley and his expertise as a realtor that the

summary he wrote in the PCDS was sufficient. [ 19 ] In contrast, Mr. Topley’s account is that he was provided with a version of events that minimized the problem. He deposed in his affidavit that the comments in paragraph 6 of the PCDS accurately reflect what the Tremmels told him: 7. At paragraph 6 of the PCDS the Sellers specifically disclose what they described to me as a minor issue with water seepage that

occurred in 2007. The Sellers explained that it was due to the yard not being landscaped and that the water that entered the basement was, as set out in the PCDS, “ very small + dried quickly”. The Sellers confirmed that once they landscaped the yard and put down sod, there were no further water problems. This is just as stated in paragraph 6 of the PCDS. 8. While the handwritten comments under paragraph 6 of the PCDS are in my handwriting, I wrote down exactly what the Sellers advised me.

The Sellers then reviewed my handwritten comments and explicitly confirmed the correctness and accuracy of the comments in paragraph 6 and signed the PCDS. [ 20 ] The discrepancy between Mr. Topley’s version and the Tremmels’ version was more pronounced on the questioning record. Mr. Tremmel asserted under oath that he provided a detailed description of the discovery and repair of the leak, and told Mr. Topley the full extent of the problem. He said that this included the fact that water had wicked from one bedroom to the other.

He had to pull the carpet back in both bedrooms to figure out the source of the leak, cut out the drywall, and replace the underlay. Mr. Tremmel did all this work himself. Mr. Tremmel also said that he showed Mr. Topley the affected area. [ 21 ] On questioning, Mr. Topley denied that the Tremmels had ever told him those details. [ 22 ] The Tremmels do not dispute that the only information Mr. Topley would have had with respect to the PCDS disclosure is what they told him. The Tremmels also admit that they watched Mr.

Topley write out the information in paragraph 6, then they themselves read over the PCDS and signed it. [ 23 ] The second main factual conflict relates to the conversation between Ms. Bosch and Mr. Topley regarding the water issue mentioned in the PCDS. [ 24 ] The Tremmels argued, and provided evidence, that in the course of this conversation Mr. Topley provided more specific information than what was contained in the PCDS. Ms. Bosch’s evidence suggests that Mr.

Topley gave additional details, including that the leak was located in the northeast corner of the home, was about the size of a pizza box, occurred during construction before anyone had lived in the home, and was repaired by the builder, Sarlin. [ 25 ] During questioning, Ms. Bosch referred to an email that she wrote to the Siebens shortly after speaking with Mr. Topley, summarizing the information that she obtained from Mr. Topley over the phone. That email reads in part: I talked to Ryan about the water, and I guess it was during construction, so basement wasn’t even finished yet.

And so he got all the dirt and backfill done asap so there wouldn’t be any more water. It was fixed by Sarlin the builders and said it wasn’t a total of 4 gallons that would have seeped in. Frank hadn’t even lived in the house yet So that is very typical on new construction because of the hole all the way around the house during construction. [ 26 ] Mr. Topley denied providing these additional details, and indicated that he only stated what was said in the PCDS, though he did not recall whether he had the form in front of him during the conversation or not.

He did not contact the Tremmels for further details as he felt that the information in the PCDS was sufficient. The Contractual Clauses [ 27 ] The Listing Contract between Mr. Topley and the Tremmels contains a warranty that the Seller’s information was accurate, an indemnity clause, and an “entire agreement” clause: 9.1 The Seller warrants the following... (

g) all information provided to the Brokerage is accurate to the best of the Seller’s knowledge … 11.1 The Seller will hold harmless and indemnify the Brokerage for any claims that may arise from its reasonable and good faith reliance on representations made, or information provided, by the Seller … 18.4 This Agreement will constitute the entire agreement between the Seller and Brokerage and there are no representations, warranties, collateral agreements or conditions which affect this Agreement other than as expressed herein. [ 28 ] The Listing Contract also explicitly incorporates the PCDS, which was completed at the same time as the Listing Contract.

The first page of the PCDS does not form part of the document, but contains a number of pieces of information. This includes the warnings that Sellers should “complete the Disclosure Statement in their own writing to avoid a misunderstanding”; that if a realtor assists in completing the form he or she will not verify the information; and that only the Sellers shall provide information for the form.

The text also indicates that the “Seller may be held legally responsible to the Buyer for the accuracy of his answers in this Disclosure Statement”. [ 29 ] The PCDS itself contains the following statement: The SELLERS state that the above information is true as of the above date and that the SELLERS will disclose to any BUYER any changes to this information prior to the signing of any Contract of Purchase and Sale in which this Disclosure Statement is incorporated. Any important changes to this information made known to the SELLERS will be disclosed by the SELLERS to the BUYERS prior to closing.

By signing this Disclosure Statement, each of the SELLER and the BUYER acknowledge that all of the information contained in this Disclosure Statement comes from the SELLER and that none of the SELLER’s BROKERAGE or BUYER’s BROKERAGE nor any of their representatives have verified the accuracy of any such information. None of the SELLER’s BROKERAGE or the BUYER’s BROKERAGE or any of their representatives warrant, guarantee or represent the accuracy of the above information.

By signing this Statement, the SELLER and the BUYER and their successors, assigns, and personal representatives hereby release each of the SELLER’s BROKERAGE, the BUYER’S BROKERAGE and their respective representatives and each of their successors, assigns and personal representatives of and from all responsibility and liability with respect to any loss or damage suffered or sustained by the SELLER or the BUYER or by any of their successors, assigns and personal representatives by reason of an inaccuracy in any of the information contained in this Disclosure Statement or by reason of any omission of any information from this Disclosure Statement. [Emphasis in original]. [ 30 ] The Tremmels signed the PCDS indicating they had read and understood it.

Later, when the Plaintiffs received a copy of the PCDS, the Plaintiffs also signed the document indicating they had read it. [ 31 ] Receipt of a satisfactory PCDS was a condition of the offer in the Purchase and Sale Contract. [ 32 ] The Purchase and Sale Agreement between the Plaintiffs and the Tremmels contained an “entire agreement clause”.

Section 6.4 of the Agreement of Purchase and Sale states the following: 6 .4 The Seller and the Buyer 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 the property, any neighbouring lands and this transaction, including any warranty, representation, or collateral agreement relating to the size/measurements of the land and buildings or the existence of any environmental condition or problem and the Buyer hereby agrees to purchase the above described property as it stands at the price and terms and subject to the conditions above set forth.

Positions of the Parties [ 33 ] The Applicant Topley argued that this is an appropriate case for

summary judgment, as clauses in the Listing Contract, PCDS and Purchase Contract ultimately relieve him of liability. Further, he submitted that the conflicting evidence regarding additional verbal representations does not bar

summary judgment, as consideration of this evidence in the first place would be contrary to the terms of the Listing Contract, the Agreement of Purchase and Sale, and the parol evidence rule. [ 34 ] The Plaintiffs and the Tremmels opposed Mr. Topley’s application. [ 35 ] The Plaintiffs argued that this is not an appropriate case for

summary judgment due to the conflicts in evidence. They submitted that a determination of liability requires a credibility finding regarding what was disclosed between Mr. Topley and the Tremmels, and that this can only be resolved through viva voce evidence at trial. [ 36 ] The Tremmels opposed

summary dismissal on a number of grounds. In addition to the issue of disputed facts necessitating trial, they suggested that expert evidence at trial is required to establish the appropriate standard of care for a real estate agent in these circumstances. The Tremmels have also suggested that Mr. Topley may be liable for fraudulent misrepresentation, which could expand the scope of evidence that the Court is entitled to consider. [ 37 ] The Tremmels further submitted that even if the Court determines that the application can be decided notwithstanding the factual dispute, Mr. Topley has not demonstrated that the claims against him are without merit. The Law of

Summary Judgment [ 38 ] Rule 7.3(1) of the Alberta Rules of Court , Alta Reg 124/2010 [Rules] provides: 7.3(1) A party may apply to the Court for

summary judgment in respect of all or part of a claim on one or more of the following grounds: (

a) there is no defence to a claim or part of it; (

b) there is no merit to a claim or part of it; (

c) the only real issue is the amount to be awarded. [ 39 ] The Supreme Court clarified the test for

summary judgment in Hryniak v Mauldin , 2014 SCC 7 , [2014] 1 SCR 87. Recognizing the reality that in modern litigation very few files actually go to trial, the Court noted that

summary judgment rules “should be interpreted broadly, favoring proportionality and fair access to the affordable, timely and just adjudication of claims” (para 5). [ 40 ]

Summary judgment is appropriate where there is “no genuine issue requiring trial”. This will be the case when the judge is able to make necessary findings of fact, apply the law to the facts, and the procedure is “a proportionate, more expeditious, and less expensive means to achieve a just result” ( Hryniak at para 49 ). [ 41 ] The process must give a judge confidence in his or her conclusions. In some cases, the nature of the evidence required or the issues at play may mean that

summary judgment is not appropriate ( Hryniak at paras 50-51 ).

[42] In Windsor v Canadian Pacific Railway Ltd, 2014 ABCA 108, 572 AR 317 the Alberta Court of Appeal adopted theSupreme Court’s approach to

summary judgment in Hryniak. Similar to the Ontario Rules of Court that were at play in Hryniak, theAlberta Rules call for a “holistic” analysis of whether the claim has merit. A court must assess “whether there is in fact any issue of“merit” that genuinely requires a trial” (Windsor at para 16).

Put another way, the question is whether the moving party’s position is “socompelling that the likelihood of success is very high such that it should be determined summarily” (Whitecourt Power LimitedPartnership v Elliot Turbomachinery Canada, 2015 ABCA 252 at para 9, 606 AR 248). [43] I also note that unlike the new Ontario Rules of Court that were at issue in Hryniak, Alberta’s Rules do not provide“enhanced-fact-finding powers” to Chambers judges on

summary judgment; these powers are more akin to Alberta’s

summary trial rules(Orr v Fort McKay First Nation, 2014 ABQB 111 at paras 19-20, 587 AR 16). Further, Masters in Chambers cannot weigh evidence,and any fact-finding abilities of a Master are restricted by Section 9(3)(

b) of the Court of Queen’s Bench Act, RSA 2000, c C-31 whichprovides that Masters do not have jurisdiction to determine “disputed or contentious questions of fact unless the parties agree to thedisposition of the questions in chambers on affidavit evidence” without a trial (see also Orr at para 16). [44] Typically

summary judgment is not appropriate where there is conflicting evidence (Sherwood Steel Ltd v OdysseyConstruction, 2014 ABCA 320, 5 Alta LR (6th) 268). There are some exceptions to this general principle. If the judge assumes theevidence of the party opposing

summary judgment is correct, he or she may be able to make a determination on the motion. If theconflicting evidence is irrelevant to the grounds on which a party is asking for

summary judgment, then conflicting evidence is not a bar.Finally, if evidence “is either destroyed by cross-examination on affidavit or introduction of other evidence that would render that party’sevidence completely non-credible”, a Master may be able to draw inferences of fact and thus make a

summary determination (Janvier v834474 Alberta Ltd, 2010 ABQB 800 at para 15, 511 AR 76). [45] The “roadmap” for

summary judgment decisions in Alberta first requires the Court to assess the record and determinewhether viva voce evidence is necessary. As Master Schlosser stated in 1214777 Alberta Ltd v 480955 Alberta Ltd, 2014 ABQB 301 atpara 17, 2014 CarswellAlta 821: The starting point (as found in the Windsor decision para. 13 and Hryniak at para. 49) is 'to examine the record to see if a disposition thatis fair and just to both parties can be made on the existing record'. The court is to look at the record and the dispute to decide whether itis essential to the resolution of the dispute that the court see the witnesses.

If the answer is yes, the matter must go to trial. [46] If it is not essential that the court see the witnesses, the court should engage in a six-step analysis to determine whethersummary judgment is appropriate (1214777 Alberta Ltd at para 17): 1. The court should presume that the best evidence from each side is before the court.

Summary judgment applications must be decidedon the record before the court, rather than speculation as to what the evidence might be; parties are expected to put their “best foot”forward. 2. The court must consider whether an absence of evidence leads to a negative inference on certain points. 3. The court should consider the “complete package” and ask whether all of the evidence would be admissible. 4. The next question is whether there is a conflict in the evidence.

If so, a court should ask whether the conflict has been resolved oncross-examination, or whether the evidence is purely self-serving (in which case it would not give rise to a triable issue). 5. Next, the court should examine the evidence. Without making findings of fact, a court may still assess the admissibility, sufficiency,and reliability of evidence. Without deciding a “genuine question of law”, a court may apply the law to the facts. 6. Finally, the court can make a determination on the

summary judgment claim. [47] I will now apply these principles to the evidentiary record before me. Analysis: Is it essential for the Court to see the witnesses? [48] The Plaintiffs and the Tremmels argue that a credibility assessment is necessary given the discrepancies in the evidencementioned above. However, if Mr. Topley is entirely protected by the contractual clauses, or if the conflicting evidence is not relevant tothe determination of liability, he should be released from the action. To make this determination, I must consider the parol evidence ruleand the scope of entire agreement clauses, and how they apply in the context of the contractual agreements in this case.

a) What is the effect of the Parol evidence rule? [49] The parol evidence rule is a principle of contractual

interpretation. If a written contract is clear and unambiguous, it must beinterpreted based on its plain and ordinary meaning (Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53 at para 59, [2014] 2 SCR633; Eli Lilly & Co v Novopharm Ltd, (SCC), [1998] 2 SCR 129 at para 55, 161 DLR (4th) 1).

A court should notconsider statements or evidence outside the words of the contract that would change or contradict the written agreement (Sattva at para59). [50] The purpose of the parol evidence rule is “primarily to achieve finality and certainty in contractual obligations, andsecondarily to hamper a party’s ability to use fabricated or unreliable evidence to attack a written contract” (Sattva at para 59).

InGainers v Pocklington Holdings, 2000 ABCA 151, 255 AR 373 at para 24, the Alberta Court of Appeal stated: If hindsight, implication, unspoken thoughts, and unwritten statements could have so pivotal a role as they appear to have had here, thenwritten contracts would become a mere trap for the credulous. Almost all commercial certainty would evaporate, and commercial

litigation become a swearing contest. A suit on a commercial contract, no matter how carefully drafted, would become a long historicalinvestigation of an insoluble mystery. Often who said what to whom by telephone 15 years ago is impossible to unravel. A formalwritten contract should not rise or fall with such mysteries. [51] In Sattva, the Supreme Court clarified that the parol evidence rule does not preclude consideration of the factual matrixsurrounding the contract formation (para 60).

The nature of evidence that falls under the umbrella of surrounding circumstances is case-specific, but should only be objective evidence of facts that the parties knew or reasonably ought to have known at the time the partiesentered into the contract (paras 57-58). This evidence should never overpower the text of the agreement, but may “deepen a decision-maker’s understanding of the mutual and objective intentions of the parties as expressed in the words of the contract” (para 57). [52] However, the surrounding circumstances may be less relevant in cases of standard form contracts, as is the case here.

InLedcor Construction Ltd v Northbridge Indemnity Insurance Co, 2016 SCC 37, 2016 CarswellAlta 1699, the Supreme Courtcommented that while background factors such as the purpose of the agreement, the nature of the contractual relationship, and thecontext of the industry may still be considered, these factors will generally be the same for everyone who enters into the standard formagreements.

Thus, surrounding circumstances will typically play less of a role, and consistency in interpreting these types of contracts isimportant (paras 31-32). [53] There are some well-established exceptions to the parol evidence rule.

Most relevant to this case, fraud or fraudulentmisrepresentation will require a court to look at evidence outside the terms of the contract (Gallen v Allstate Grain Co Ltd (1984), (BC CA), 9 DLR (4th) 496 at 506; 53 BCLR 38 (CA), leave to appeal to SCC refused (1984) 56 NR 233 (SCC)). [54] Applying the parol evidence rule to the case at bar, on the face of the PCDS, the Tremmels clearly agreed, pursuant toparagraph 8, that the information contained in the PCDS was that of the Sellers, not the real estate agent.

They also understood that theirrealtor would not verify, warrant, represent or guarantee any of the information in the Disclosure Statement. They acknowledged that theinformation contained in the PCDS was true. [55] Although the information in paragraph 6 was penned by Mr. Topley, Mr. Tremmel’s evidence on questioning was that he‘was sitting right there’ as Mr. Topley wrote the information, and did have occasion to read it afterward. For the Court to now considerevidence that the Tremmels told Mr.

Topley something different than what they agreed was their own, true information in the DisclosureStatement would require the court to look behind these clear contractual terms. [56] Thus, absent allegations of fraud in relation to the formation of this contract, the parol evidence rule may preclude a Courtconsidering parol evidence in relation to interpreting the PCDS and the Listing Contract. However, as I will discuss, the Tremmels allegeadditional misrepresentations that induced the formation of the Purchase Contract, and that Mr. Topley may have been complicit in theserepresentations.

b) What is the effect of the ‘entire agreement clause’ in the Purchase Contract? [57] An entire agreement clause, such as the “no representations or warranties” term in

section 6.4 off the Purchase Contract, mayhave a similar effect to the common law parol evidence principle. Such clauses “were developed in order to preclude the introduction ofwritten evidence outside the written contract that would be in conflict with it” (Terrace Consulting v Jackson, 2011 ABQB 108 at para25, 521 AR 22).

Clause 6.4 of the Purchase Contract is commonly found in the standard form real estate contracts used in this province. [58] It is a well-established principle that, similar to the parol evidence rule, an entire agreement clause does not bar a claim offraudulent misrepresentation (Opron Construction Co v Alberta (1994), (AB KB), 151 AR 241 at paras 712-717, 14CLR (2d) 97 (QB)). [59] The question of whether an entire agreement clause can provide a defence to a claim in tort, such as for negligentmisrepresentation, is more unsettled.

In BG Checo International Ltd v British Columbia Hydro & Power Authority, (SCC), [1993] 1 SCR 12 at 26-28, 99 DLR (4th) 577, the Supreme Court held that parties have the right to sue in both contract and tort,and that generally a right to sue in tort can only be negated by clear terms.

Limitation or exclusion clauses will be strictly construedagainst the party that seeks to rely on them (Bow Valley Husky (Bermuda) Ltd v Saint John Shipbuilding Ltd, (SCC),[1997] 3 SCR 1210 at para 114, 158 Nfld & PEIR 269). [60] One line of authority suggests that in order to bar a claim in negligent misrepresentation, a clause must specifically state thatliability for negligence is excluded: Zippy Print Enterprises Ltd v Pawliuk (1994), (BC CA), 100 BCLR (2d) 55 atpara 34, 20 BLR (2d) 170 (CA); 40 Sunpark Plaza Inc v 850453 Alberta Inc, 2007 ABQB 54 at paras 74-77, 413 AR 200; 239199Alberta Ltd v Patel (1993), (AB CA), 145 AR 10, 105 DLR (4th) 739; 1250810 Alberta Ltd v 1284768 Alberta Ltd,2010 ABQB 125 at para 50, 489 AR 201. [61] In the real estate context, Erb J’s decision in Power v Goodram, 2012 ABQB 50, 529 AR 195, is consistent with this line ofauthority.

Power concerned the sale of a duplex unit, in which the defendant realtor listed an incorrect square footage on the MultipleListing Service website. The realtor had measured the property himself, but was also notified by the residents in the adjoining unit thatthe two units were not the same dimensions or size. Further, the neighbours referred the realtor to a Party Wall Agreement registered ontitle, but the realtor did not pursue this. [62]

Section 6.4 of the purchase contract in Power contained an entire agreement clause with the same wording as clause 6.4 of thePurchase Contract between the Siebens and the Tremmels. Erb J found that even with the disclaimer under clause 6.4, a real estate agent“cannot completely avoid professional responsibilities and duty of care” (para 141). Ultimately the Court found that the realtor was liablefor negligent misrepresentation. [63] However, another line of cases supports the opposite proposition: that non-reliance or entire agreement clauses may precludean action for negligent misrepresentation even if there is no explicit wording to that effect: see e.g. Carman Construction Ltd v

Canadian Pacific Railway Company and CP Rail, (SCC), [1982] 1 SCR 958 at 973, 136 DLR (3d) 193; Hayward vMellick (1984), (ON CA), 45 OR (2d) 110 at 119; 5 DLR (4th) 740 (CA); No 2002 Taurus Ventures Ltd v IntrawestCorp, 2007 BCCA 228, at paras 47-60, 281 DLR (4th) 420; McNeely v Herbal Magic Inc, 2011 ONSC 4237 at para 19, 2011CarswellOnt 6247.

Many of these cases involved contracts between two sophisticated commercial parties. [64] Most recently, Alberta Court of Appeal also commented on this issue in 2013, holding that “entire agreement clauses need notexpressly exclude liability in tort in order to exclude an action in negligence” (Horizon Resource Management Ltd v Blaze Energy Ltd,2013 ABCA 139 at para 47, 544 AR 289 [Horizon]), though again in the context of sophisticated commercial contracts.

Nonetheless,there is support for this proposition in the real estate context as well. [65] In Anchor Fence v Polaris Realty (1994), (AB KB), 156 AR 81, 1994 CarswellAlta 197, Master Fundukconsidered the effect of an entire agreement clause with the same wording as clause 6.4 in the case at bar. In Anchor Fence, thePlaintiffs made an offer on a parcel of land, but later learned that there would be a substantial local improvement charge that was not pre-paid by the vendor.

As a result, the Plaintiffs refused to complete the sale and sued both the seller and the real estate agents for damagesand the return of the Plaintiffs’ deposit.

The Plaintiffs alleged that the realtor who showed them the land warranted that the localimprovement charges had already been prepaid, and thus should be liable for misrepresentation (Anchor Fence at paras 9-13, 15). [66] Although there was a conflict in evidence between the Plaintiff, who alleged the agent had told him the improvement chargeswere prepaid, and the agent, who denied making any representations or warranties about the charge, Master Funduk found that

summarydismissal was appropriate. [67] Master Funduk held that while the real estate agent was not a party to the purchase contract, he was still entitled to the benefitof the clause, which expressly stated that it applied to the agents (para 37).

In signing the contract and agreeing to that term, the Plaintiffhad “contracted away any cause of action against the agents for the tort of misrepresentation” (para 51). [68] The Court has reached a similar conclusion – namely that real estate agents may rely on clause 6.4 as a complete defence to aclaim for negligent misrepresentation, and that it also encompasses unwritten representations – in Bright v Tanguay (1995), (AB KB), 32 Alta LR (3d) 116, 1995 CarswellAlta 339 (QB), and Belzil v Bain (2001), 2001 ABQB 890 , 300 AR72, 2001 CarswellAlta 1375.

Most recently, Master Smart cited this line of authority with approval in Devji v Fast Track Real EstateInc, 2016 ABQB 508, 2016 CarswellAlta 1697. [69] The divergence in the case law indicates the unsettled nature of this area.

The cases may turn on fine distinctions, including theprecise wording of the clause, whether or not a clause is properly characterized as an “exclusion” clause, and other factors such as theintentions of the parties and their level of sophistication. [70] As the Court of Appeal stated in Tottrup v Clearwater (Municipal District No 99), 2006 ABCA 380 at para 11, 401 AR 88,“if the legal issue is unsettled or complex or intertwined with the facts, it is sometimes necessary to have a full trial to provide a properfoundation for the decision.” I find that to be the case here. [71] The Plaintiffs and the Tremmels allege that Mr.

Topley negligently misrepresented the state of the property. If the entireagreement clause does not properly exclude an action for negligent misrepresentation, evidence of the representations in the conversationbetween Mr. Topley and Ms. Bosch will be admissible, and require a determination of credibility, which can only be done at trial. [72] Even if Mr. Topley was able to rely on the entire agreement clause to bar the claims in negligence, the possibility of fraudmust be considered.

c) Fraud as an exception to the Parol Evidence Rule and Entire Agreement Clause [73] The Tremmels made submissions in written and oral argument that Mr. Topley may have fraudulently misrepresented thestate of the property. [74] If Mr. Topley’s representations were potentially fraudulent, a court would be required to look past the terms of the contractsand make findings of credibility, in order to determine whether there was in fact fraud in relation to the formation of the PurchaseContract.

Fraud could vitiate both the parol evidence rule and the effect of the entire agreement clause, and make viva voce evidence notonly an appropriate consideration but a necessary one. [75] The classic test for fraudulent misrepresentation was set out in Derry v Peek (1889), 14 App Cas 337 (HL)). In order toestablish fraudulent misrepresentation, the Tremmels must show that Mr.

Topley made a false representation: 1) knowingly or 2) without belief in its truth, or 3) recklessly, careless whether it is true or false (Derry v Peek at 374; Nash v McMillan (1997), (AB KB), 222AR 4 at paras 33-36, 1997 CarswellAlta 1206) [76] In addition, it must be shown that the Plaintiffs relied on the representation, and that such representation induced the Plaintiffsto enter into the sale contract. [77] Fraud may be established where there is active concealment, or silence regarding a major latent defect that is known to thedefendant (Lerke v Brear (1990), (AB KB), 112 AR 1 at para 92, 78 Alta LR (2d) 24).

Further, “the law is clear thatsilence and half-truths can amount to fraudulent misrepresentation” (Palmer v Van Keulen, 2005 ABQB 239 at para 23, 375 AR 341).

[ 78 ] There are special requirements under the Rules of Court for pleading fraudulent misrepresentation. Rule 13.7 provides that a pleading for fraud must give particulars, and I recognize that the neither the Plaintiffs’ nor the Defendants’ pleadings contain sufficient particulars that would give rise to a claim for fraudulent misrepresentation. [ 79 ] However, on

summary judgment applications, courts have been cautious in dismissing claims where fraud is alleged without sufficient particulars in the pleadings. In Terrace Consulting , Master Hanebury considered the appropriate remedy where affidavit evidence supported a claim for intentional misrepresentation, but particulars were not adequately described in the pleadings. The Court held that its mandate was to see that justice was done, and that, had misrepresentation been properly pled, it would have defeated the

summary judgment application (paras 56-60). Master Hanebury directed that the party amend their pleadings to comply with the Rules of Court , but found that the matter should proceed to trial. [ 80 ] Similarly, in 1250810 Alberta Ltd v 1284768 Alberta Ltd, 2010 ABQB 125 , 489 AR 201 Manderscheid J denied

summary dismissal of an action even though the pleadings were not compliant with the requirement for particulars, finding that misrepresentations that fall short of fraud may vitiate a contract (para 47). [ 81 ] A generous reading of the Third Party Claim would provide some basis for a claim in fraudulent misrepresentation. In addition, the Tremmels explicitly made this allegation in their brief and oral submissions. For the purposes of a

summary judgment application, I must determine whether “ a disposition that is fair and just to both parties can be made on the existing record” ( Windsor at para 13 ). [ 82 ] Mr. Topley cannot hide behind the contractual clauses and parol evidence rule in relation to allegations of fraud. As Kent J stated in Alberta Treasury Branches v Gammell , 2011 ABQB 351 at para 18 , 532 AR 142, “[i]t cannot be the law that evidence of what really happened is inadmissible on the basis of a clause in the contract that is the root of the alleged misrepresentation.

The principle of certainty of contract must yield to truth.” [ 83 ] If there is some merit to the Tremmels’ allegations of fraud, a court will be entitled to consider evidence of the discussions outside the written terms of the contract to get to the heart of the matter. [ 84 ] The record before me discloses a potential discrepancy between the information in the PCDS and the actual extent of the water problems and repairs that Mr. Tremmel underook. The Tremmels have put forward evidence that Mr.

Topley heard the full story of the water issues and repairs when he met with the Tremmels to sign the listing contract and PCDS. [ 85 ] Significantly, the Tremmels also provided evidence that further inaccurate or untrue details were provided in the course of this conversation between Ms. Bosch and Mr. Topley. For instance, there is evidence of statements that the owners had not lived in the house yet, which is not correct, and that the damage was repaired by the builders, Sarlin, when in fact Mr.

Tremmel himself had done all of the work. [ 86 ] As to whether the representations induced the plaintiffs to enter into the contract, the conversation between Ms. Bosch and Mr. Topley occurred after the initial offer had been made by the Plaintiffs. After receiving this information from Ms. Bosch, they decided to remove their conditions on the offer and complete the sale. Mr. Sieben stated in questioning that after he and his wife made inquiries relating to the water issue, they felt that they had received sufficient answers. [ 87 ] To determine whether Mr.

Topley knowingly made false statements, or was reckless or willfully blind to the truth in making these representations, requires weighing evidence to determine what information he actually knew at the time. The question of who is truly responsible for the misrepresentations is not clear on the evidentiary record before me. This demonstrates the need for a credibility determination to reconcile the conflicting versions of events. [ 88 ] There is a sufficient evidentiary basis to the claim of fraudulent misrepresentation that a court cannot dispense with the need for a credibility assessment.

I conclude that in order to reach an outcome that is fair to all the parties, it is necessary for a court to see the witnesses. It would be unfair and unjust to release Mr. Topley from the action at this stage. Conclusion [ 89 ] On the basis of the unsettled law surrounding whether the entire agreement clause would bar a claim for negligent misrepresentation, as well as the possibility of fraud, I conclude that this case requires viva voce evidence.

Summary judgment would be inappropriate in the circumstances. I thus dismiss Mr. Topley’s claim. Heard on the 13 th day of June, 2016. Dated at the City of Edmonton, Alberta this 5 th day of December, 2016. W. Breitkreuz M.C.C.Q.B.A.

Appearances: Linnea Goodhand Goodhand Law Office for the Plaintiffs Chantelle Lefebvre Meridian Law Group for the Defendants Joe Spelliscy Duncan Craig LLP for the Third Party