Torfason v Booth, 2017 ABQB 387

Court of Queen’s Bench of Alberta Citation: Torfason v Booth, 2017 ABQB 387 Date: 20170616 Docket: 1401 01029 Registry: Calgary Between: Lynn Torfason and Michael Allen Plaintiffs - and - Grant Booth and Cynthia Collens as personal representatives of the Estate of Delores Donna Booth, Deceased, Remax Real Estate Calgary South Ltd. Operating As Re/max First and Daniel Geneau Defendants _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice C.S.

Anderson _______________________________________________________ [ 1 ] This action arises out of the purchase of a property in the neighbourhood of Wildwood in Calgary, Alberta. [ 2 ] The property backed onto Edworthy Park, which is owned by the City of Calgary. There was a fenced backyard, a portion of which was situated on Edworthy Park. [ 3 ] At the time that the Plaintiffs made the offer to purchase, on September 13, 2013, they did not know that part of the fence was on city property.

The Plaintiffs believed that the back fence delineated the property line; they thought that they were purchasing all of land that extended to the backyard fence. [ 4 ] The amount of the backyard area that is in dispute, that is, the area from the actual property line to the backyard fence, is triangular and significant - an area of 176 square meters. [ 5 ] At the time of the listing in question in September 2013(it had been previously listed three times), the property was owned by the Estate of Delores Booth. Mrs. Booth had lived there for over thirty years, until her death in 2012 .

Although parts of the fence had

been repaired, parts were original. It was old and dilapidated, and parts of it were falling down. I heard evidence that Mr. Booth may have repaired it from time to time but that he was originally a farmer and as long as it kept things in and other things out, the fence was fine. [ 6 ] The home itself was 58 years old. The Plaintiffs, since taking possession, have spent over $430,000 renovating the home. [ 7 ] Dan Geneau of Remax First was the listing agent for the Estate and two of Mrs. Booth’s children, Grant Booth and Cynthia Collens were representing the estate. Mr.

Geneau prepared a marketing brochure and MLS feature sheet that correctly set out the size of the property as 1062 square meters. [ 8 ] In September 2013, the Plaintiff Ms. Torfason, who lived in the neighbourhood with Michael Allen, whom she described as her common law husband, noticed that the property was listed for sale. She contacted her real estate agent, Ms. Elaine Sulima, and together the two of them viewed the property on September 13, 2013. Mr. Allen was out of the country at the time. [ 9 ] After viewing the property on September 13, 2013, Ms.

Sulima drafted an offer to purchase in the form of a Residential Purchase Contract and provided it to Mr. Geneau. [ 10 ] The contract set out in clause 4.4 that the seller will deliver a real property report and that the buyer must have an opportunity to review the real property report.

Further at 4.11, the contract stated that, “[a]s part of the normal closing documents, the Seller will provide the Buyer, regarding the matters described in clause 6.1, a real property report reflecting the current state of improvement on the property ... with evidence of municipal compliance or non-compliance.” [ 11 ] In Clause 6.1(e), the seller represented that the improvements on the Land do not encroach on neighbouring lands.

Clause 6.2 stated that all of the warranties contained in the contract are made as of and will be true at the Completion Day, unless otherwise agreed in writing. [ 12 ] Clause 6.4 stated that there are no other warranties or representations relating to the size/measurements of the Land. [ 13 ] Clause 10.2 of the contract stated that “the buyer may wish to obtain an independent property inspection and verify the measurements of the Land and Buildings.” [ 14 ] The offer was accepted by the sellers the next day, on September 14, 2013. [ 15 ] The purchase price was agreed at $985,000 and the Completion Day [closing date] was set for October 9, 2013.

The offer was conditional on the Plaintiffs obtaining a property inspection and approval of financing. The purchase contract was silent on the actual size of the lot. [ 16 ] On September 16, 2013, a property inspection was completed. It identified a number of defects with the home, including, among other things, issues with the garage roof, the lower deck and the front railing.

The estimated cost of the defects totaled $22,400. [ 17 ] In response to the inspection, the Plaintiffs sought and negotiated a $12,000 reduction in the purchase price, resulting in a new purchase price of $973,000. [ 18 ] An appraisal was completed by Calgary Residential Appraisals for the mortgagee to determine financing and was provided to the Plaintiffs.

The appraisal included a map of the property that showed the actual boundaries of the property and upon inspection, could have alerted the Plaintiffs to the boundary issue. [ 19 ] Conditions were then waived on September 18, 2013. [ 20 ] Both parties retained their own lawyers for the closing. [ 21 ] At the time of this transaction, in September 2013, a visual mapping software program for the Calgary real estate market was readily available and used by realtors, called GeoJet. This program identified property boundaries of lands in Calgary.

A simple (and free at the time) search on GeoJet would have disclosed the boundary of the property. [ 22 ] Mrs. Booth’s children set about to clear out the property. On October 1, 2013, eight days before closing, Ms. Collens, the daughter of Ms. Booth, was contacted by her lawyer. The lawyer informed Ms. Collens that she had reviewed the second Real Property Report and a portion of the backyard fence was on city property. [ 23 ] That same day, Ms. Collens was at the property when the Plaintiff, Ms. Torfason, came into the backyard to pick up some fallen trees. At that time, Ms. Collens told Ms.

Torfason that a large portion of the fence was on city property. [ 24 ] Ms. Torfason was very upset to learn about the fence as it meant that the backyard they were buying was not as large as she had thought. Ms. Collens was also upset and called her brother, Mr. Booth to tell him about the fence being on city property. [ 25 ] As a result of this discovery, with legal advice, the Estate reduced the purchase price of the property by a further $4000, which represented the cost of moving the fence to the correct property line and obtaining a new real property report.

This was intended to address the Estate’s contractual representation (at

part 6.1(

e) of the contract) that the improvements on the land do not encroach on any neighbouring lands as of the Completion Date. [ 26 ] In addition to the reduction in the purchase price, the Estate also offered the Plaintiffs the opportunity to repudiate the contract with a full return of their deposit. [ 27 ] The Plaintiffs rejected this offer because they still wanted the property. They instead elected to close subject to their right to pursue the Estate for the lost value of the land. By letter dated October 9, 2013, Plaintiffs’ counsel advised that the Plaintiffs intended to

close the transaction but put the Estate on notice that “the misrepresentations regarding the lot size will not merge on closing.” [ 28 ] The Plaintiffs subsequently rebuilt the fence for approximately $1500, in the same location it was before – on city property. The Plaintiffs testified that the fence was rebuilt in such a way that if the City requires them to relocate the fence – off of city property, they can do so, re-using the same fence materials. [ 29 ] A map of the area reveals that this backyard fence continues on an angle past other homes in the neighbourhood of Wildwood.

This means that other homes in Wildwood have this same issue. Although the City has not requested that the Plaintiffs remove their fence from city property, a nearby homeowner has received such a request. Findings of Facts in dispute [ 30 ] In February 2012, when the property was first listed after her mother’s death, Ms. Collens ordered a real property report (RPR). Ms. Collens had been a realtor for a number of years prior, although that was not her occupation at the time of trial or at the time of sale. When Ms.

Collens first received the real property report in 2012, there was a post-it note on it from the surveyor. The post-it note stated “gazebo must be at least one meter from house”. Ms. Collens noticed that post-it note and nothing else actually written on the RPR. As the gazebo was falling down and should have been removed in any event, Ms. Collens asked her brother, Mr. Booth to remove the gazebo, which he did. [ 31 ] Written on the first RPR itself, were two references to the backyard fence being on city property. Ms. Collens did not notice these references.

She only noticed the post-it note that referred to the gazebo encroachment. [ 32 ] After the gazebo was removed, Ms. Collens then ordered another RPR in order to demonstrate compliance. [ 33 ] Ms. Collens did not open the envelope with the second RPR, so did not review it.

She assumed that it would show that the property was compliant, as they had removed the gazebo. [ 34 ] While the first invoice (for $675) simply referenced a Real Property Report, the invoice for the second RPR, set out “Compliance Stamp $143.00 and Compliance Service Fee $50.00”, which lead her to believe that the second RPR showed the property was now compliant. [ 35 ] Unknown to Ms. Collens, the second RPR contained a new, larger, additional stamp, titled Encroachment Advisory, that set out an encroachment had been identified, referencing the backyard fence. [ 36 ] Ms.

Collens was a mildly combative witness under cross examination, in part because she was very upset at being involved in this lawsuit. [ 37 ] Regardless of this demeanour, however, I accept her evidence that she did not know that the fence encroached on city property until she was advised so by her lawyer on October 1, 2013. I accept her evidence that she did not see the stamp referencing the fence encroachment on the first RPR, despite her experience as a real estate agent. Given that the gazebo encroachment was flagged with a post it note, it makes sense that Ms.

Collens’ attention would be drawn to the gazebo encroachment and further it was also reasonable for her to assume that if there had been another encroachment on the property (such as the fence) that too would have been marked on the post it note. [ 38 ] I also accept Ms. Collens’ evidence that she did not open the envelope with the second RPR. I accept that she expected it would show compliance, as that was why she ordered the report and that is what was referenced on the second invoice. [ 39 ] Additionally, I accept Ms.

Collens’ evidence that in her years as a real estate agent she was instructed to leave the review of real property reports to the lawyers. Accordingly, in this transaction Ms. Collens provided her counsel with the second RPR to review during the transaction. [ 40 ] Having witnessed and heard Ms. Collens’ testimony, I find her actions and explanation to be reasonable. [ 41 ] I also heard from Mr. Booth, who I found to be candid and forthright. I accept his evidence that his sister, Ms. Collens, telephoned him on October 1, 2013, upset and surprised to learn that the back fence encroached on the city property.

If Ms. Collens knew about the fence when the Plaintiffs allege she did, prior to September 2013, it makes no sense that she would call her brother on October 1, 2013, upset and surprised at learning this information. [ 42 ] In light of this evidence, I find that the first knowledge either Ms. Collens or Mr. Booth had of the fence encroachment was on October 1, 2013. [ 43 ] Like Ms. Collens, Ms. Torfason was also a mildly combative witness under cross examination. Nonetheless, I accept her evidence that she believed the property they were purchasing extended to the back fence.

This is understandable as fences most often mark the boundaries of a property. I accept her evidence and that of Mr. Allen that the back yard is very important to them and that they spend a great deal of time outdoors in the back yard. [ 44 ] I also accept that the Plaintiffs had an opportunity to satisfy themselves as to the lot size and an opportunity to repudiate the contract. They instead chose to proceed with the purchase, knowing that the backyard they were actually purchasing was not as large as the backyard fence would suggest. [ 45 ] I heard evidence from Mr.

Doyle, a real estate expert called by the Plaintiffs. He opined that best practices would have required a contractual provision that the vendor provide an RPR within three days of signing the agreement of purchase and sale, before

conditions were waived. This would have given the purchasers an opportunity to ‘get out of the deal’. This evidence does not assist the Plaintiffs in their claim because their agent prepared the agreement of purchase and sale and did not follow this recommended practice. Further, and in any event, regardless of any contractual requirements, the Plaintiffs were given the opportunity to repudiate the contract knowing the actual property boundary and chose not to.

Presumably the Plaintiffs would still be in the same position and maintain this same claim had the three day contractual requirement for an RPR been included. Issues at trial [ 46 ] At the close of the Plaintiffs’ case, counsel for Dan Geneau and Remax brought a nonsuit application. The Plaintiffs consented to the nonsuit application. The trial then proceeded against the Estate only as represented by Ms. Collens and Mr.

Booth (the “Defendant”). [ 47 ] The Plaintiffs’ claims against the Defendant are framed in fraudulent misrepresentation, negligent misrepresentation and deceit. [ 48 ] The Plaintiffs allege that the clause in the contract relating to improvements not being on neighbouring lands was a representation. In addition, the placement of the fence was a representation of the boundary or perimeter of the property. It is alleged that the Estate knew or ought to have known that the fence went beyond the property line and encroached onto city property.

While the fence may easily be moved, the cost to move the fence does not address the Plaintiffs’ actual loss, which is the loss of land they thought they were buying. [ 49 ] The Plaintiffs allege that having been told of the encroachment only after they put in their offer, they lost the opportunity to negotiate a lower purchase price. [ 50 ] Plaintiffs’ counsel conceded that the doctrine of merger is applicable here and that the representations contained in the contract did not survive the closing.

He advised the Court that the Plaintiffs are not claiming breach of contract. [ 51 ] The Defendant Estate’s position is that the Plaintiffs were advised of the encroachment prior to closing, and accepted a reduction in the purchase price by $4000 to address the cost to move the fence to the property boundary. [ 52 ] With regard to the Plaintiffs reserving their rights to claim for misrepresentations as to lot size, the Estate submits that the lot size was accurately described in all marketing materials and that the contract specifically stated that there were no representations regarding the lot size. [ 53 ] If liability is found, a further issue before this Court is whether the Plaintiffs suffered any damages.

Legal Analysis Fraudulent Misrepresentation [ 54 ] The principle of caveat emptor applies with respect to the purchase of residential real estate in Alberta. This principle sets out that absent fraud, mistake or misrepresentation, a purchaser takes existing property as he finds it... unless he protects himself by contractual terms: Professor John D.

McCamus, " Caveat Emptor : The Position at Common Law", in Law Society of Upper Canada Special Lectures 2002: Real Property Law: Conquering the Complexities (Toronto: Irwin Law Inc., 2003). [ 55 ] Claims for fraudulent misrepresentation and the tort of deceit are similar, although the latter provides for damages and not just rescission . [ 56 ] In order to make out a claim for fraudulent misrepresentation or the tort of deceit, the plaintiff must demonstrate that (1) a false representation was made by the defendant, (2) there was some knowledge of the falsehood either by knowledge or recklessness as to whether it was true or not, (3) the false representation caused the plaintiff to act, and (4) the plaintiffs suffered a loss as a result: Bruno Appliance and Furniture Inc v Hryniak , 2014 SCC 8 , [2014] 1 SCR 126, at para 21 . [ 57 ] The Plaintiffs submit that a false representation arises from the representation set out under

section 6.1(

e) of the purchase contract, that none of the improvements are on neighbouring lands. A second false representation was the fence itself, whose placement delineated the property boundaries. The Defendant submits that the placement of a fence is not a representation and that, in any event, the representation under 6.1(

e) was effective as of the time of closing, and that by the time of closing the defect had been cured by the payment of $4000 to move the fence. More importantly, the Defendant maintains that the contract put the Plaintiffs on notice to satisfy themselves as to the property boundaries. The Defendant emphasizes that this contract was prepared by the Plaintiffs’ own agent, Ms.

Sulima. [ 58 ] Without deciding the first element, I consider the second element of a claim for fraudulent misrepresentation, which is whether the Defendant either had prior knowledge of the fence encroachment onto city property or were reckless as to knowledge of the encroachment. [ 59 ] First, I have found that neither Ms. Collens nor Mr. Booth knew about the encroachment until October 1, 2013, therefore the Plaintiffs have not established actual knowledge on the part of the Defendant Estate. [ 60 ] Second, with respect to whether Ms. Collens or Mr.

Booth were reckless in not knowing of the fence encroachment, I consider the Alberta Court of Appeal decision of Motkoski Holdings Ltd v Yellowhead (County) , 2010 ABCA 72 , 20 Alta LR (5th) 43 at paragraph 58 , in which the Court held that recklessness is something more than a statement “made with very great negligence.” It is not sufficient that Ms. Collens “should have known the truth or should have been more careful... actual indifference to the truth is required.” [ 61 ] On the facts before me, I cannot find that Ms. Collens or Mr. Booth were indifferent to the encroachment or boundary of the

property. They did not attempt to hide or delay the RPR. They did not live at the property, they did not build the fence – it was theoriginal fence and for reasons set out earlier, it was reasonable for Ms. Collens to assume that the second RPR would show that theproperty was compliant and reasonable for Ms. Collens to entrust the review of the RPR to her lawyer. [62] As such, I cannot find (nor infer, as the Plaintiffs ask that I do) that Ms. Collens or Mr.

Booth were reckless in not knowing ofthe property boundary. [63] The Defendant also argues that the other elements of the claim for fraudulent misrepresentation or the tort of deceit have notbeen met; however, given my finding regarding knowledge, I need not consider the other elements. However, as my later findings willshow the fourth element of this claim also fails as I have found the Plaintiffs did not suffer any loss or damages. [64] As a result, the claim for fraudulent misrepresentation is dismissed.

Negligent Misrepresentation [65] The Plaintiffs alternatively claim for negligent misrepresentation, another exception to the principle of caveat emptor. [66] It is agreed that the necessary elements to establish a claim for negligent misrepresentation are 1) a duty of care based upon aspecial relationship, 2) a representation that is untrue, inaccurate or misleading, 3) the defendant acted negligently in making themisrepresentation, 4) the plaintiffs reasonably relied on the representation, and 5) the reliance was detrimental to the plaintiffs resultingin a loss: R v Cognos Inc (SCC), [1993] 1 SCR 87. [67] With regard to the third element, the Plaintiffs maintain that there is a general duty of honesty in contractual performance.

Theparties must not lie or otherwise knowingly mislead each other: Bhasin v Hrynew, 2014 SCC 71, [2014] 3 SCR 494. Further, there is aduty not to conceal: Gladu v Robineau Estate, 2017 ONSC 37, [2017] OJ No 147. [68] In response, the Defendant first denies that it owes the Plaintiffs a duty of care regarding the placement of the fence. TheEstate’s representatives did not meet with or speak to the Plaintiffs at all prior to the offer being accepted. The Plaintiffs had their ownreal estate agent and their own counsel. [69] Second, the Defendant denies there were any untrue, inaccurate or misleading representations.

Leaving aside the fact that thecontract did not warrant the size of the lot, the representations made at the time of the offer were accurate: the actual size of the lot was1062 meters. All of the marketing documents offered a property with the size of 1062 square meters. They submit that the fence is not arepresentation and that the contract terms govern. The contract stated (at clause 6.4) that there was no warranty or representation as to thesize/measurements of the land. [70] With regard to the contract representations in

section (6.1(

e) and 6.2) that provided that at the time of closing there would beno improvements encroaching on neighbouring lands, the Defendant states that that representation was corrected when the Defendantpaid, and the Plaintiffs accepted, $4000 to move the fence to the property boundary. The representation regarding improvements wasaccurate. [71] Third, the Defendant denies it acted negligently regarding the boundary of the property by virtue of the placement of thefence. [72] Fourth, the Defendant denies that the Plaintiffs reasonably relied upon the representation.

They were notified of theencroachment and given an opportunity to walk away from the purchase, which they declined. [73] Finally, the Defendant denies the Plaintiffs have suffered a loss. They argue that the Plaintiffs offered to purchase a 1062square meter property and that is what they got. The Defendant argues that the Plaintiffs are seeking damages for the value of land thatthey did not purchase.

They are seeking a windfall. [74] I am persuaded by all of the Defendant’s arguments. [75] In addition, I note that I considered whether the Defendant was negligent by omission for not knowing the fence was on cityproperty. In Cognos, the Supreme Court stated that the standard of care required by a person making representations is an objective one.It is a duty to exercise such reasonable care as the circumstances require to ensure that the representations made are accurate and notmisleading. The Court relied upon Professor Klar’s

summary regarding the standard of care required by a person making representations,at para 55: An advisor does not guarantee the accuracy of the statement made but is only required to exercise reasonable care with respect to it. Aswith the issue of standard of care in negligence in general, this is a question of fact which must be determined according to thecircumstances of the case.

Taking into account the nature of the occasion, the purpose for which the statement was made, the foreseeableuse of the statement, the probable damage which will result from an inaccurate statement, the status of the advisor and the level of thecompetence generally observed by others similarly placed, the trier of fact will determine whether the advisor was negligent. [76] I find Ms. Collens was not negligent for not knowing the fence encroached on city lands. Ms. Collens was not responsible forthe placement of the fence.

Further, I found it was reasonable for her to believe the fence was not on neighbouring lands because shebelieved she had a compliant RPR. [77] I also find that it was reasonable for Ms. Collens to rely on her lawyer to interpret and advise her as to the contents of the RPRon October 1, 2013, prior to closing. The timing of events was in accordance with clauses 4.4 and 4.11of the contract. I am notpersuaded that there is an obligation on a seller of property to obtain and interpret a real property report at an earlier point in time, norwas I given any authority to that effect.

This is especially true in a case where the seller has retained a lawyer to represent them on thetransaction.

[78] This situation is also distinguishable from cases where the defendant is advised of a special concern of the plaintiff regardingthe property and then makes an incorrect representation about that concern: Taggart v No. 236 Seabright Holdings Ltd, 2008 BCSC 1412, 76 RPR (4th) 266. Ms. Collens was not aware that the size of the backyard was a special concern to the Plaintiffs as they did notbring that fact to her or her realtor’s attention. [79] In terms of the duty of honesty in contractual performance, I have found that neither Ms. Collens nor Mr.

Booth knew aboutthe fence being on city property prior to October 1, 2013. They did not knowingly mislead the Plaintiffs or conceal information about thefence. [80] Finally, as noted my later analysis finds there was no loss in this case, which on its own would defeat the Plaintiffs’ claim fornegligent misrepresentation. Latent Defect [81] Another exception to the principle of caveat emptor is latent defects of title.

Where real property, to the knowledge of thevendor, has a latent defect of title that cannot be discovered by the purchaser with ordinary care, then this defect must be disclosed to thepurchaser: Paul M. Perell, “Caveat Emptor and Latent and Patent Defects” (1999) 24 RPR (3d) 34 (WL). [82] On the other hand, a purchaser is not obligated to disclose a patent defect of title.

A patent defect being one “which ariseseither to the eye, or by necessary implication from something which is visible to the eye”: Stieglitz v Prestolite Battery (1980), (ON SC), 119 DLR (3d) 672, 17 RPR 188 (Ont H Ct J), at para 19, quoting Yandle & Sons v Sutton, [1922] 2 Ch 199. [83] The Plaintiffs argue that the fence encroachment amounted to a latent defect in title that should have been disclosed. Theyargue the defect was latent as the backyard contained no visual indication of the encroachment. Nor were there any encumbrancesregistered on title.

It was not a defect that the Plaintiffs could have discovered with ordinary care. The Plaintiffs submit that as they arenot realtors or surveyors they are not expected to use software tools such as GeoJet as a part of their ordinary diligence in inquiring intothe property. [84] The Defendant’s position is that it did not know of the fence encroachment, which defeats the Plaintiffs’ claim on its own. [85] Further, the Defendant argues the Plaintiffs could have discovered the defect easily by measuring the length of the propertyline set out on the MLS Feature Sheet.

The contract specifically set out that there was no representation as to lot size and put the onus onthe purchasers to verify the measurements of the lot. The encroachment was also visible and identifiable by looking at a map of theproperty or using the GeoJet software program, which was available to and known by the Plaintiffs’ real estate agent. The Plaintiffstherefore failed to exercise ordinary care in inquiring into the property. [86] The Defendant goes further and submits that as the true lot configuration was readily discoverable by the Plaintiffs, the defectin this case was actually patent, not latent.

As such, even if the Defendant had been aware of the existence of the encroachment, it had nolegal obligation to disclose its existence to the Plaintiffs: Belzil v Bain, 2001 ABQB 890, 300 AR 72, at paras 56-62. [87] Without delving into a determination of whether this was a latent or patent defect, which can be unclear especially in relationto defects in title (as opposed to defects in quality), I find that the Plaintiffs’ claim relating to a latent defect fails on the same basis astheir fraudulent misrepresentation claim failed.

Namely, the Defendant did not know about the encroachment. [88] In Temple v Thomas, 2007 ABQB 316, 76 Alta LR (4th) 128, Justice Sullivan reviewed the authorities on latent defects andconcluded that: ...a vendor who has knowledge of, or who is unaware of latent defects on his property but for his own recklessness, has a duty to disclosethem during the sale of that property. [89] I already found that the Defendant did not have knowledge of the fence encroachment prior to accepting the offer, and was notreckless in this regard. This finding defeats any claim for a latent defect of title.

Damages [90] The parties have fundamentally differing views on what damages arise from this transaction. This has resulted in the parties’experts taking very different views and approaches to assessing damages. [91] The Plaintiffs maintain that they lost the opportunity to negotiate a lower price for the property. Had they been advised of thetrue property boundary they would have had the opportunity to negotiate a lower price. [92] The Plaintiffs further maintain they did not get what they bargained for because they did not in fact purchase theencroachment area.

The Plaintiffs’ position is that their loss is the value of the land from the actual property boundary to the fenceboundary, which is the portion of the land that they thought they were buying but could not. As Ms. Torfason testified, they accepted$4000 for the cost of moving the fence but not for the loss of land. [93] The Defendant counters that the Plaintiffs had an opportunity to negotiate a lower price. They were given the opportunity towalk away from the existing deal and could have attempted to re-negotiate a lower price.

The Plaintiffs did not take that opportunity.They did not want to risk losing the property. I accept this argument and find that the Plaintiffs did not suffer a loss arising from anopportunity to negotiate a lower price. [94] With respect to the Plaintiffs’ other claim for damages, that they did not receive what they bargained for, the Defendant

counters that the Plaintiffs actually bought and received a lot that was 1062 square meters, which is the size that was represented in the materials. There was no representation that the lot was any larger than actually received. [ 95 ] Further, the Defendant notes that the purpose of damages is to put a party back to the position they would have been but for the breach. The proper measurement of damages is the difference between the price paid for the property and the actual value at the time of sale: Cubukgil v Lacasse (1989), 26 OAC 284, [1989] OJ No 1735 (Ont H Ct J) . Damages are not to be a windfall.

Here, it is argued, the Plaintiffs are looking for the value of additional land they did not buy. [ 96 ] I heard from two different experts with respect to damages. Each had a different perspective on how to view damages. [ 97 ] The Plaintiffs’ expert, Mr. Findlay attempted to quantify the impact of the unregistered encroachment on the value of the land. In other words, he attempted to estimate the value of the lot and then estimate the impact of the encroachment.

He did this by attempting to quantify the value of the area of the land in dispute - the 176 square meters (1899 sq. ft.) from the actual property line to the fence line. [ 98 ] In terms of methodology, Mr. Findlay considered 10 different properties and came up with a price per square foot for the properties he considered. The values used for some of Mr. Findlay’s comparable properties were based upon sales three years earlier and three property values were determined from sales that took place after the closing. The adjustments of the comparable properties range upwards as high as 55% to 60%. [ 99 ] Mr.

Findlay concluded that the market value of the lot was $63.42 per square foot. Based on a measurement of 1899 sq. ft, he estimated the value of the encroached land to be in the range of $30,000 - $120,000 and concluded that the mid-point, $60,000, would be an appropriate assessment of the lost land. Mr. Findlay qualified his report by stating that the opinion is a matter of judgement rather than an empirical measurement. He further stated that in his report the existing improvements were ignored and the lot was treated as if vacant. [ 100 ] Unlike Mr. Findlay, the Defendant’s expert Mr.

Code was tasked with determining the fair market value of the subject property. As a result, the two expert reports don’t answer the same question. [ 101 ] Mr. Code testified that he relied upon the direct comparison approach to valuing the property. He provided four comparable properties that sold around the time of sale with gross adjustments of 8.8%, 9.4%, 12.1% and 31.8%. He testified that adjustments are made on comparable properties to account for a number of factors including: different lot sizes; size and age of the home; specific features of the home, including renovations; and the location of the lot.

Adjustments are measured as both net and gross. The larger the adjustment, the less reliable the comparable. He testified that the 31.8% adjustment was near a range of being unreliable. [ 102 ] Mr. Code determined the fair market value was $980,000, which is more than what the Plaintiffs paid for the property ($973,000 - $4000 = $969,000). [ 103 ] Mr. Code also testified as to some concerns with Mr. Findlay’s approach. He noted that appraisers are not to use sales that take place after a sale unless there was a conditional or pending sale at the time.

As well, using sales from three years prior is unreliable because the real estate market is not static, particularly in Calgary. He also expressed concern that Mr. Findlay’s report did not explain how his adjustments were established and that his adjustments were not more specific. In considering an adjustment of 20-25%, he asks is it 20% or 25%? The standard is to provide specific adjustments in both net and gross figures. Mr. Findlay’s report does not do this. Finally, a number of Mr. Findlay’s adjustments were so high as to be unreliable. [ 104 ] Mr.

Code conceded in cross examination that more comparables are better than fewer, but only if the properties are truly comparable. The Plaintiffs take issue with Mr. Code’s comparables because only one of the properties was in Wildwood. However, in Wildwood, where properties are unique, direct comparables are difficult to find. [ 105 ] It is interesting to note however that in Mr. Code’s analysis, he unknowingly used two of the very same properties that the appraiser for financing used in its report of Sept 19, 2013. This further supports Mr.

Code’s methodology. [ 106 ] I note that the appraisal value of the property, undertaken for financing purposes and completed just prior to the closing, set the market value of the property at $973,000. [ 107 ] In considering the evidence of the experts, I preferred the evidence of Mr. Code over that of Mr. Findlay. Where their evidence conflicts, I accept Mr. Code’s evidence. [ 108 ] Mr. Code was not asked to value the land only, and particularly the value of the land from the property line to the fence. Instead he valued the titled land.

He conceded that a significant portion of the value of this land is in the lot itself. Had he been asked to value just the encroaching area, he testified that the correct method to use would have been a “paired sales approach.” Mr. Findlay, however, did not use that approach. [ 109 ] I accept the evidence of Mr. Code and prefer his evidence and methodology over that used by Mr. Findlay. Given the significant adjustments and failure to explain the reasons for the adjustments, I do not find Mr. Findlay’s report to be particularly helpful in assessing damages. [ 110 ] Based upon Mr.

Code’s appraisal of the property, I conclude that the Plaintiffs did not suffer any damages. [ 111 ] The Plaintiffs have failed to prove any loss or damages and this alone defeats their various claims. [ 112 ] Had I found liability on the part of the Defendant, I would have set the Plaintiffs’ damages at a nominal amount, given my concerns with Mr. Findlay’s report and given the values arrived at by both Mr. Code and the appraisal for financing completed by Calgary Residential Appraisers.

Summary [ 113 ] I would dismiss the Plaintiffs’ action for failing to establish a claim against the Defendant. Had I found liability, I would have set the Plaintiffs’ damages at $1000 . Heard on the 20 th , 21 st , 22 nd , 23 rd and 24 th day of March, 2017. Dated at the City of Calgary, Alberta this 16 th day of June, 2017. C.S. Anderson J.C.Q.B.A. Appearances: A. Chowdhury and M. Tomos (Student-at-law) for the Plaintiffs S. McGurk and M. Corbett for the Defendants; Grant Booth, Cynthia Collens and the Estate of Donna Booth J. Doyle and J. Martinelli For the Defendants; REMAX Real Estate Calgary, RE/MAX First and Daniel Geneau