Khalil v Durant, 2021 ABQB 241

Court of Queen’s Bench of Alberta Citation: Khalil v Durant, 2021 ABQB 241 Date: 20210329 Docket: 1001 12325 Registry: Calgary Between: Alex Khalil Plaintiff - and - Jo-Anne Durant Defendant _______________________________________________________ Reasons for Decision of the Honourable Mr. Justice D.A. Labrenz _______________________________________________________ I. Background [ 1 ] By reason of a successful

summary judgment application finding the defendant liable to the plaintiff for a breach of a contractual warranty in a real estate purchase agreement, I am tasked with assessing the quantification of damages in a transaction gone so far wrong that, in the end, neither party owns the land in question. The issue of liability was determined in a

summary judgment application brought before Master Prowse ( 2018 ABQB 17 ) and upheld on appeal by Justice Eidsvik ( 2018 ABQB 473 ). [ 2 ] Initially, two realtors were also parties to this proceeding. On August 8, 2019, the two realtors settled with the plaintiff by way of a Pierringer Agreement.

On October 30, 2019, Justice Nation approved the settlement subject to the defendant’s right to seek a determination of the degree to which the realtors were at fault for the plaintiff’s damages ( [2019] AJ No 1799 ). [ 3 ] The parties filed a Statement of Agreed Facts which I will reproduce in toto , omitting references to the Agreed Trial Exhibits: 1 The defendant Joanne Durant [“Durant”] was the registered owner of lands municipally known as 5032 and 5036 – 38 Street, Sylvan Lake, Alberta [collectively, “Lands”] from October 22, 1992 until June 2, 2008. 2 When Durant purchased the Lands, (a) 5032 38 th Street Sylvan Lake Alberta [“5032”] had a garage located on it; (b) 5036 38 th Street Sylvan Lake Alberta [“5036”] had a house located on it; and, (

c) The garage on 5032 was a two-story building. 3 Following Durant’s purchase of the Lands, her brother, Robert Decker [“Decker”], lived in the house located on 5036. 4 While he resided in the house on 5036, Decker, with Durant’s knowledge and permission, modified the second floor of the

garage located on 5032 to include plumbing and added additional lighting to create a suite [“Suite”]. 5 The garage had a small balcony during the time that Durant owned the Lands, which was not added by either Durant or Decker. 6 The Suite was first used as a residence by Durant and Durant’s family when visiting.

After Decker’s passing, the suite was subsequently rented out by Durant and she received irregular rental income from it after 2001 up until the Lands were sold by Durant. 7 Durant was never aware whether the Town of Sylvan Lake [“Town”] approved the Suite or whether the use of the Suite was in accordance with the Town’s Land Use Bylaw. 8 Durant has two university degrees, which she obtained in the 1960’s: a Bachelor of Arts and a Bachelor of Education which she obtained from the University of Saskatchewan and the University of Regina. 9 Durant was a teacher for 30 years, predominantly teaching high school. 10 Durant initially retained Angora Lam [“Lam”] of Kingsland Realty Ltd. [“Kingsland”] to sell the Lands. 11 Lam suggested to Durant that Durant jointly retain a realtor who lived in the Sylvan Lake area, Bill Taylor [“Taylor”] to assist with the listing and sale of the Lands. 12 Taylor was initially working under the Royal LePage Endeavor brokerage, but moved to Century 21 Global Real Estate Inc. [“Century 21”]. 13 Durant entered into a listing agreement in October, 2007 with Kingsland and Royal LePage Endeavor for the sale of the Lands [“First Listing Agreement”]. 14 Durant entered into a second listing agreement in March, 2008 with Kingsland and Century 21 for the sale of the Lands [“Second Listing Agreement”]. 15 On April 28, 2008, Durant received an offer [“139 Offer”] from a numbered company, 1393981 Alberta Ltd. [“139”] for the Lands.

The representative of 139 was the plaintiff Alex Khalil [“Khalil”]. 16 On April 29, 2008, as part of the 139 Offer, Durant completed a disclosure statement [“Statement”] with respect to the Lands. 17 The 139 Offer was terminated on May 9, 2008. 18 On or about May 16, 2008, Khalil entered into a Real Estate Purchase Contract [“Contract”] with Durant for the purchase of the Lands by Khalil for $620,000.00. 19 On June 2, 2008, title to the Lands was transferred to Khalil. 20 On June 2, 2008, Khalil caused to be registered against title to both 5036 and 5032 a mortgage to Calvert Home Mortgage Investment Corporation as Instrument Number 082 229 167 [“Calvert Mortgage”] for the sum of $592,870 [“Calvert Funds”].

The Calvert Funds were used to partially finance the purchase of 5036 and 5032. 21 On August 29, 2008, Khalil caused to be registered against title to 5036 a mortgage to the Bank of Montreal as Instrument Number 082 377 554 [“BMO Mortgage”] for the sum of $496,000. 22 On December 8, 2008, Khalil caused to be registered against title to 5036 and 5032 a mortgage to First Choice Capital Corporation as Instrument Number 082 532 204 in the sum of $936,812 [“First Choice Mortgage”].

The First Choice Mortgage was a blanket mortgage that covered eight properties owned by Khalil at the time. 23 On December 31, 2008 Khalil caused to be registered against title to 5032 a mortgage to Canadian Western Trust Company as Instrument Number 082 556 282 [“CWT Mortgage”] for the sum of $218,000. 24 On January 21, 2009, the Calvert Mortgage was discharged from title to 5032. 25 On February 6, 2009, Khalil caused to be registered against title to 5032 a mortgage to Olympia Trust Company as Instrument Number 092 039 635 [“Olympia Mortgage”] for the sum of $142,000. 26 On August 18, 2009, a Stop Order pursuant to the Municipal Government Act was registered against title to 5032 as Instrument Number 092 287 687 by the Town. 27 On November 25, 2009, Khalil caused to be registered against title to 5032 a mortgage to J.N.P.

Investments Ltd. as Instrument Number 092 425 705 [“JNP Mortgage”] for the sum of $60,000. [ 4 ] Some additional facts are required. [ 5 ] Prior to the purchase, Khalil twice visited 5032 two times in the company of Taylor and on one of those occasions, Stirling Bott, a building safety codes officer, attended the property with both men. Bott frequently conducted safety code inspections on behalf of the Town, but was not acting in that capacity when he visited 5032 with Khalil and Taylor. The nature of the discussions among these three men are the subject of some dispute between the parties.

Justice Eidsvik summarized the controversy as follows at para 8 of her decision:

Mr. Bott, a safety codes officer who was often hired by the Town to do safety code inspections, met with [Khalil] and Mr. Taylor on May 5, 2008 at [5032]. Mr. Bott swore that he advised [Kahlil] and Mr. Taylor that [5032] could not be used as a residence and was otherwise uninhabitable unless certain safety code requirements were met. [Khalil] does not recall this advise – but does recall being advised that the foundation may have some issues in terms of potential development. Mr. Taylor confirmed that Mr.

Bott showed [Khalil] the back of the garage and the foundation and told him that there was “stuff” that would not comply and that he would have to go to the Town to get permits. [ 6 ] Following his purchase of the Lands, Khalil hired someone named Leo to undertake certain repairs and upgrades in preparation for renting 5036 and 5032.

In late June 2008, Leo was approached by a bylaw officer from the Town and served with a letter indicating that a building or development permit was required. [ 7 ] Khalil did not apply for a permit at that time and on July 22, 2008 was served with a Stop Order that was successfully registered against title to 5032. Khalil then applied for a permit, which was denied.

He unsuccessfully appealed the denial. [ 8 ] Khalil did not agree with the denial of a permit and continued to undertake repairs to the Suite until December 2008 when he was served with further process from the Town demanding that he stop his efforts at repairing or upgrading the property. He applied again in January 2009 for a permit, which was granted subject to a number of conditions. Khalil’s appeal from that decision was denied in April 2009. [ 9 ] In late 2009, Khalil entered into what he suggests was an agreement to sell 5032 for $441,000 to Mark Neal, a tradesman who had done renovation work for Khalil.

That transaction did not ultimately close. [ 10 ] The CWT Mortgage, the Olympia Mortgage and the JNP Mortgage were all were obtained through companies owned by Khalil’s business associate, Jeff Proudfoot. After the failed transaction with Neal, Khalil defaulted on all of these mortgages and Proudfoot’s companies foreclosed. The foreclosure resulted in recovery of $190,000, leaving Proudfoot’s companies with an unrecovered loss. II.

Damages Assessment [ 11 ] Given the complexity of argument, and in the absence of a common approach by the parties to quantification of damages, it is useful to reproduce some basic principles. [ 12 ] As a starting point, I look to what is meant by the compensation as a measure of appropriate damages.

In McGregor on Damages , 17 ed. (London: Sweet & Maxwell, 2003) at 1-022, the author states that the general rule has stood the test of time and quotes as follows from Lord Blackburn in Livingstone v Rawyards Coal Co. (1880) 5 App Cas 25 at para 39 : [The measure of damages is] that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation. [ 13 ] McGregor goes on at 1-024 to note that this general compensatory principle is subject to a number of limitations: The general rule is, however, only a starting point, for upon it a number of important limits are engrafted which may result in the claimant recovering less than the amount which would put him in the position he would have been in had the tort or breach of contract never been committed.

Rigorously to insist upon such full compensation would be too harsh upon defendants. The loss for which the claimant will be compensated is cut down by a variety of factors: thus he cannot recover damages for that part of the loss due to his contributory negligence, nor for such loss of which the defendant’s conduct is not the cause, nor for such loss which is not within the scope of the protection of the particular tort or contract, nor for loss which he should have avoided, nor for loss which is too uncertain, nor for some past and prospective losses. [ 14 ] Paul M.

Perell (now of the Ontario Superior Court of Justice) helpfully reviewed the approach to damages in the specific context of real estate land purchase agreements. In Remedies and the Sale of Land , 2d ed (Toronto: Butterworths, 1998) (“Perell Remedies”), consistent with McGregor, he states at 183-4: Certain classic principles of contract and tort law guide the resolution of damage claims. In contract, the general goal of an award of damages is to use money to put the innocent party in the same position as it would have been if the contract had been performed.

This is sometimes described as protecting the expectation interest of the injured party, and the innocent party may be entitled to compensation for consequential losses that would not have occurred but for the breach of contract.

Refinements of these general goals are accomplished by the general principles that compensable losses must have been reasonably foreseeable at the time of contracting, they must be unavoidable, which characteristic is known as the principle of mitigation, and there must be certainty in their proof. [ 15 ] Similarly, in Real Estate Transactions , 2d ed (Toronto: Canada Law Book, 2014) (“Perell Transactions”) he states at 283: When a contract for the sale of land fails to close because of the default of one of the parties, the other party’s expectations will have been disappointed.

In contract law, an award of damages addresses the disappointment in expectations and compensates by using money to put the innocent party in the same economic position in which he or she would have been had the contract been performed.

This goal for damages is refined and qualified by requirements that, to be recoverable: (1) the damages must be reasonably foreseeable; (2) they must be unavoidable in the sense that the innocent party is treated as if [he] had an obligation to take reasonable steps to avoid loss; that is, to mitigate; and (3) the damages must be proved with some certainty. [ 16 ] Of particular importance when quantifying Khalil’s damages is the question of consequential damages.

McGregor addresses this issue at 6-144 and 6-146: ...the scope of protection [of the general rule] is marked out by what was in the contemplation of the parties. [Initially], no general rules

as to whether damages might be too remote had been formulated, and, as Asquith J. J. put it in Victoria Laundry v Newman : “this purpose, if relentlessly pursued, would provide him [the claimant] with a complete indemnity for all loss de facto resulting from a particular breach, however improbable, however unpredictable”. ...

In Hadley v Baxendale , [the Court stated]: “We think the proper rule in such a case as the present is this: where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e. according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.

Now, if the special circumstances under which the contract was actually made were communicated by the claimants to the defendants and thus known to both parties, the damages resulting from the breach of such a contract, which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances so known and communicated.

But, on the other hand, if these special circumstances were wholly unknown to the party breaking the contract, he, at the most, would only be supposed to have had in his contemplation the amount of injury which would arise generally, and in the great multitude of cases not affected by any special circumstances, from such a breach of contract.

For, had the special circumstances been known, the parties might have specially provided for the breach of contract by special terms as to the damages in that case; and of this advantage it would be very unjust to deprive them. [ 17 ] In Perell Remedies, consequential damages are discussed as follows at 203-4: In addition to losing the benefit of its bargain and income losses, the innocent party may suffer other losses as a consequence of the guilty party’s failure to perform.

These consequential damages are recoverable, subject to limiting factors of causation, reasonable foreseeability, mitigation and adequate proof. Of these factors, the most problematic is reasonable foreseeability, based on the principles from the classic case of Hadley v Baxendale . The rule developed from this case differentiates between (

a) damages that are contemplated because the parties specifically addressed the consequences of a breach, the special knowledge cases, and (

b) damages that are contemplated as a matter of general knowledge or expectations. The latter type of case raises policy issues because what is reasonably foreseeable is a matter to be determined by the court as a matter of fair compensation and is not necessarily concerned with what the parties in fact contemplated. When a court decides that the type of head of damage claimed is not within the special or general knowledge of the parties, then it will deny recovery on the grounds that the damages are too remote.

Not surprisingly, judgments about a particular type of consequential damage are not uniform, and the results depend very much on the particular facts of each case. In cases arising from failed real estate transactions, a variety of consequential damage claims have been successful... [ 18 ] One additional factor bears mentioning here. In a breach of contract case, damages are payable to the innocent party for losses suffered by that party, not by another party not privy to the contract. While this may seem self-evident, it is an issue on this assessment.

Durant refers to the decision of the British Columbia Court of Appeal in Vancouver Canucks Limited Partnership v Canon Canada Ltd , 2015 BCCA 144 at para 146 : A party claiming a loss bears the onus of proving that a loss has occurred and the value of that loss. Where there is evidence available to prove its loss, it is incumbent on the plaintiff to lead it. If it fails to do so, leaving no basis for assessment, the court may ... decline to make an award of damages. [ 19 ] With these principles in mind, I turn now to the various heads of damages claimed by Khalil. A.

Out of Pocket Costs [ 20 ] Khalil claims $9,788.63 in out of pocket expenses for legal, professional and administrative fees paid in his attempt to secure permission from the Town to use the Suite as a residence. [ 21 ] Conceptually, this head of damages seems reasonable. Khalil purchased the Lands specifically intending to rent the Suite as a residence.

Had he been successful in persuading the Town to permit this, he would have been in the position intended under the Contract. [ 22 ] Durant, however, raises several specific objections to Khalil’s claim for out of pocket expenses, with the major objection found in Durant’s argument that the expenses were not actually incurred by Khalil, but instead by various corporate bodies. [ 23 ] First, Khalil claims $1407.38 for building permits and produced a receipt from the Town in support of that amount. The receipt, however, was issued to 1532219 Alberta Ltd. Khalil testified that this corporation is owned by Proudfoot.

Durant asserts that there is no evidence that Khalil reimbursed the corporation for this amount and therefore takes the position that Khalil has failed to prove that he suffered this loss. [ 24 ] Khalil’s position is that he reimbursed the corporation for this amount and, therefore, is entitled to claim it as damages. At trial, however, his evidence on the point was vague: Q All right. Well, now, if we look at this first one, it says the receipt is for a company called 1532219 Alberta Ltd. A Yes. Q Who’s that?

A I believe that’s Mr. Proudfoot’s company. Q Now, so what was – what – these expenses are ones we’ve talked about that you incurred? A Yes. Q And they related to the garage? A Yes. Q So why was this company paying them? A Well, like I said, Jeff and I were – Mr. Proudfoot and I were kind of working together on this. And, you know, my – I mean my finances were – because of this situation, my finances were very tight. And so he had – my recollection is he had sort of paid this just to sort of make sure we weren’t – you know, things were progressing.

And then I – I – I reimbursed him either by way of repaying him or by way of advancement – further advancement on the mortgage. [ 25 ] I am not satisfied on this evidence that Khalil incurred this expense and suffered the resultant damage. Khalil gave this evidence in November 2019, years after filing his initial Statement of Claim. Khalil had no notes or other documentary evidence in support of his rather vague “recollection”. [ 26 ] As correctly stated by the Court in Vancouver Canucks , the plaintiff has the onus of proving his loss.

The basic damages principles that I have reviewed require the plaintiff to do so with reasonable certainty. While the amount of this expense has been established with certainty, I am uncertain that Khalil actually paid this expense. I would also note that while Khalil says that he reimbursed Proudfoot, the actual expense was incurred by 1532219 Alberta Ltd. [ 27 ] As will be reviewed more fully later in my reasons, Khalil testified that he feels obliged to make Proudfoot “whole”. However, in relation to this expenditure, Khalil did not reference this obligation to Proudfoot in his testimony.

Rather, as his reproduced evidence verifies, Khalil suggests that he has reimbursed Proudfoot in some manner. I find that the record before me is not sufficient to establish that Khalil reimbursed Proudfoot for this expense, let alone that he reimbursed the payor company. [ 28 ] Accordingly, I decline to award this amount as damages. [ 29 ] Similarly, Khalil claims $3900.00 for a water main connection, but the receipt he has provided indicates that this amount was paid by JNP Investments Ltd., another of Proudfoot’s companies.

Again, Khalil testified that Proudfoot made this payment on his behalf, but provided no other evidence of reimbursement. For that reason, I decline to award this amount as damages. [ 30 ] Next, Khalil claims three payments of $150.00 each for development permit fees. One of the receipts for these payments shows that he paid it personally and Durant concedes that it is a legitimate expense. The other two receipts show payment by Calcorp Ltd., one of Khalil’s companies, and nothing in the record before me substantiates reimbursement of these amounts by Khalil.

Consequently, I award as damages only the $150.00 paid by Khalil personally. [ 31 ] Khalil claims a payment of $918.35 to Straightline Drawing for structural drawings associated with the development permit. He has provided a copy of a cheque for payment of this amount, but the cheque was from Calcorp Ltd. and no evidence of reimbursement by Khalil was provided. Therefore, I decline to award this amount. [ 32 ] Next, Khalil claims $750.00 for engineering drawings done by his father. He has provided an invoice with his name set out under “Billing Address” and indicating that payment was made.

Durant takes the position that Khalil has not proven that this expense actually was paid and characterizes the invoice as “suspicious”. [ 33 ] While it would have been better if Khalil had provided better evidence of payment, such as a copy of a cheque or similar banking information, I am prepared to accept the invoice at face value and I award $750.00 in damages for this item. [ 34 ] Finally, Khalil claims $2362.50 in legal fees for an account rendered from Miller Thomson LLP. It is clear on the face of the account that the legal services rendered were in respect of the permit issues with the Town.

Durant, however, asserts that the account was paid with proceeds from the JNP Mortgage. Since Khalil has admitted that he did not repay this mortgage, Durant argues that he has suffered no loss in respect of this payment. [ 35 ] I do not accept Durant’s argument. Unlike some of the other items in question, this invoice clearly was issued to Khalil personally and I do not think it appropriate to look behind it to determine the source of the funds used to pay it. Therefore, I allow this amount. [ 36 ] In the result, I award Khalil damages in the amount of $3262.50 for out of pocket expenses. B.

Cost of Remediation/Diminished Value [ 37 ] As noted above, the fundamental principle of damages is that a plaintiff is entitled to compensation that will place him in the position he would have been but for the breach of contract. Such damages may be quantified in one of two ways. The first approach is to award the plaintiff the monetary damages necessary to remediate the property such that it would be in the condition it was contractually warranted to be.

The second approach is to award an amount of damages representing the difference between the amount paid and the diminished value of the property as received. [ 38 ] In this regard, Waddams states at 1.2310:

A question commonly arising in all these kinds of cases is whether the plaintiff’s loss should be measured by the cost of restoring theproperty or by the diminution of its capital value. [39] Similarly, Perell Remedies states at 207-8: The conflict is between using the difference in capital value versus the cost of replacement as the measure of damages for the breach ofwarranty or condition. ... Either measure may be correct.

It will depend on the circumstances of the particular case as to which measure should be selected as themeans to put the plaintiff in the position he or she would have been had the contract been performed. If the plaintiff can establish that thecost of replacement is appropriate because, for instance, the plaintiff has incurred or will incur this expense and it is not unreasonable todo so, then the cost of replacement may be awarded.

However, if effecting a repair can be seen to be a simple waste of money or anattempt by the plaintiff to obtain a windfall by an award of damages, then the plaintiff’s real loss is the diminution in value caused by thebreach. The fact that either measure may be appropriate and that there is no absolute rule has been recognized in a number of moderncases. [40] There are cases in which various courts have awarded damages for both the cost of repair or remediation and diminishedvalue. In such cases, however, there was evidence that the value of the property was reduced notwithstanding repair.

For example, in618369 Alberta Ltd v Canadian Turbo

(1993) Inc, 2004 ABQB 283, the plaintiff’s property was damaged by a leak from aneighbouring gas station. While the successor owner of the gas station entered into an agreement to remediate the plaintiff’s land, theplaintiff claimed a diminution in value even after the remediation. Rowbotham J (as she then was) awarded damages for the residualdiminished value of the property and made these comments at para 39: The plaintiff alleges that there has been a diminution in the value of the property for which it should be compensated. This is in additionto the cost of remediation; which cost has been borne by Shell.

The principles applicable to this claim were stated in TridanDevelopments Ltd. v. Shell Canada Products Ltd. (2000), 35 R.P.R. (3d) 141 (Ont. S.C.J.) at para 68: In certain cases, even after repair, the value of the property is less than it was originally. When this occurs, the owner is entitled to thecost of restoring the property and to an additional amount to compensate for the residual deficiency: [Waddams]. As stated in the EnglishCourt of Appeal by Roskill L.J. in Payton v. Brooks, [1974] R.T.R. 169 (Eng.

C.A.) at p. 176: In a case where the evidence justifies a finding that there has been, on top of the cost of repairs, some diminution in market value – or, toput the point another way, justifies the conclusion that the loss to the plaintiff has not been fully compensated by the receipt of the cost ofcomplete and adequate repairs, because of a resultant diminution in market value – I can see no reason why the plaintiff should bedeprived of recovery under that head of damage also. This is also good law in Canada.

The plaintiff is entitled to the cost of repairing the property and any difference in value between itsformer worth and that of the property when repaired: see e.g. Porteous v. Chotem (1920), (SK CA), 51 D.L.R. 507(Sask. C.A.) and Walter v. Seibel, (SK CA), [1927] 2 D.L.R. 1005 (Sask. C.A.). (An appeal of Tridan to the Court of Appeal was allowed at (2002) (ON CA), 154 O.A.C. 1, 57 O.R. (3d) 503.Leave to appeal to the Supreme Court of Canada was dismissed on November 21, 2002 without reasons, [2002] S.C.C.A.

No 98.) Theappeal court disagreed with the trial judge’s conclusion as to stigma damages, but did not disagree with these general principles.) [41] All of the evidence before me clearly demonstrates all that was required to make the Suite compliant was to move the garageto a different location on 5032.

The Town passed a motion to permit use of the Suite subject to the following Development PermitConditions: DP 006-2009 – 5032 38 Street Change in Use (Accessory Use to Residential) Requiring Rear Yard Setback Relaxation MOVED by Donna Mae Roth that the Municipal Planning Commission approve Development Permit #006-2009 for the change in useof the building located at 5032 38 Street (accessory to residential use) subject to the following terms and conditions: 1. This permit is being granted only for the development of a single detached dwelling.

Any additional development or change in useshall require prior approval of a separate permit. 2. The developer ensuring the following minimum setbacks are maintained from property lines:

i) minimum 6.0 m front yard; ii) minimum 1.2 metre side yard and; iii) minimum 10.0 metre rear yard. 3. The developer ensuing the development is consistent with other developments in the vicinity with the front of the building facing 38th Street. 4. The developer ensuring that the dwelling is orientated to the front of the property and is in keeping with the streetscape of

developments in the vicinity and that a revised site plan be provided to the satisfaction of the Development Officer. 5. The developer ensuring:

i) the proposed development complies with all Federal, Provincial and Municipal statutes, regulations, codes and standards. ii) the proposed development complies with the Alberta Building Code. iii) the proposed development complying with the provisions of

Schedule C, pertaining to the R5 – Narrow Lot General Residential District of Land Use Bylaw #1307/2003, and amendments thereto. iv) the development commences within twelve (12) months from the date of approval and is complete within twenty four (24) months from the date of approval.

v) the property is graded so that storm water does not drain onto adjoining properties. vi) the property is serviced in accordance with the minimum standards of the Town and that the necessary Water and Sewer Permits are obtained. vii) adequate parking is provided for this use and shall be in accordance with

Schedule B, 3(1) of the Town’s Land Use Bylaw. If parking is to be provided by way of 38 th street, all parking areas shall be hard surfaced. [ 42 ] Accordingly, had Khalil moved the garage, he would have obtained the necessary permit to use the Suite. This would have put Khalil in the position intended by the land purchase Contract with no residual diminution in the value of 5032. [ 43 ] However, Khalil has claimed both the cost of remediation (being the cost to move the garage, as discussed infra ) in addition to an amount for the diminished value of 5032. This is inappropriate.

To claim both measures of damages is akin to seeking the same compensation calculated two different ways, and doing so results in unsupported double counting. As the Court stated in Forbes v Morrison , 2014 SKQB 40 at para 175 , “Plaintiffs are entitled to be fully compensated for their losses, but they are not entitled to be doubly compensated.” While Durant’s counsel did not raise this objection in his closing argument, I am not prepared to make an award that is so contrary to established principles.

As a result, I must determine which measure of compensation is appropriate in this case. [ 44 ] In fairness to the plaintiff, Khalil’s counsel indicated at trial that the figures for diminished value in their brief were in error and should have been reduced by the cost of remediation. While I appreciate counsel’s efforts to represent the claim accurately, this approach still conflates the two possible measures of compensation.

In the absence of evidence of residual diminished value, I must choose between the two available options as an appropriate measure of damages, and not combine them as suggested on behalf of Khalil. [ 45 ] Having been unsuccessful in obtaining permission from the Town to use the Suite as a residence as situated on the property, Khalil did take some steps to move the garage to make it compliant with the setback requirements. To that end, Dusty Dukes Ventures Inc. (“Dusty Dukes”) was engaged to move the garage at a price of $55,000, $25,000 of which was to be paid as a deposit.

I have no other evidence before me as to the cost of moving the garage. Unfortunately, the work was not done and Dusty Dukes absconded with the $25,000 deposit.

Nevertheless, Khalil claims this cost as damages, stating in his brief: As much as Khalil did not complete this work, such completion is not required: the measure of damages must include the amount it would have cost to have the garage moved to comply with the Land-Use Bylaw, the state it was represented to be by Durant. [ 46 ] Some legal authorities suggest that a plaintiff ought not be awarded damages for the cost of remedial work where the work has not been, and will not, be done.

These cases suggest that it may be more appropriate in such circumstances to award damages based on the diminished value of the property. In Green View Homes Ltd v Larssen , 2006 BCSC 685 at para 10 , the Court stated: At page 10 [of Farmer Construction v Doncaster Holdings Ltd (1990) 46 CLR 80 ], Millward J. said: I find that the general approach used by the courts to determine damages in cases of defective buildings is either to assess damages based on the cost of repair or the diminution in the value of the building as a result of the defect.

I am satisfied that in determining which of the two tests it will use, the court may consider whether the evidence indicates that the party claiming for the cost of repairs actually intends to carry out the repairs.

If it is apparent that the party claiming for repairs does not intend to carry out those repairs, the court may then adopt the diminution in value approach to determine the amount of the award, if any. [ 47 ] On the other hand, the Court in Charles Bentley & Associates Inc v Violetis (cob Olymbia Contractor Co) , [1993] OJ No 1056 , while coming to the same conclusion, referred to McGregor on Damages , 14 th ed, para 1001 as follows: The face that the repairs have not yet been executed before the hearing of the action, or will never be executed at all, does not prevent the normal recovery.

Since damages may on general principles be given for prospective loss, it is immaterial that the repairs are not yet executed. [ 48 ] Turning my attention to the diminished value option, Khalil called two witnesses to speak to the value of the Land: Neal and Prabhdeep Singh Gill [“Gill”]. [ 49 ] Khalil asserts in his brief that “the best and only evidence before the Court of the fair market value of 5032 with a residence in compliance with the Land-Use Bylaw was the amount proposed to be paid under the Neal Contract of $441,000.

The actual value of 5032 at the time is best reflected by the amount recovered by Proudfoot through the foreclosure of $190,000. When that figure is deducted from the Neal purchase price of $441,000, the measure of damages is $251,000.” As I have just noted, Khalil took the position at trial that this amount should be reduced by $55,000.

[ 50 ] Durant takes issue with these figures and asserts that the contemplated sale was not a bona fide transaction. She points to Neal’s evidence that he refused to complete the transaction because he became concerned that he might be doing “something illegal” and “could be left holding the bag”. Khalil points out that, on cross-examination, Neal acknowledged his signature on the contract and that he knew he needed to be the owner of the property in order to qualify for a mortgage on it. [ 51 ] In my view, Neal’s evidence is wholly unsatisfactory as support for the asserted value of 5032.

I found Neal a straightforward witness who was doing his best to testify as to what he knew. However, he was often confused and it was abundantly clear to me that he had little understanding of the transaction in question, either at the time, or during his testimony. The following excerpts from Neal’s testimony serve to illustrate this: A [Khalil] wanted me to – well, he would put the down payment, give me 5,000. I would qualify for that mortgage and then he would buy it back from me, because we were going to move it and it would sell as a separate property within a year or so. ...

Q And so was there any back-and-forth with respect to the price that was to be paid? A The price that was to be paid for the actual Sylvan Lake, there was – no, I had no discussion on anything to do with the Sylvan Lake property. I did not sign any documents to do with Sylvan Lake, and it was put in on top of the mortgage that I was getting for the downtown condo... ... Q Do you recall any discussions with Mr. Khalil about having to extend the proposed purchase in Sylvan Lake for a period of time?

A The conversation that I had about the Sylvan Lake property was limited to, basically, I’ll give you 5,000 to go qualify for this mortgage and I’ll help you have the income to qualify for the mortgage, and it’s already set up for you at the T-D Bank. So that’s it. And then I was going to go to the lawyers to sign, and then I had the warning from the executive secretary, and I chose not to sign any documents for Sylvan Lake. ... Q [cross-examination] and this document sells the property to you, correct? A If you say so.

I don’t - I don’t recognize an agreement of any kind towards Sylvan Lake having been signed by me. Q Okay. But – A This was strictly a verbal thrown on top of my other mortgage that I was getting for the condo. [ 52 ] In his brief, Khalil argues that the sale to Neal did not proceed because Khalil was not able to provide the clear title required for Neal’s financing. Neal’s evidence did not consistently support such an argument: Q Isn’t it possible, sir, that she was telling you that because of the stop order, the financing couldn’t go ahead? A I wouldn’t know that, sir. Q What’s that? A I wouldn’t know that.

Q Yeah. So, if she was saying, There’s a stop order. The financing can’t proceed with this property until it’s off, that would have caused you concern, because you don’t know what a stop order is? A No, that would have been a technicality that I may have remembered, that there was a stop order. I only remember her warning me that I was doing something that I didn’t think – that she didn’t think I knew I was doing and that I should think about it, because I may be left holding the bag on something illegal, and that’s – Q Okay. But – A - that’s what I remember.

Q But do you remember a conversation in the lawyer’s office where there was a discussion about the stop order getting in the way of being able to do the transaction? A No, sir. Q You don’t recall that? A I have never heard of a stop order in any transactions dealing with him. [ 53 ] While I am not prepared to go so far as to make a finding that this transaction was fraudulent, I am not satisfied that the contemplated purchase price represents a genuine negotiation between Neal and Khalil such that it may be relied upon as a measure of fair market value of 5032.

[54] Alternatively, Khalil argues that the diminution in value of 5032 may be gleaned from the expert evidence provided by Gill,which suggested that the value of 5032 in 2008 was $150,000. [55] Durant responded by arguing that Gill was unconvincing and that his appraisal was superficial and deficient. [56] I do have some concerns with Gill’s evidence.

In my view, parts of his approach, including the 10% adjustment he applied andthe zoning of the comparable he used, were inadequately explained. [57] Moreover, even if I accepted Gill’s value for 5032, it does not follow that Khalil’s calculation of the diminished value isreasonable. Khalil purchased the Lands for $620,000 and attributes half of that value, or $310,000, to each of 5036 and 5032. I agree withDurant that this approach is not supportable given that 5036 had a house situated on it while 5032 had only the garage.

Indeed, Khalil’scounsel acknowledged this argument at trial and stated that the plaintiff would not disagree with an adjustment to the allocation. I havenot, however, been provided with an evidentiary basis upon which to arrive at a different allocation. [58] In the further alternative, Khalil argues that the value of 5032 is measurable by the amount Proudfoot obtained for it throughforeclosure, being $190,000. There are two problems with this. First, as Durant points out, the foreclosure occurred in 2011 and I am notprepared to assume that the value of 5032 was the same at the time of the purchase in 2008.

Second, even if I accept $190,000 as thevalue of 5032, I am left with the same question as to the appropriate allocation of the $620,000 purchase price as between 5036 and5032. [59] On the whole, I find the evidence of diminished value unpersuasive. [60] It is clear from the case law that the appropriate measure of damages will depend upon the circumstances of the particularcase. In Dolly Varden Mines Ltd (NPL) v Sunshine Exploration Ltd, (SCC), [1970] SCR 2, Martland J for the Courtmade these comments: In British Westinghouse Electric and Manufacturing Company Limited v.

Underground Electric Railways Company of London,Limited, [1912] A.C. 673, Lord Haldane at pp. 688-9 stated: ...The quantum of damage is a question of fact, and the only guidance the law can give is to lay down general principles which afford attimes but scanty assistance in dealing with particular cases. ...

The following passage from the speech of Lord Du Parcq at p. 232 [of Monarch Steamship Co, Limited v Karlshamns OljefabrikerA/B, [1949] A.C. 196] puts the particular rules for measuring damages in their proper light, as simply methods of solving what is after allessentially a question of fact, and that this application must vary according to the circumstances of each case: ...Circumstances are so infinitely various that, however carefully general rules are framed, they must be construed with some liberality,and not too rigidly applied.

It was necessary to lay down principles lest juries should be persuaded to do injustice by imposing an undue,or perhaps an inadequate, liability on a defendant. The court must be careful, however, to see that the principles laid down are never sonarrowly interpreted as to prevent a jury, or judge of fact, from doing justice between the parties. So, to use them would be to misusethem. [61] When approaching the question of the appropriate measure of damages, the courts have often looked to the question of therelative amounts determined using the two methods in an effort to arrive at the fairest measure.

In those circumstances where one amountvastly differs from the other, the lesser amount may be more appropriate.

In Eldon Weiss Home Construction Ltd v Clark et al (1983), (ON SC), 39 OR (2d) 129, the Court held that “If, however, the cost of remedying the defect is disproportionate to theend to be attained, the damages fall to be measured by the value of the building had it been built as required by the contract less its valueas it stands.” Conversely, the Court in Strata Corp NW1714 v Winkler (1987), (BC CA), 20 BCLR (2d) 16 quoted asfollows from McGarry et al v Richards, Ackroyd & Gall Ltd, (BC SC), [1954] 2 DLR 367 (BCSC) at 389: Cases may arise where the damages for the default should be measured by the cost of making good the default.

This will be so if the costof performing the work or making good the defects is less than the diminution in the value of the property caused by the default. [62] As I earlier stated, whether the plaintiff undertakes or intends to undertake the work is also a factor, but is not definitive. InBustos v Tardif, 2015 ABQB 202 at para 17, Ross J quoted from Waddams: Where the cost of restoration is equal to or less than the diminution of capital value the cost is always recoverable even if the plaintiffdoes not actually incur the cost.

This has been often described as a way of measuring the capital diminution, and indeed it is arguablethat wherever the cost of restoration appears to be less than the diminution of capital value, the two are, on analysis, properly consideredto be equal... [63] Considering the foregoing authorities and the deficiencies in the evidence before me of diminished value, I find that the costof remediating 5032 is the more appropriate measure of damages in this case. As noted above, the only evidence I have of that cost is the$55,000 contemplated by the contract with Dusty Dukes.

I accept this amount as a reasonable measure of the cost necessary to put Khalilin the position he would have been had the Contract not been breached. [64] I am fully aware that the work was not performed and that it never will be, at least not by Khalil, but my approach is notbarred by this knowledge. I take comfort in my approach, in part, because of the comments made by Graesser J, in WestwoodCommunity League v Swish One Infill General Partner Inc, 2020 ABQB 395 at para 18: It is clear from

section 19 of the Judicature Act that I have a broad discretion as to the remedy to be granted following a finding ofliability. It is also clear from cases such as Jorna v Chiasson that when the assessment of damages is difficult, especially where there hasbeen no or insufficient evidence provided, the Court must do the best it can on the evidence it has, and make its best estimate of thedamages. I am clearly in that position.

[ 65 ] So am I. I find that $55,000 is a reasonable measure of the damages under this heading. [ 66 ] Durant argues that Khalil should not be awarded this amount for several reasons. First, she notes that the contract with Dusty Dukes was amended to replace Khalil as the contracting party with Calcorp Ltd. Second, Khalil, on behalf of Calcorp Ltd., assigned the rights under the Dusty Dukes contract to JNP Investments Ltd.

Additionally, she points to the testimony of both Khalil and Proudfoot as establishing that the funds to move the garage on 5032 originated from the JNP Mortgage, which mortgage has not been repaid. [ 67 ] None of these factors precludes recovery. As I have just discussed, in appropriate circumstances, the cost of remediation may be awarded as damages even in those situations where the work has not been completed. In the final analysis, Khalil received a property that was not what he had contracted to receive.

As the passage from Waddams as quoted by Justice Ross in Bustos supports, the cost of remediation is a means of measuring capital diminution. In these circumstances I find that the Dusty Dukes contract provides a reasonable estimate of the damages arising from Durant’s breach of warranty. C. Loss of Rental Income [ 68 ] The next head of damages Khalil claims is loss of rental income from the Suite. This is reasonable request as a matter of principle given that he purchased the Lands intending to use the Suite to generate rental income.

The property was marketed as a “money maker” and I reject Durant’s argument that loss of rental revenue was not reasonably foreseeable. [ 69 ] Khalil claims that he would have been able to rent the Suite for $995/week for 16-18 weeks each summer and $1200/month for the other eight months of the year. He claims two years of lost rental income calculated on this basis, for a total claim of $51,040.00. [ 70 ] A number of difficulties arise from Khalil’s claim for damages under this heading.

First, I am not satisfied on the evidence before me that the Suite reasonably could be expected to garner the amount of rental income claimed by Khalil. At the time of listing, the Suite was being rented for $900/month. While Khalil provided some evidence of the rental income generated by the house on 5036, that is a very different property and I am not prepared to artificially extrapolate to the degree suggested by Khalil. [ 71 ] Second, even if it had been possible to rent the Suite, it was not always available.

The evidence before me is that it was occupied at various times by persons doing work on it, including Leo and Neal. [ 72 ] Third, I find that Khalil did not pursue his legal dispute with the Town as expeditiously as he might have.

While Khalil’s belief that the Town’s legal position was in error may have been genuine, it was not open to him to simply ignore it and carry on with the renovations until the Stop Order was issued and, once again, after his initial appeal was denied. [ 73 ] I have also found that moving the garage to comply with the Development Permit Conditions would have resulted in the Suite being compliant and usable as a rental property. Khalil did not enter into the contract with Dusty Dukes until January 8, 2010.

That contract provided that the work was to begin on or before January 18, 2010 and be completed not later than May 15, 2010, a period of some four months. [ 74 ] I think it appropriate to award damages for lost rental income for this four-month period along with some reasonable period to pursue the development appeal and to undertake renovations. [ 75 ] In the result, I award damages equal to ten months’ lost rental income at $900/month for a total of $9000. D. Mortgage Interest [ 76 ] As noted above, Khalil registered a number of mortgages on 5032 in the months following the purchase.

These mortgages were at high rates of interest ranging from 12% to 18%. Khalil testified that he intended to obtain a conventional mortgage to pay out the initial high rate Calvert Mortgage. He did so for 5036 but states that he was unable to do the same for 5032 because of the problem with the Suite.

Accordingly, he claims as damages the difference between the amount paid on the high interest mortgages and what would have been payable under a conventional mortgage. [ 77 ] Initially, Khalil claimed an amount under this heading from the date of possession to the date of foreclosure or, in the alternative, to the date of the failed sale to Neal. At trial, he acknowledged that interest payments were not made after the sale to Neal did not close and, therefore, he limited his claim to that date.

He claims interest in the amount of $32,196. [ 78 ] Durant argues that these damages cannot be claimed as they were not reasonably foreseeable. [ 79 ] As I earlier reviewed, what is meant by reasonable foreseeability was considered by the Court in the seminal case of Hadley v Baxendale .

Our Court of Appeal has also considered “reasonable foreseeability” in a number of decisions. [ 80 ] In a decision cited by Durant, Noble v Principal Consultants Ltd (Trustee of) , 2000 ABCA 133 , the Court stated at para 10: When assessing damages for breach of contract, two distinct issues arise, remoteness and quantification. ... Remoteness is a question of whether the damage suffered is properly recoverable in an action for breach of contract. The test for remoteness is founded in Hadley v.

Baxendale [citation omitted] which says that damages for breach of contract are limited to the ordinary natural consequences of a breach or for consequences that might reasonably have been in the contemplation of both parties when they made the contract. [ 81 ] Similarly, in Petersen Pontiac Buick GMC (Alta) Ltd v Campbell , 2013 ABCA 251 , the Court held at para 50: Remoteness limits recovery to the ordinary consequences that would follow in the usual course of thing from the breach or the consequences which might reasonably have been supposed to have been in the contemplation of both parties when the entered into the contract...

[82] In 644036 Alberta Ltd v 625494 Alberta Ltd, 2018 ABCA 236 at para 39, the Court offered a different articulation: The remoteness inquiry considers whether the loss suffered was reasonably foreseeable.

The Supreme Court of Canada has definedreasonable foreseeability as a “real risk”, i.e. “one which would occur to the mind of a reasonable man in the position of the defendant ...and which he would not brush aside as far-fetched” ... [83] Recently, a majority of the Court commented again on Hadley v Baxendale, though in the specific context of an exclusionclause, in Dow Chemical Canada ULC v NOVA Chemicals Corp, 2020 ABCA 320 at para 57: [Hadley v Baxendale] set the test for foreseeability of damages for breach of contract.

The recoverable damages are those that would bein the reasonable contemplation of the parties at the time of contract. There is only one rule, but if “special circumstances” have beencommunicated, then the damages within the parties’ reasonable contemplation would be wider. [84] In my view, the high interest mortgages Khalil registered against 5032 were not within the reasonable contemplation of bothparties at the time of the purchase. Durant had no knowledge of Khalil’s financial situation. Khalil’s evidence was that he was able tomortgage 5036 at a rate of approximately 4%.

A conventional mortgage of that kind would be in the reasonable contemplation of partiesto a real estate purchase. A mortgage at a rate three or more times that would not “occur to the mind” of a reasonable person in Durant’sposition. [85] Therefore, I conclude that the high interest charges incurred by Khalil were not reasonably foreseeable and were too remote tobe claimed. I reject Khalil’s claim for damages under this head. [86] Two other arguments made by Durant should be mentioned.

First, it is common ground that Khalil obtained “secondaryfinancing” through Proudfoot, who foreclosed when Khalil defaulted on the payments. Durant argues that Khalil has no legal obligationto repay Proudfoot and therefore has suffered no loss. However, Khalil and Proudfoot both testified to their mutual “expectation” thatKhalil will make Proudfoot whole over time. [87] In light of my findings regarding diminished value and Khalil’s claim for mortgage interest, it is not necessary for me toaddress this argument.

Nevertheless, whatever understanding Khalil and Proudfoot may have, I would not be prepared to award damagesin the absence of a legally enforceable agreement between the two. [88] Second, Durant argues that, far from having lost money in respect of the mortgages, Khalil essentially profited from them.She points out that, within eight months of purchasing the Lands for $620,000, Khalil had placed mortgages on it totalling $856,000, notincluding the JNP Mortgage.

She takes the position in her brief that “As such, he received at least the sum of $236,000 free and clear,with no obligation to repay the mortgagees, subject to the Bank of Montreal’s action against him in fraud.” She argues that this“windfall” should be credited to any damages assessed against her. [89] Initially, Durant cited no case law in support of this argument. In her surrebuttal brief, she referred to British Westinghouse, ascited by the Supreme Court of Canada in Windmill Place v Apeco of Canada Ltd, (SCC), [1978] 2 SCR 385 and inDolly Varden cited above.

Durant refers to the following passages from British Westinghouse at 689 and 690: As James, L.J., indicates, this second principle does not impose on the plaintiff an obligation to take any step which a reasonable andprudent man would not ordinarily take in the course of his business. But when in the course of his business he has taken action arisingout of the transaction, which action has diminished his loss, the effect in actual diminution of the loss which he has suffered may be takeninto account even though there was no duty on him to act. ...

The subsequent transaction, if to be taken into account, must be one arising out of the consequences of the breach and in the ordinarycourse of business. [90] It is important to remember that British Westinghouse was a case about mitigation.

In NESI Energy Marketing Canada Ltd(Bankrupt) v NGL Supply (Gas) Co Ltd, 2001 ABCA 168, the Court of Appeal considered it at length, stating at paras 38, 40, 41, 43,50, 51 and 52: The rule as to avoided loss provides that a benefit or profit will be taken into consideration to diminish the damages owing to a party inrespect of a particular breach if that benefit stems from steps taken to mitigate the loss consequent on that breach: [BritishWestinghouse] [emphasis added]...

The House of Lords held that the benefit must be taken into account to reduce the damages as the benefit arose out of mitigative conducttaken in consequence of the breach and, therefore, diminished the actual loss suffered by the plaintiff... Courts will only allow benefits to be taken into account in reduction of damages incurred if those benefits resulted from mitigativeconduct in response to the breach. The rationale for the rule is that such benefits diminish the actual loss suffered by the plaintiff fromthe breach.

But for the breach, the benefit, like the loss, would not have occurred. [emphasis in original] ... The rationale for mitigation exists in the context of a single contract. Rather than imposing a general obligation to attain a fair balancingof gains and losses between parties, mitigation rules demand that a court consider all mitigative conduct relevant to the breach of aspecific contract. The principle as to avoided loss does not suggest that other factors external to the contract in question, such as thebroader relationship of the parties, are determinative. ...

The indemnity principle provides another mechanism for determining the true measure of damages stemming from the breach. The rule

permits, and indeed compels, incidental profits consequent upon the breach to be subtracted from the losses directly incurred as a resultof the breach. The rule, however, stops short of directing that gains and losses from breaches of separate contracts be set off against eachother.

The rationale underlying the indemnity principle cannot be stretched to justify the netting of gains and losses associated with breaches ofdifferent contracts. ... ...the principle of indemnity requires courts to ensure that, in the context of a single contract, the innocent party is indemnified only forits actual losses flowing from breach of that contract.

The defaulting party cannot claim the benefit of a windfall resulting from its breachof a separate contract. [91] Durant argues that Khalil himself connects the mortgages and the breach of the Contract, saying in her surrebuttal brief: Khalil has testified and argued that he was forced to enter into these high interest mortgages as a result of the breach of contract of[Durant].

As such the proceeds received from the mortgages directly relate to the breach of contract claim, and it is respectfullysubmitted that Durant is entitled to a set off. [92] I cannot agree. [93] First, I have found that the interest payable on the high rate mortgages is not recoverable as it was not reasonably foreseeable.Second, it seems to me that Durant is attempting to do exactly what the Court of Appeal in NESI said was impermissible, namely, to setoff the losses arising from breach of the Contract against the alleged benefit to Khalil from breach of the mortgage contracts. [94] The fact remains that Khalil contracted to purchase something he did not receive, being a property with a rentable suite.Durant must bear the consequences of having given that warranty.

I am not persuaded that her obligation to make good the differencebetween what Khalil contracted for and what he received is obviated by Khalil’s alleged profit from the mortgages. III. Contribution [95] Durant seeks contribution from Taylor and Lam to any award of damages against her. As I earlier stated, Taylor and Lam havesettled with Khalil by way of a Pierringer agreement. Consequently, the practical effect of any finding that contribution is warranted willbe to reduce the amount of damages payable to Khalil by Durant. [96] Durant claims that Taylor and Lam were negligent.

It is common ground that, as real estate professionals engaged by Durant,Taylor and Lam owed Durant a duty of care. The point in dispute is whether they failed to meet the applicable standard of care. [97] A major point of departure between the parties is whether expert evidence is required to establish that standard of care. Bothsides referred to Krawchuk v Scherbak, 2011 ONCA 352.

These comments at paras 130 – 135 are instructive: The jurisprudence indicates that, in general, it is inappropriate for a trial court to determine the standard of care in a professionalnegligence case in the absence of expert evidence. [Citations omitted.] In Walls v. Ross, [2001] B.C.J.

No. 1641, 2001 BCPC 187, at paras. 66-74, Stansfield A.C.J. offers a lengthy discussion of thecircumstances in which expert evidence will be necessary to define the standard of care in the real estate professional context: Counsel for the realtors in this case argued I could not find negligence in the absence of expert evidence as to the standard of care thelaw requires of realtors in circumstances such as those disclosed by the evidence in this case. The claimant did not call any such expertevidence. ...

It is clear there can be cases in which expert evidence is not required to prove a realtor's failure to meet what the court will determine tobe the standard of care expected of realtors in particular circumstances. An example is Brown v. Fritz, (BC SC),[1993] B.C.J. No. 2182 (B.C. S.C.), about which I will say more in due course. It seems that whether expert evidence is or is not required is a question which falls to be determined on the facts (and most especially,one imagines, the egregiousness of the conduct or the very specialized or technical nature of the activity) in the particular case.

So, forexample, in Shaak v. McIntyre and others, [1991] B.C.J. No. 2607, Sept. 6, 1991, Vancouver No. A852424 (B.C.S.C.) Madam JusticeRyan (then of the trial court) dealt with a case of alleged negligence by a solicitor for failing to advise a plaintiff to obtain a surveycertificate where the plaintiff called no evidence of the standards of the profession in that regard. She observed that: [T]here may be cases where the defendant has so clearly fallen below the standard required of him or her that expert evidence is notrequired although she said on the facts before her that "this is not one of those cases".

In Haag v Marshall (1989), (BC CA), 61 D.L.R. (4th) 371 (B.C.C.A.), Mr. Justice Locke, concurring with two othersin the result in a case of alleged solicitor's negligence, said: [t]he professional evidence led in this case was unsatisfactory . . . nowhere was it said that what was not done fell short of a professionalstandard of conduct. In cases of professional negligence above all, with the many difficult and varied situations met, if a plaintiff hopesto succeed on the grounds of lack of competency it must be fairly demonstrated that it has fallen below an established standard orpractice in the profession.

To similar effect in Mileos v. Block Bros. Realty Ltd. and others , unreported, September 30, 1994, Vancouver No. C913338, Mr. Justice Thackray, in the context of alleged realtor's negligence, said (at page 8): . . . I am of the opinion that the onus is on the plaintiff to show that there was a certain standard of care required by the real estate agent and the agency, that that standard was breached, and that the breach caused damages. No evidence was called to establish the standard. In Shaak v.

McIntyre ( supra ), Madam Justice Ryan said: [t]he (selling) broker is under a duty to check information of which he or she is in doubt (or ought to have been in doubt) before passing it on to the purchaser . . . The selling agent must also check the completeness and accuracy of all information which it is usual or customary for brokers to verify. In the case at bar there is no evidence of the usual or customary information which selling agents check. I cannot find that (the selling agent) fell below that standard, whatever it may be. (emphasis added) The same difficulty was identified by Mr.

Justice Drost in Snijders v. Morgan , unreported, January 27, 1997, Nelson No. 4747 (B.C. S.C.) where he said: it is alleged that (the selling realtors) were negligent in failing to properly investigate the nature, identity and extent of the property they advertised for sale. There is no evidence whatsoever of that being a duty or responsibility that the law or the custom or the nature of that business imposes upon persons in that type of business in this province.

Similarly, . . . the allegation that they were negligent in failing to advise the Plaintiffs that a plot plan or survey should be obtained at any time, and more particularly once they became aware that a misdescription of the property was involved, there is no evidence of a standard of care that would impose upon them a duty to so advise the Plaintiffs accordingly. A review of the cases referred to in these reasons suggests that unless conduct is particularly egregious, the court likely requires expert evidence of the usual or customary standard in the real estate industry regarding:

a) the kind of information that must be checked or verified by realtors, where it has not been demonstrated that the realtor had cause to doubt the information;

b) a duty to take positive steps to confirm the nature, identity and extent of the property they advertise, including any duty to recommend a purchaser secure a plot plan or survey; and

c) a duty to recommend that the purchaser secure an inspection regarding the soundness of premises, including any structural defects. While the authorities discussed above indicate that, as a general rule, it will not be possible to determine professional negligence in a given situation without the benefit of expert evidence, they do indicate two exceptions to this general rule. The first exception applies to cases in which it is possible to reliably determine the standard of care without the assistance of expert evidence.

As explained by Southin J.A., at para. 44 of Zink , this will be the case only where the court is faced with "non-technical matters or those of which an ordinary person may be expected to have knowledge". ... The second exception applies to cases in which the impugned actions of the defendant are so egregious that it is obvious that his or her conduct has fallen short of the standard of care, even without knowing precisely the parameters of that standard: see Cosway v. Boorman's Investment Co. , [2008] B.C.J. No. 2081, 2008 BCSC 1482 , at para. 35 .

As can be seen, this second exception involves circumstances where negligence can be determined without first identifying the parameters of the standard of care rather than identifying a standard of care without the assistance of expert evidence. [ 98 ] Khalil argues that Durant cannot successfully seek contribution from Taylor and Lam in negligence because she did not provide expert evidence as to the standard of care. [ 99 ] I do not agree in these circumstances.

While the case law suggests in some circumstances expert evidence must be resorted to in an effort to determine the appropriate standard of care, the legal authorities do not support the conclusion that expert evidence is always a requirement nor that the lack of expert evidence always constitutes a bar to a finding that the standard has been breached. [ 100 ] In Idzan v Broadfoot , 2011 ABPC 208 at paras 31 - 35 , Skitsko PCJ canvassed the law regarding the need for expert evidence: It is generally accepted that the Standard of Care expected of an agent is to act with reasonable care and skill in performing his or her duties.

Epstein J.A. in Krawchuk v. Scherbak , 2011 ONCA 352 , [2011] O.J. No. 2064, made some general observations regarding the assessment of the Standard of Care in real-estate agency situations. To avoid liability in negligence, a real estate agent must exercise the standard of care that would be expected of a reasonable and prudent agent in the same circumstances.

This general standard, a question of law, will not vary between cases and there is no need for it to be established through the use of expert evidence...The translation of that standard into a particular set of obligations owed by a defendant in a given case, however, is a question of fact. External indicators of reasonable conduct, such as custom, industry practice, and statutory or regulatory standard, may inform the standard. Where a debate arises as to how a reasonable agent would have conducted himself or herself, recourse should generally be made to expert evidence. Martin J. in Adeshina v.

Litwiniuk & Co. , 2010 ABQB 80 , [2010] A.J. No. 125, reiterated this point stating that it is generally inappropriate for a trial judge to determine the standard of care in a professional negligence case where expert evidence has not been tabled by the plaintiff. The reason for this being that in cases of professional negligence, given the specialized expertise and knowledge of the individuals involved, it is often difficult for an outsider to have sufficient knowledge to decide what the reasonable practitioner in

that field would do in the given circumstances. Thus in order to satisfy the necessary burden of proof a plaintiff has in a civil action, theywill quite often have to tender evidence as to what standard the court should be grading the defendants conduct against (see also: Haag v.Marshall, (BC CA), [1989] B.C.J. No. 1576, 61 D.L.R. (4th) 371 (BCCA)). The Exception to the Rule It is clear that there will still be situations in which expert evidence will not be required to prove a realtor's failure to meet the standard ofcare, as deemed by the trial judge in those particular circumstances.

There will be cases in which the defendant's conduct has so clearlyfallen below the standard required of him or her that expert evidence is not required. In particular, the BC Court of Appeal in Zink v.Adrian, 2005 BCCA 93, [2005] B.C.J. No. 295, noted two situations in which there is an exception to the general rule requiring expertevidence to be tendered. a. Where the court is faced with a nontechnical matter that of which an ordinary person would be expected to have knowledge. b.

Where the impugned actions of the defendant are so egregious that it is obvious that his or her conduct has fallen short of the standardof care, even without knowing the precise parameters of that standard. The leading case in Alberta regarding the necessity for expert evidence is Kelly v. Lundgard, 2001 ABCA 185. There the majority of theAlberta Court of Appeal ruled that it is not always necessary to call expert evidence in every medical malpractice case. It should beprovided where the negligence involves a technical issue on which the court needs guidance from experts. In ter Neuzen v.

Korn, (SCC), [1995] S.C.J. No. 79, the Supreme Court of Canada dealt extensively with the issue ofexpert evidence in the context of medical treatment cases. It held that even in treatment cases, expert evidence is not always necessary.Expert evidence is only called on as an aid to guide the Court in reaching a sound decision. Expert evidence regarding approved practiceis not necessarily conclusive, especially where the conduct is not of a technical manner but rather relating to the ordinary taking ofprecautions. [101] Khalil cites Alvas v Barrett, 2018 ABQB 651.

In that case, Justice Ashcroft referred to Krawchuk and to para 29 of Idzan andstated at para 86 that “Recourse may be made to expert evidence to assist in determining industry standards...”. She did not find thatexpert evidence was required and, as Ashcroft J heard expert evidence, did not need to make such a finding. [102] More recently, in 1234389 Alberta Ltd v 606935 Alberta Ltd, 2020 ABQB 28 at para 205, Justice Kirker found a breach of thestandard of care without expert evidence: In these circumstances, I must agree with the Purchaser’s submission that it is obvious Mr. Wade and Mr.

Huynh failed to meet therequisite standard of care: [Idzan at para 33, citing Zink]. “There are cases where the breach of the standard of care will be apparentwithout expert evidence”: Tran v Kerr, 2014 ABCA 350 at para 21, citing [ter Neuzen].” I am satisfied that this is one of them. [103] For the reasons that follow, I am satisfied that Durant did not need to call expert evidence in these circumstances. [104] The parties agree, in general terms, that the standard of care expected of a real estate agent is what a reasonable and prudentagent would do in the circumstances.

Khalil argues in his brief that “As there is no evidence that the Realtors would be expected byindustry practice to make their own separate inquiries regarding the use of the Suite with the Town, there can be no finding that theRealtors did not meet the standard of care owed to Durant.” He also states that “...neither Lam nor Taylor gave any evidence that theydefinitively knew that the use of the Suite was not in fact in compliance with the Town’s Land-Use bylaw or that there was a lack ofpermits for the Suite.” [105] At trial, neither Taylor nor Lam had any meaningful memory of the events in question.

It was difficult for me to determinewhether the lack of memory suffered by both was in an attempt to keep the truth of matters hostage. However, excerpts from theirQuestioning were entered as Exhibits at trial. In such excerpts, both gave evidence of what their usual practice would be in the face ofuncertainty as to a property’s compliance.

Taylor’s evidence was as follows: A If I have any question into that before I list the house, I would call the Town and figure out what’s going on after interviewing myclients to see – if they gave me some of the red flags that we built that ourselves or we built that garage ourselves, and I would ask, well,did you get a permit for it and they said, no, then I wouldn’t have a red flag. Q And what would the red flag do? What would that – you would call the Town yourself? A In that particular instance, I would talk to the Town myself, yes.

Q So if the vendor couldn’t satisfy you that everything was in order, you would make the inquiries yourself? A Yes. ... A ...I told [Khalil] that with those properties in the cottage area that the Town had made a big deal about people renting them outuntil they were sold to a new person. And once they were sold to a new person, he could run into some conflicts with the Town withwhether or not he could even rent that suite up there. ... Q Sure. And you advised him to go and talk to the Town? A Yes, very early.

Q What did you tell him specifically? A You need to go talk to the Town. Q Who at the Town? A I didn’t say who. I said you need to go talk to the Town and make sure you can do what you want to do because he had already told me what he wanted to do with the property. I said you’ve got to make sure you go to the Town and make sure they will let you do that. Q So do what he wanted to do, meaning renovate the main floor so he could rent that out? A And even rent the upstairs. ...

Q And at that time [when the 139 sale fell through], you are aware that there is an issue with the garage – in your mind, there is an issue with the use of the garage as a rental suite? A In my mind, yes. [ 106 ] Lam’s evidence was to similar effect: Q Do you as part of your standard practice make inquiries with the local municipality to see if there is any issues with the properties; is that part of your standard practice? A If I have questions about the usage, yes. Q So what do you mean by that? A Case in point, I was given a listing in downtown and there were some issues.

I looked at the Land Titles saying that the driveway is shared with the City of Calgary which I never seen it before. So I took the trip to the City of Calgary, sat down with the people there and just find out what does it mean. Like how – what’s the right on my potential buyer if we need to do something on it. Can they do it or can it not be done. ... Q And what about if a property has a rental suite in it? Do you make inquiries to see if that rental site is authorized? A What do you mean by “authorized”?

Q I understand that some houses, some zones under the land use bylaw, you’re not allowed to have rental suites in them or if you do, there are certain rules and regulations about what the rental suite is supposed to be and how it was supposed to be constructed with respect to access. Are those issues that you look at as a realtor? A It depends on the individuals. Q So sometimes you might make inquiries? A Yes.

If I have questions, yeah, if I am doubtful of what is the usage or can that be used as a rental property, yes. [ 107 ] While neither Taylor nor Lam knew with any certainty that the Suite was non-compliant, both were alive to the issue. Taylor indicates as much in his evidence and Lam was involved in the preparation of the Disclosure Statement in which Durant identified the potential issue. [ 108 ] I find that Taylor and Lam had an obligation to take some steps to protect Durant based on an awareness of a potential issue with the Suite and Durant’s warranty in that regard.

Both could have made inquiries of the Town, as they stated was their usual practice. They could have amended the Contract to remove the warranty in question. They could, at the very least, have questioned Durant to ascertain if she was giving the warranty deliberately. Neither of them did any of these things or, indeed, anything else.

In my view, it cannot be said that they met the standard of care by essentially doing nothing. [ 109 ] In this regard, I agree with the comments of Skitsko PCJ in Idzan at para 45 : The Agent has certain duties that the seller does not have, simply because real estate agents hold themselves out to be experts in the field, and thus they are expected to be competent and reasonably skilled in the basic facets of a real-estate transaction.

If this were not the case, there would be no point in hiring and paying for their services in the first instance. [ 110 ] Durant asserts in her surrebuttal brief that “...while Durant breached the contract with [Khalil], that was solely due to the Realtor Parties failure to protect her as they were obligated to do.” (Emphasis added.) I cannot accede to that. As Khalil rightly argues, this is not a situation where the real estate agents were in possession of some information unknown to the property owner.

Durant, like Khalil, Taylor and Lam, was aware that there was an issue respecting the Suite and did not take adequate care to ensure that the Contract reflected that issue. As found by Master Prowse and Justice Eidsvik on the

summary judgment application, Durant took the risk of warranting that the Suite was compliant. [ 111 ] Khalil also argues that Durant cannot seek contribution from Taylor and Lam because of the indemnification clause in the

Listing Agreement. Clause 14.1 of the Listing Agreement provides that “The Seller will hold harmless and indemnify the Brokerage forany claims that may arise from its reasonable and good faith reliance on representations made, or information provided, by the Seller.” [112] In my view, this clause does not prevent Durant from claiming contribution. Given Taylor and Lam’s knowledge of thecompliance issue with the Suite, both realtors cannot be said to have relied reasonably and in good faith on any contrary representationsfrom Durant.

Indeed, Taylor and Lam’s evidence on Questioning indicates that such reliance would not be consonant with their usualpractice. If Durant had represented to Taylor and Lam that she had received assurances from the Town that the Suite was compliant, thisargument might be available, but that is not what occurred. [113] Moreover, I note that an indemnification clause cannot shield a party from its own negligence, unless set out in clear term

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