Ban v. Keleher, 2017 BCSC 1132

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Ban v. Keleher, 2017 BCSC 1132 Date: 20170630 Docket: 14-3441 Registry: Victoria Between: Stephen Shigeyoshi Ban and Natalie Corinna Ban Plaintiffs And: Brent Michael Keleher Defendant Before: The Honourable Madam Justice Dorgan Reasons for Judgment Counsel for the Plaintiffs: S. M. Hirji Counsel for the Defendant: N. Parhar Place and Dates of Trial/Hearing: Victoria, B.C. November 1 - 4, 2016 November 14, 2016 Place and Date of Judgment: Victoria, B.C.

June 30, 2017 [ 1 ] This case concerns the purchase and sale of a Fairfield area residential property located at 1121 McKenzie Street, Victoria, B.C. (the “property”). The defendant, Mr. Keleher, who bought the property in December 2009, sold it to the plaintiffs, the Bans, on May 8, 2013 for the agreed price of $687,500. [ 2 ] The Bans claim damages arising from the alleged fraudulent and/or negligent misrepresentations of Mr.

Keleher and for breach of contract in respect of the transaction. [ 3 ] The factual basis of the claim arises from the possible migration to the property of chemical contaminants from a nearby drycleaning business which closed in the 1990’s, from Notices of “Likely or Actual Offsite Migration” to the defendant in August and September 2012, and from the October 2012 installation of testing wells on the property for the purpose of monitoring the environmental effect of potential migration of the contaminants.

Agreed Statements of Facts [ 4 ] At the outset of this trial the parties submitted an agreed statement of facts (Exhibit 2) as follows: 1. The Defendant, Brent Michael Keleher, purchased the property located at 1121 McKenzie Street, Victoria, B.C. (the “Property”) in late 2009. 2. Mr. Keleher paid approximately $629,000 to purchase the Property in late 2009. 3. Mr. Keleher was the owner of the property between late 2009 and May 8, 2013. 4. In or about 2010, Mr.

Keleher conducted some construction/ renovation work on the Property that included installation of dormer windows, “re-doing” the hardwood flooring, the bathroom, the deck, and the roof. 5. The renovation work required a permit and a variance, both of which were obtained by Mr. Keleher. 6. In or about the summer of 2012, Mr. Keleher was informed by his neighbour Neil Vickers that that [sic] environmental consultants had conducted drilling and/or installed wells in the backyard of the neighbour’s property, and would likely be contacting Mr. Keleher to examine the Property; 7. In or about August 2012, Mr.

Keleher received a “Notification of Likely or Actual Offsite Migration dated August 16, 2012 (the “First Notice”).

8. In or about September 2012, Mr. Keleher received a “Notification of Likely or Actual Migration” dated September 18, 2012 (the “Second Notice”). 9. In or about October 2012, representatives of Franz Environmental attended at the Property to conduct drilling, install monitoring wells, and conduct sampling. 10. The Property was listed for sale by Mr. Keleher in or about mid-February 2013. 11. The Plaintiffs, Mr. and Mrs. Ban, entered into an agreement to purchase the Property from Mr. Keleher on or about February 28, 2013 (the “Purchase Agreement”). 12. The transaction closed on or about May 8, 2013. 13.

The purchase price was $687,500. 14. Mr. and Mrs. Ban used a notary public, Tim Shipley, to assist them with the conveyancing of the Property. They did not hire a lawyer. 15. Neither the Plaintiffs, nor their representatives, conducted searches of the BC Site Registry prior to completion of the transaction. 16. In relation to the purchase price, Mr. and Mrs. Ban had previously offered to purchase the Property at a price of $695,000, but the price was reduced to $687,500 after it was determined that there were some issues with the perimeter drains. 17.

The Purchase Agreement included a Disclosure Statement dated February 12, 2013, that formed part of the Purchase Agreement. 18. It was a term of the Purchase Agreement that the representations contained in the Disclosure Statement survive the completion of the sale. 19. The Disclosure Statement was signed and initialed by Mr. Keleher. 20. The Disclosure Statement was received by Mr. and Mrs. Ban on or about February 28, 2013, and signed and initialed by them at that time. 21. The Disclosure Statement contained the following question at

section 1.E. “Have you received any other notice or claim affecting the Premises from any person or public body?” 22. The answer provided by Mr. Keleher to the question at

section 1.E. was “NO”. 23. Mr. Keleher did not disclose in the Disclosure Statement that he received either the First Notice or the Second Notice. 24. Mr. Keleher did not disclose the existence of the First Notice or the Second Notice directly to Mr. or Mrs. Ban at any time. 25. Mr. Keleher did not tell Mr. or Mrs. Ban, at any time, that: a. environmental consultants had conducted drilling and/or installed wells in the backyard of his neighbour’s property in the summer of 2012; b.

In or about October 2012, representatives of Franz Environmental attended at the Property to conduct drilling, install monitoring wells, and conduct sampling; c. Five monitoring wells had been installed in the backyard of the Property; d. New sod had been placed over the monitoring wells installed in the backyard of the Property. 26. The Plaintiffs have never listed the Property for sale since acquiring it in May 2013. Issues [ 5 ] In their opening statement, the plaintiffs frame the issues as follows: a.

Is the Defendant liable to the Plaintiffs for: i. fraudulent misrepresentation; ii. negligent misrepresentation; or iii. breach of contract? b.

If so, what is the appropriate measure of damages? [ 6 ] As the plaintiffs earlier abandoned their claim for rescission, their claim is for damages only. [ 7 ] The plaintiffs contend that the defendant, a police officer, knowingly and dishonestly answered question 1.E. of the property disclosure statement (the “PDS”) incorrectly, that he deliberately failed to disclose the fact he had received the First and Second Notices or the fact of the existence of the installed monitoring wells in the PDS generally, that the plaintiffs relied on the PDS in making their decision to purchase and at what price, and that as a result they paid $687,500 for a property that was actually worth less.

[ 8 ] The defendant submits that the cause of action here, as framed in the Amended Notice of Civil Claim, is limited to a determination of whether, as a result of the answer to question 1.E. of the PDS, the defendant made a misrepresentation that was innocent, negligent, or fraudulent. The defendant submits he made an innocent mistake in completing the PDS which cannot ground liability. Further, the defendant argues that even if causation is found, the plaintiffs have not proven damage or loss as the property has increased in value and damages claimed under either the heading of stigma or loss of use are purely speculative. [ 9 ] As will be discussed below, the PDS contained an unfilled

section which invited the seller to provide additional information or explanations. Although not explicitly stated in the defendant’s submissions, the inference I draw is that the defendant suggests that the plaintiffs should not be allowed to argue that the PDS generally misrepresented the known state of affairs by failing to disclose in either 1.E. or within the

section for additional comments and explanations. [ 10 ] The plaintiffs plead, inter alia , that: A. Fraudulent Misrepresentation 25. The answer provided by the Defendant to question 1.E of the Property Disclosure Statement was not true when the Disclosure Statement was completed by the Defendant. The Plaintiffs plead that the answer provided by the Defendant is a fraudulent misrepresentation in the circumstances. … B. Negligent Misrepresentation 30.

In the alternative, the Plaintiffs plead that the Defendant acted negligently when providing answers to the Disclosure Statement and in particular with respect to question 1.E. … C. Breach of Contract 32. The Disclosure Statement was incorporated into and formed part of the Contract. 33.

The answer provided by the Defendant to question 1.E was untrue and did not accord with the Defendant’s true belief at the time. [ 11 ] As may be seen in the pleadings noted above, under Fraudulent Misrepresentation and Breach of Contract the plaintiffs specifically target question 1.E. whereas under Negligent Misrepresentation the plaintiffs target the PDS generally and highlight question 1.E. specifically. [ 12 ] Furthermore, the plaintiffs state in the “Statement of Facts” that: 15. At no time before or after executing the Disclosure Statement did the defendant inform or advise the Plaintiffs:

a) that the First Notice or the Second Notice had been received;

b) that subsurface investigations had taken place in relation to actual or likely off-site migration of contaminants;

c) that the Defendant had been informed of the results of those investigations; or

d) that monitoring wells remained installed on the Property. [ 13 ] I am satisfied that the defendant knew the case he had to meet. The plaintiffs’ claim is that as of May 2013 the defendant knew that sub-surface monitoring wells had been installed in order to monitor likely or actual migration of off-site contamination and that the defendant fraudulently or negligently failed to disclose this fact to the plaintiff purchasers prior to the sale of the property. [ 14 ] Proof of this may be found at paras. 1 to 2 of Division 3 of the Response to Civil Claim where the defendant states that: 1.

The Defendant admits that he did not disclose the existence of the [sic] either the First or Second Notice in the Property Disclosure Statement included in the Contract of Purchase and Sale with the Plaintiffs, but not out of any intent to deceive them. 2. The Defendant says that he discussed any potential or actual obligation to disclose the Franz testing and contamination investigation with his realtor, Ivica Kalabric, prior to executing the Property Disclosure Statement, but was advised against such disclosure because it could negatively affect the saleability of the Property.

The Defendant answered the questions in the Property Disclosure Statement in reliance on the advice of his realtor. [ 15 ] I am satisfied that the defendant was well aware that while question 1.E. is certainly a primary concern within this claim, that the overarching grievance is that the PDS generally did not contain complete disclosure. Fraudulent Misrepresentation A. Legal Principles [ 16 ] As affirmed in Van Beek v. Dodd , 2010 BCSC 1639 at para. 42 , to succeed in a claim for fraudulent misrepresentation, the plaintiffs must establish that:

a) the defendant made a representation of fact to the plaintiff(s);

b) the representation was false in fact;

c) the defendant knew that the representation was false when it was made, or made the false representation recklessly, notknowing if it was true or false;

d) the defendant intended for the plaintiffs to act on the representation; and

e) the plaintiffs were induced to enter into the contract in reliance upon the false representation and thereby suffered adetriment. [17] In Hanslo v.

Barry, 2011 BCSC 1624 at para. 72, a case involving a real estate transaction, our court observed that “[t]he classicand most obvious form of fraud is where the vendor positively misstates to the purchaser facts, which he knows to be false, for thepurpose of deceiving the purchaser.” [18] The plaintiffs note that in Van Beek at para. 46, the court cites with approval the following passage concerning the dangers ofincomplete representations: [46] … A false or incomplete representation of those facts may amount to an actionable falsehood. The plaintiffs cite C.R.F.Holdings Ltd. v.

Fundy Chemical International Ltd. (1981), (BC CA), 33 B.C.L.R. 291 (B.C. C.A.) [C.R.F. HoldingsLtd. (CA)] at para. 5, for this proposition: [5] ... “To state a thing which is true only with qualifications or additions known to, but studiously withheld by, therepresentors to say the thing which is not. Such a statement is a lie, and one of the most dangerous and insidious forms of lie.” [G.Spencer Bower, K.C., & The Hon. Sir A. K.

Turner, The Law of Actionable Misrepresentations, 3rd ed. (London: Butterworths, 1974)(at p. 94)]. [19] The standard of proof is proof on a balance of probabilities, having due regard to the seriousness of the allegation of deceit (VanBeek, at para. 43). In this respect, Mackenzie J.A. makes the following remarks in Anderson v. British Columbia (SecuritiesCommission), 2004 BCCA 7 at para. 29: Fraud is a very serious allegation which carries a stigma and requires a high standard of proof.

While proof in a civil or regulatory casedoes not have to meet the criminal law standard of proof beyond a reasonable doubt, it does require evidence that is clear and convincingproof of the elements of fraud, including the mental element. [20] It should also be noted that where a misrepresentation is properly characterized as being fraudulent, the doctrine of caveatemptor will not apply (Hanslo, at para. 71). For example, this exception to the doctrine was applied in Aldred v. Colbeck, 2010 BCSC57, where the seller failed to disclose to the buyer the presence of an underground storage tank. B.

Position of the Parties [21] The plaintiffs submit that they have satisfied the test for fraudulent misrepresentation and that the evidence supports thefollowing findings of fact and law:

a) a representation of fact was made by the defendant to the plaintiffs;

b) the representation was false;

c) the defendant knew the representation was false when it was made, or was reckless as to its truth or falsity;

d) the defendant intended for the plaintiff to act on the representation; and

e) the plaintiff was induced to enter into the contract in reliance on the false representation, and thereby suffered a detriment. [22] The plaintiffs submit that answering “NO” to question 1.E., and saying nothing about the contamination issues on the PDS,amounts to a lie.

According to the plaintiffs, the representation made by the defendant on the PDS could only have been intended tocause the plaintiffs to believe in the truth of the statement and to act accordingly, and to their detriment. [23] According to the plaintiffs, the defendant’s own evidence is that he was concerned that the contamination issue would make itdifficult for him to sell his property.

They further point out that the defendant was experienced in the real estate market and that in orderto avoid taking a loss on the property, the defendant decided to withhold information in order to improve his chances of selling theproperty quickly, and for a higher price. [24] They note that the defendant simultaneously claims that the contamination issues were at the forefront of his mind -- causinghim to seek advice on the matter from his realtor -- but that he failed to make any connection between question 1.E. and the two Noticeshe received.

This they say is contradictory and supports a finding that the defendant knew the representation was false when it wasmade. [25] With respect to the doctrine of caveat emptor, the plaintiffs state that nothing about the answer to question 1.E., or any of thesurrounding circumstances, could have or should have put the plaintiffs on notice that they needed to make further inquiries. As a result,the plaintiffs submit that it does not lie in the defendant’s mouth to argue that the plaintiffs could have discovered the defendant’s fraudif they had investigated further by conducting a search of the BC Site Registry.

In any event, the plaintiffs take the position that thepoint is moot as Mr. Steele (called to give responding opinion evidence as to value) in fact conducted a search of the BC Site Registryand was unable to find any information concerning off-site contamination. [26] The defendant admits that he made a mistake in answering “NO” to

section 1.E. of the PDS. In retrospect he states that he

ought to have answered “YES”, but that he simply did not think of the two Notices from Franz Environmental when he answered thisquestion. [27] According to the defendant, he received the two Notices in or about September and October 2012, was not particularlyconcerned about the Notices, had no intention of selling the property at that time, and only formed the intention to sell the property inlate-January/early-February 2013 for family reasons. [28] The defendant’s position is that at the time of execution of the PDS, he:

a) answered every question on the PDS honestly and to the best of his knowledge;

b) did not specifically remember receiving the two Notices and did not equate them with a positive answer to 1.E.;

c) did not answer 1.E. in the negative in order to conceal the fact that he had received the two Notices or with the intention ofdeceiving any prospective purchaser. [29] The defendant admits that he asked his realtor, who was present at the execution of the PDS, where the contamination issue fitinto the PDS. He claims to have been told by his realtor that he did not need to disclose this information on the PDS.

His realtor deniesproviding such advice and denies that the topic itself was ever raised by the defendant. [30] The defendant submits that this incorrect answer was simply a mistake; it was not borne out of dishonesty, deceit, or fraud. Moreover, he states that the evidence falls short of the requirements for a finding of a fraudulent misrepresentation. He argues that hegenuinely believed that he was answering the question truthfully and that he lacked the intention for the plaintiffs to act on therepresentation. Negligent Misrepresentation A.

Legal Principles [31] A misrepresentation in a PDS is capable of giving rise to a claim for damages for negligent misrepresentation. The test for thiswas restated by our court in Hanslo as follows: [108] A plaintiff must establish five elements for a finding of negligent misrepresentation. They were outlined as follows by theSupreme Court of Canada in Queen v. Cognos Inc., (SCC), [1993] 1 S.C.R. 87 (S.C.C.), at 110 [Queen]:

a) there must be a duty of care based on a “special relationship” between the representor and the representee;

b) the representation in question must be untrue, inaccurate, or misleading;

c) the representor must have acted negligently in making said misrepresentation;

d) the representee must have relied, in a reasonable manner, on said negligent misrepresentation; and

e) the reliance must have been detrimental to the representee in the sense that damages resulted. B. Position of the Parties [32] The plaintiffs submit that if fraudulent misrepresentation is not found, their alternative submission is that the misrepresentationof the defendant was negligent. They submit that the following satisfy the elements for a claim in negligent misrepresentation:

a) In a real estate transaction, there is a “special relationship” between a vendor and a purchaser, and the vendor owes thepurchaser a duty of care (Hanslo, at paras. 117-18).

b) The defendant has admitted that the representation was not true in that he was aware of the notices and the presence of themonitoring wells when he signed the PDS.

c) Since the defendant was aware of the contamination issues when he completed the PDS, his misrepresentations werenegligent.

d) The plaintiffs have testified that the information contained in the PDS was a key part of their decision to continue with thepurchase of the property. That is to say, they relied on the representations of the PDS and such reliance was reasonable in thecircumstances.

e) This reliance was detrimental in that the plaintiffs completed the purchase of the property without knowledge of thecontamination issues, and paid more than the actual market value for the property. [33] The defendant submits that for the reasons provided above in respect of fraudulent misrepresentation, his answer to question1.E. was simply an innocent mistake, and that this error was not borne out of negligence. [34] In the alternative, the defendant submits that even if causation is found under this cause of action, there is a lack of proven lossand that the result could only be an award of nominal damages.

Breach of Contract [35] The plaintiffs pleaded that in the alternative, they seek damages for breach of contract. It is an agreed statement of fact that the

PDS was incorporated into the contract for purchase and sale of the property and as a result the plaintiffs submit that the failure to disclose the contamination issue gives rise to a breach of contract. [ 36 ] Neither party addressed this issue in much depth in submissions and I will not do so in these reasons. I am satisfied the case rests on and may be justly decided upon the claimed misrepresentation(s).

Discussion in Respect of Liability [ 37 ] The defendant says on cross-examination that as a result of the two Notices in August and September 2012, he thought at that time about problems which could arise if he wanted to sell the property due to the fact that notice of likely or actual off-site migration would show up online on the BC Site Registry.

However, the defendant also disagreed with the suggestion that he knew that if he disclosed this information that he would be unable to sell the property either at all or for the price that he wanted. [ 38 ] On cross-examination, the defendant admits having received two Notices and a letter from Franz Environmental.

He recalls having conversations with members of Franz Environmental and he knew that they had worked in his backyard and installed monitoring wells. [ 39 ] The defendant testified that he did not, at any point leading up to the listing of the property, discuss with his realtor the two Notices he had received or the installation of monitoring wells.

The defendant explains that he was not hiding this information from his realtor, but that the environmental issues were not really at the forefront of his mind at that point in time. [ 40 ] The defendant testified that his realtor was present on February 12, 2013, when the defendant filled out, initialed, and signed the PDS. When asked on examination why he answered “NO” to question 1.E., the defendant testified that the “whole issue” was not at the forefront of his mind, that he “didn’t even really recall getting those notices,” and that he did not make the connection between the two Notices and the question.

The defendant testified that he believed he was answering the question truthfully and that he was not attempting to be deceitful, dishonest, or to hide anything. [ 41 ] The defendant says he did not discuss the meaning of the specific question with his realtor, but, upon completing the PDS, he did inform his realtor about the issues concerning the drycleaner and the installation of monitoring wells. He testified that he asked his realtor where that issue fit into the PDS and whether it was something that needed to be disclosed.

The defendant says that the realtor told him that he did not need to disclose the installation of the monitoring wells and that disclosure of this environmental issue might raise a “red flag” making it more difficult to the sell the property. The realtor denies providing such advice and further denies the matter being raised with him. [ 42 ] However, the defendant reiterates that while he had turned his mind to the off-site contamination generally, he did not connect the question being asked at

section 1.E. of the PDS with the two Notices he received from Franz Environmental. The defendant says that at no point in time prior to the sale of the property in May 2013 was he aware of any actual contamination or exceedances of the applicable provincial standards concerning contamination. [ 43 ] When asked whether he had read the statement on the PDS concerning the seller’s responsibility for the accuracy of answers, the defendant said he did not recall reading this statement but said that he understood the concept of the PDS and that he knew he was responsible for his answers. Moreover, he acknowledged that there was an unfilled

section labeled “Additional Comments and/or Explanations” and that he could have filled that

section out with information concerning the monitoring wells and the drycleaner situation. The fact is, he did not do so. [ 44 ] The defendant was cross-examined on his discovery evidence. On examination for discovery the defendant stated that he knew there was an issue with the environmental impact from the drycleaners and he knew that it had not been disclosed. The defendant adopted this statement at trial when it was put to him. [ 45 ] The defendant says that subsequent to the sale of the property, he saw an

article in the Times Colonist newspaper which referred to Mr. Ban and the issue of off-site contamination. The defendant informed his realtor and told him “I hope this isn’t going to be an issue”. Finding on Liability [ 46 ] I am satisfied that the plaintiffs have established that the defendant made a representation of fact to them, the PDS, in which he disclosed neither his receipt of the two Notices nor the fact that monitoring wells were installed on the property which were not visible to the naked eye as they were covered in sod and therefore, the fact they were installed was important to be disclosed.

I am satisfied that the representation the defendant presented in the PDS in question 1.E. or anywhere in the document, i.e., within the

section for additional comments and explanations, is actionable. [ 47 ] While question 1.E. arguably did not trigger the defendant’s specific memory of receiving the two Notices, and that is his evidence, that is not the end of the analysis. On the defendant’s own evidence, he sought advice from his realtor (albeit evidence contradicted by the realtor) about where the contamination issue would fit into the PDS.

Accordingly, the general contamination issue was clearly on his mind, yet he did not bring it to the attention of the plaintiffs as a result of the manner in which he completed the PDS. [ 48 ] In the circumstances of the vendor/buyer relationship, he owed a duty of care to the plaintiffs. The PDS he signed presented an inaccurate and misleading picture of the state of the property at issue.

As a consequence, his representation leads me to the conclusion that he acted negligently in so doing. [ 49 ] The evidence clearly supports a finding that the plaintiffs relied on the negligent misrepresentation and that they did so to their detriment. They were first-time homebuyers involved in a significant transaction. They testified they would not have made any offer if they had known of the contamination potential of this property.

Apart from any other circumstances, it cannot be ignored that the plaintiffs are environmental scientists and as such would more likely than not be sensitive to such an issue had it been raised with them,

and sensitive to the point that potential contamination would, I am satisfied, cause them to lose any interest in purchasing the property. [50] I am satisfied the plaintiffs reasonably relied on the negligent misrepresentation of the defendant in offering to buy the propertyand as such, the reliance has been detrimental to them on a number of levels which will be more closely examined later in these reasonson the issue of damages. [51] The plaintiffs have met the five elements for a finding of negligent misrepresentation as outlined in the Cognos Inc. case. [52] Turning to the question of whether the misrepresentation amounts to a fraudulent misrepresentation -- while I am satisfied thedefendant completed the PDS in a reckless manner, thereby creating a false representation/presentation of the state of the property, I ammindful that fraud is a serious allegation which requires a high standard of proof, albeit not the standard reserved for the criminal law.

Inorder for the misrepresentation to be fraudulent, the high standard of proof requires an additional element of proof of intention. Acknowledging that the defendant, a police officer, surely accustomed to accurately reporting on facts, did not positively misstate a fact,he left the plaintiffs with a false impression which itself may amount to an actionable falsehood.

However, I find on a consideration ofall of the evidence, that the evidence falls short of proving that the false representation of facts and the impression created by that falserepresentation, was advanced, “for the purpose of deceiving the purchaser”. See Hanslo v. Barry. I have concluded that the requisite“clear and convincing proof” of the mental element of fraud, the deliberate intention to induce the plaintiffs to enter into the contract topurchase the property by relying on that false representation, has not been made out. [53] In

summary, I find the plaintiffs have established negligent misrepresentation capable of giving rise to a claim for damages. What is the Proper Measure of Damages A. Time of Assessment [54] The general rule is that damages for either fraudulent or negligent misrepresentation are assessed as at the date of the breach: Wiebe v. Gunderson, 2004 BCCA 456 at para. 9; Van Beek, at para. 90; Eck v.

Montreal Trust Company of Canada, (B.C.S.C.); Aldred, at para. 80. [55] The plaintiffs correctly submit that the appropriate time for measurement of damages is the date on which the plaintiffspurchased the property, namely May 8, 2013. [56] I note that it appears that the defendant also agrees with this general proposition, but takes issue with how to quantify thediminution in value, if any, and whether subsequent increases in value undermine the plaintiffs’ claim for damages. B.

Measurement and Quantum of Damages [57] In an action for either negligent or fraudulent misrepresentation, the plaintiff is entitled to be put in the position he/she wouldhave been in if the misrepresentation had not been made (Rainbow Industrial Caterers Ltd. v. Canadian National Railway Co., (SCC), [1991] 3 S.C.R. 3 at para. 20). The question to be asked is what amount of money, if any, is required to restore theplaintiff to the position he/she would have been in had he/she not relied upon the misrepresentation. i.

Position of the Plaintiffs [58] The plaintiffs submit that for both negligent and fraudulent misrepresentation, the appropriate measure of damages is thedifference between the price paid and the actual market value at the time of the sale of the property. They further submit thatconsequential losses are compensable if the misrepresentation is found to be fraudulent. [59] The plaintiffs submit that had the misrepresentation not been made, they would have been richer by a considerable amount inthat they would not have bought this property, but one without the stigma of off-site contamination.

In these circumstances it does notmatter whether or not the defendant would have agreed to sell the property for any less than he did. Based on Mr. Umlah’s appraisalevidence, the plaintiffs would not have paid $687,500 for the property which, in his opinion, was worth $550,000. The amountnecessary to put the plaintiffs in the position they would have occupied but for the misrepresentation is the difference between those twoamounts. ii. Position of the Defendant [60] The defendant categorizes the plaintiffs’ loss as a loss of chance or opportunity.

The defendant therefore submits that theplaintiffs first must prove on a balance of probabilities that if they had known about the contamination issues they would have had a realor substantial chance to make a better bargain with the vendor. [61] The defendant relies on Lee v. Royal Pacific Realty Corp., 2003 BCSC 911, Li v. Ouyang, 2012 BCSC 48, and Cranbrook(City) v.

Gabriel Construction (Alberta) Ltd., 2014 BCSC 2280, for the proposition that the court should engage in a loss of opportunityanalysis to determine the appropriate quantum of damages. [62] As a result, the defendant argues that the evidence shows that the defendant would not have been willing to sell the property forany less than the plaintiffs paid for it and that as a result there are no damages. iii. Discussion [63] With respect, I disagree with the

interpretation of and applicability of Lee, Li, and Cranbrook as argued by the defendant’scounsel. I find the plaintiffs in this case need not prove a loss of opportunity as a pre-condition to an assessment of damages. [64] In Lee, the plaintiff brought an action against the defendant real estate agent and broker for an alleged breach of contractualduty, breach of fiduciary duty, breach of confidence and negligent misrepresentation with respect to purchase of bowling alleys. Here,

the defendant allegedly disclosed the price that purchaser was willing to pay, the purchaser's motivation for buying the property, and personal information about the purchaser without purchaser's authorization. In arriving at the conclusion that the plaintiffs had failed to establish any actionable wrongs, the court discusses the legal test for proving a loss of opportunity at para. 92. [ 65 ] In Li , the plaintiff purchased a condominium knowing that the property had water ingress problems.

The claim was not made against the vendor but rather against the defendant real estate agent for negligently misrepresenting the market value of the condominium. The court noted that on those circumstances, the plaintiffs needed to show that they could have purchased the condominium for less than they did and, therefore, made a larger profit. [ 66 ] In Cranbrook , the court found that one of the defendants was liable in breach of contract for expectation damages.

The court considered whether the plaintiff lost an opportunity to have a third-party do work at an earlier time for a lower cost, due to the defendant’s failure to act promptly in fulfillment of its contractual obligations. [ 67 ] In Lee and Li the issue of loss of opportunity arose only in relation to negligent misrepresentations made by real estate agents which prevented the plaintiffs from bargaining effectively with vendors who were not a party to the matter.

In these types of cases, an appropriate remedy requires putting the plaintiff in the position they would have been in had the negligent misrepresentations not been made. That is to say, the court was required to speculate as to how the bargaining process would have played out had the plaintiff not suffered the detriment of the defendant’s impugned conduct.

Such a scenario appears to necessitate that the court consider whether the plaintiff would have had a real or substantial chance to make a better bargain with the vendor. [ 68 ] In the present case, the action is against the vendor and does not require a loss of opportunity analysis.

It should not lie in the mouth of a defendant vendor to say that damages do not flow from their own negligent misrepresentation because in any event she or he would not have sold the property for any less. [ 69 ] Rather, the courts in our province, and others, appear to agree that in circumstances such as those in the case at bar, the appropriate assessment of damages is to determine the difference in the amount paid for the property at the time of sale, and the actual market value of the property at the time of the sale. [ 70 ] Where a defendant is found to have made either a fraudulent or a negligent misrepresentation, damages are determined on the reliance measure of damages.

The plaintiff should be awarded an amount necessary to put them in the position they would have occupied had the misrepresentation not been made ( Wiebe , at para. 9 ; Noble v. Fuller, Ellis Realty Ltd. , 1985 CarswellBC 4167, [1985] B.C.J. No. 1007 at para. 28 (S.C.) (WL) ). [ 71 ] Our court affirmed in Eck that “in a claim for negligent misrepresentation the proper measure of damages is the difference between the actual worth of the property at the time of sale and the price paid” (pp. 9-10).

The same conclusion was reached in Noble and Aldred . [ 72 ] As I have found that fraudulent misrepresentation has not been proven, I will not consider consequential losses. Expert Appraisal Report [ 73 ] Turning to the question of the fair market value of the property at the time of the sale of the property, the plaintiffs entered an appraisal report prepared by Mr. Umlah dated July 29, 2016 (See Exhibit 4) and the defendant entered a rebuttal appraisal review report prepared by Mr. Steele dated September 16, 2016 (See Exhibit 6).

Each was qualified to give opinion evidence concerning the value of the property at the time of its purchase and sale. [ 74 ] The plaintiffs’ letter of instruction to Mr. Umlah (See Appendix “D” of Exhibit 4) sets out the scope of engagement for services: (1) the provision of an independent objective expert opinion for admission into evidence, and (2) the provision of consultation services to the plaintiffs, including an assessment and advice in respect of an anticipated expert report from the defendant. [ 75 ] The plaintiffs instructed Mr.

Umlah to prepare an appraisal report containing an independent, objective opinion of the market value of the property as of two different dates:

(1) May 8, 2013, and (2) the date that the appraisal report is prepared. [ 76 ] The following general assumptions were made by Mr. Umlah in the preparation of his report:

a) Mr. Umlah relies on a definition of “market value” as set out in the Canadian Uniform Standards of Professional Appraisal Practice . The lengthy definition is reproduced in full at page 5 of the Umlah Report. The definition notes that a determination of market value assumes, inter alia , that the buyer and seller are typically motivated, a fact which is at dispute in this trial.

b) The property was in generally similar form and character on May 8, 2013 as it was on the date of inspection unless otherwise noted (see p. 3).

c) The property was bought in late 2009 for $629,000; it was listed for sale by Mr. Keleher in mid-February 2013 and the Bans entered into an agreement to purchase the subject property on February 28, 2013. The transaction closed on May 8, 2013 and the purchase price was $687,500.

d) Mr. Umlah was not aware of any other sales, listings, or offers relating to the property within the past three years.

e) For the May 8, 2013 appraisal, a reasonable exposure and marketing time is 60-120 days. A. Reduction in Value Due to Stigma i. Assumptions [ 77 ] Mr. Umlah states that he “reviewed a Statement of Claim provided by the client” and “[r]eviewed various documents and

correspondence regarding to [sic] the potential contamination issues relating the [sic] subject property.” From this, the following facts were accepted by the appraiser:

a) Around the summer of 2012, Mr. Keleher was informed by his neighbour that environmental consultants had conducted drilling and/or installed wells in the backyard of the neighbour’s property, and these consultants would likely be contacting Mr. Keleher to examine the subject property.

b) In or about August 2012, Mr. Keleher received a “Notification of Likely or Actual Offsite Migration” dated August 16, 2012. Then, in or about September 2012, Mr. Keleher received a “Notification of Likely of Actual Migration” dated September 18, 2012 stating that nine different substances had migrated or were likely to have migrated to the soil and groundwater beneath the subject property.

c) In or about October 2012, Franz Environmental attend the subject property to conduct drilling, install monitoring wells, and conduct sampling. The wells were placed underground in the rear yard and within the basement of the subject dwelling.

d) The Franz Environmental tests of soil and groundwater samples taken from the rear of the property showed exceedances of the Ministry of Environment CSR Standard in relation to the contaminants tetrachloroethene, trichloroethene, and VH C6-C10.

e) Monitoring of these wells has continued on a regular basis with frequent visits. [ 78 ] The appraiser accepted the facts stated and reviewed the reports generally that were prepared by Franz Environmental. ii. Comparable Properties [ 79 ] According to the Umlah Report, sales involving properties where there is a potential for contamination on site are rare, and therefore, direct comparison to properties that are similarly impacted and have sold nearby in or around the effective date are rare. Mr.

Umlah attempted to address the concept of “stigma” as a factor which could or does affect the value of property. [ 80 ] Mr. Umlah provides a paired sales analysis involving properties that were former “grow-ops” and subsequently restored and resold, and compared them to otherwise similar properties in the immediate area that were not influenced by stigma. [ 81 ] The Umlah report notes that “although the paired sales analysis does not directly reflect contaminated sites, it does illustrate how the housing market reacts to stigma. It is Mr.

Umlah’s opinion that “stigma caused by potential contamination would be similarly reacted to as stigma caused by a grow-op and may be more pronounced if the contamination is not remediated” (p. 30). [ 82 ] Mr. Umlah’s opinion is that market conditions will affect the degree to which stigma will be a factor in the sale of a property. Mr. Umlah states that as of May 8, 2013 local market conditions were generally stable and therefore stigma as a factor would have been more prevalent. [ 83 ] The following is a

summary of the analysis of comparable properties as contained in Exhibit 4A which provides corrections to data found at pages 29 and 30 of the Umlah Report. The analysis considers three properties in Surrey and two in Maple Ridge which, according to Mr. Umlah, sold for prices diminished by stigma arising from the use and consequent state or condition of the property.

a) Table 1 - Stigma Affected Property - 16426 85th Avenue, Surrey B.C. Comparable properties not affected by stigma sold for between $84,000 and $102,000 more than the stigma affected property. Mr. Steele states in his report that the sales data for 16426 85th Avenue, Surrey B.C. concerns a “court order sale” of a “non- remediated Grow-op property” the sale of which must occur as a cash transaction. Mr. Steele indicates that this does not meet the definition of market value as the price here is affected by undue stimulus (p. 11). The Steele Report concludes that the Mr. Umlah’s analysis of comparable properties should have been adjusted for differences in condition and conditions of sale.

b) Table 2 - Stigma Affected Property - 7976 170A Street, Surrey B.C. Comparable properties not affected by stigma sold for between $66,500 and $115,000 more than the stigma affected property. Mr. Steele indicates that 7976 170A Street, Surrey B.C. was also a court ordered sale and that the property was sold “as is”. The Steele Report concludes that Mr. Umlah’s analysis of comparable properties should have been adjusted for differences in condition and conditions of sale.

c) Table 3 - Stigma Affected Property - 14246 Hyland Road, Surrey B.C. The two comparable properties not affected by stigma sold for $17,000 and $120,000 more than the stigma affected property.

d) Table 4 - Stigma Affected Property - 22186 River Bend, Maple Ridge B.C. The sole comparable property sold for $51,000 more than the stigma affected property. [ 84 ] The Steele Report notes that there is limited data available with respect to the “grow-op” properties in Tables 3 and 4, but ultimately concludes that the comparison properties in the respective tables require adjustment and that “to isolate the difference in price to conclude the impact of stigma is not realistic …” (p. 13).

[ 85 ] Mr. Steele notes in his report that this comparison data and analysis is incomplete (p. 11). Specifically, Mr. Steele’s opinion is that Maple Ridge and Surrey are a “completely different market than Greater Victoria” and that no adjustment was made by Mr. Umlah to account for the potential differences in the two real estate markets. [ 86 ] Moreover, and as indicated above, the Steele Report concludes that the differences in price as between selected “grow-op” properties and comparison properties is not the result of stigma but because the “grow-op” properties were simply of inferior condition.

The Steele Report states that “[w]ithout adjusting for the physical differences, location and features of these sales there is no reliable indication of any stigma. The sales appear to have different quality and features and therefore different sale prices” (p. 13). iii. Interim Conclusion s [ 87 ] Mr. Umlah concludes stigma alone would have resulted in a knowledgeable purchaser discounting the value of the subject property by approximately 15% from the unencumbered fee simple value as at May 8, 2013. [ 88 ] Mr.

Steele, in his report, disagrees with this conclusion stating that “the [comparison] data is inconsistent, and the lack of adjustments for the conditions of the sale and the overall condition of the properties weaken this conclusion considerably” (p. 13). [ 89 ] The Steele Report is also critical of the use of “grow-op” properties as a comparable property type to properties affected by the stigma of potential contamination. A “grow op” property reflects an impact to the improvements on land, whereas with contamination, while the land itself may be affected, the overall utility of the home remains unaffected. B.

Reduction in Value Due to Encumbrance to Utility [ 90 ] Mr. Umlah states in his report that there are also physical impediments to the property as a result of monthly inspections of the monitoring wells both inside and outside the residence. Moreover, the report concludes that the wells themselves are an encumbrance to the site, eliminating full utility of the rear yard (ex: building swimming pools, hot tubs, decks, etc.) (p. 31). i. Assumptions [ 91 ] Mr.

Umlah states in his report that the presence of subsurface monitoring wells prevents development of permanent ancillary structures for the most part, leaving the rear yard available for passive recreational enjoyment (p. 33). [ 92 ] Mr. Umlah also states as fact that the underlying geology is suitable to facilitate urban residential development using conventional construction practices. ii. Interim Conclusions [ 93 ] Mr. Umlah calculates an average rate for vacant land as being $84.34 per square foot. Mr. Umlah acknowledges that rear yard development would be limited through zoning regulations and setbacks.

He ultimately allocates a reduction to the unencumbered fee simple value of 25% to reflect encumbrance to the full bundle of rights as a result of the limited uses available within the area of the wells resulting in an estimated loss of 4.57% of the value of the property or $31,400. [ 94 ] The Steele Report disagrees with this assessment noting that features like swimming pools are uncommon in this area of Victoria, B.C. and likening the physicality of the monitoring wells to a large irrigation sprinkler head. Overall, Mr.

Steele concludes in his report that “the location [of the monitoring wells] in the rear yard has no impact on the current utility as a single family dwelling” (p. 15) and agrees with the Umlah Report that “[t]he rear yard can still be used for passive recreational use.” [ 95 ] The Steele Report also disagrees with the methodology employed in the Umlah Report of equating access to the monitoring wells, with an easement or right of way.

The Steele Report equates “the impact of the trespass [to inspect the wells] to that of a meter reader, a mailman or paperboy who will entered a given property unannounced” (p. 16). [ 96 ] Finally, the Steele Report also notes that the “utility of the back yard is inferior to that of the home site which is the primary point of value” and that “the rate per square foot of the land will diminish … the farther the distance from the home” (p. 16). The Steele Report criticizes the Umlah Report for incorrectly assigning a uniform rate -- $84.34 per square foot -- for every square foot on the property.

As a result, the Steele Report concludes that “[i]f there is an impact on value [owing to an encumbrance on the rear yard] it will be at a lesser rate than the rate based on the property as a whole” (p. 16). C. Conclusions as to Overall Value [ 97 ] Mr.

Umlah concludes in his report that given the stigma associated with marginalized properties, the market conditions at the time of sale and the encumbrance to utility as a result of the well monitoring, the property upon disclosure of potential for contamination would have sold for a price 20% below (namely $550,000) the non-influenced value estimate ($687,500). [ 98 ] The Steele Report concludes that the measure of the impact of the perceived stigma of 20%, as determined in the Umlah Report, is unsupported by relevant market evidence and is therefore not a reasonable conclusion.

The report goes on to conclude that Mr. Umlah has failed to provide market evidence that stigma actually exists at all. [ 99 ] Mr. Steele’s report indicates that he reviewed sales from the subject neighbourhood noting that none of properties he reviewed showed an indication of a discounted sale price due to stigma of perceived contamination.

The Steele Report concludes that this evidence contradicts the proposition in the Umlah Report that “[a] stigma may not be related only to a property with known contamination, but may also extend to properties in close proximity to known contamination” (p. 17). [ 100 ] In addition to his instructions to prepare a report reviewing the methodology and conclusions of the Umlah Report, Mr. Steele also indicates that the “purpose of the review is to provide an opinion of the market value of the property in 2013 and 2016. In that

respect, the report indicates that Mr. Steele reviewed his own set of comparable properties and concluded that as of May 8, 2013 the value of the property in this case was $687,500. Diminution in Value [ 101 ] The position of the plaintiffs is that Mr. Umlah has taken a reasonable approach to the valuation of the property, in order to provide the court a “ready-made inference” in relation to the diminution in value. Moreover they submit that the effect of stigma is a recognized element of the real estate valuation process and has been taken into account by our court in Gordon v.

Krieg , 2013 BCSC 842 , at paras. 196-97 . [ 102 ] Moreover, the plaintiffs submit that the court should give no weight to the criticisms found in Mr. Steele’s report, or to his opinion that the market would not discount the property at all after becoming aware of the contamination issues. They note that Mr. Steele has done little or no analysis of his own, on the issue of stigma he has presented no alternative methodology, and his opinion in relation to value simply does not accord with common sense. [ 103 ] Finally they disagree with Mr.

Steele’s comparison that the monitoring wells are similar to hydro meters which require periodic inspection. The monitoring wells provide no benefit to the plaintiffs in exchange for their physical presence on the property and the resulting periodic attendance of Arcadis Canada (formerly Franz Environmental) inspectors. They are simply a physical reminder of the spectre of contamination issues which affect the development potential of the rear yard. [ 104 ] In light of the foregoing, the following amounts from the Umlah Report, relevant to a determination of an appropriate award, are:

a) Price paid by the plaintiffs: $687,500

b) Value of the property as of May 9, 2013: $550,000

c) Diminution in value: $137,500 [ 105 ] The position of the defendant is that the Steele Report provides powerful rebuttal evidence that casts the reliability of the Umlah Report into serious doubt. The Steele Report identifies flaws in the Umlah Report which include:

a) Incomplete disclosure of facts and assumptions relied upon by Mr. Umlah, and the basis of those facts and assumptions;

b) Incomplete information regarding the nature of the contamination as known, thus leading to a misleading conclusion;

c) The use of former grow operations in Surrey and Maple Ridge and equating them to a potentially contaminated site in Victoria;

d) Notwithstanding the lack of apples to apples comparison, no adjustment was made between the Surrey/Maple Ridge and Victoria markets;

e) The unsubstantiated statement that the “grow op” properties used as in the Umlah analysis were subsequently restored and no analysis as to the level of damage or restoration;

f) The material non-disclosure that the “grow-op” properties were sold in an “as is” condition and pursuant to court ordered sale contradicts the definition of market value as set out on p. 5 of the Umlah Report, specifically, the assumption that a market value price is one that is not affected by undue stimulus. Further, if at least one of the sold properties were “a mess” on sale, the reliability of it as a comparable in the “stigma” analysis, and the analysis itself, is unreliable. [ 106 ] Moreover, the defendant’s position is that Mr.

Steele’s report correctly states that the rear yard of the property can still be used for passive recreational use which he contends is the normal use for residential properties in the Fairfield neighbourhood. The defendant submits that, based on the Steele Report’s comparison of home sales near to the property, that there is no evidence that stigma has affected the other properties nearby and that as a result, the market value was indeed paid by the plaintiffs in May 2013. [ 107 ] In the alternative, the defendant submits that, as stated in the Steele Report, Mr.

Umlah engaged in a flawed rear yard valuation analysis by applying a uniform rate per square foot to the property when in fact, the correct method would see the rate per square foot gradually decrease the further one ventures from the “home site.” The defendant states that the discount value given by Mr. Umlah to the diminished utility of the rear yard is too high. [ 108 ] Moreover, on cross-examination of Mr. Umlah, the defendant raises the concern that it was inappropriate for Mr. Umlah to separately calculate a diminution in value due to stigma and then a loss of value due to encumbrances.

Although not specifically addressed in submissions, the point appears to be that perhaps the loss due to encumbrances is subsumed under any diminution in value that arises due to stigma. That is, that a potential buyer who discounts the property due to stigma would presumably already include any loss of utility in that discount. Ultimately, the defendant makes the point that Mr. Umlah’s report may be amplifying the loss by using one factor in two separate places. [ 109 ] On the rebuttal evidence of Mr. Steele, the following amounts are relevant in a determination of an appropriate award:

a) Price paid by the plaintiffs: $687,500

b) Value of the property as of May 9, 2013: $687,500

c) Diminution in value: $0

Quantification of Damages [ 110 ] The task of the court is to decide what discount if any in the market value of the property (the price the plaintiffs paid) arises from the defendant’s non-disclosure of the contamination issue and, if a discount is warranted, to value it and order damages accordingly, thereby restoring the plaintiffs to the position they would have been in absent reliance on the misrepresentation. [ 111 ] Based on Mr.

Umlah’s report, and his evidence given on cross-examination, it is clear that he was attempting to illustrate the concept of stigma and how the market reacts to stigma which, in this case, was created by the potential for contamination. He acknowledges that evaluation of real estate is not a science, but is based on, in his case, experience, intuition, analysis and judgment arising from that experience. [ 112 ] As a result of his paired sales analysis involving marketed grow-op properties, and in assessing the diminution or loss of value of the property, Mr.

Umlah concluded that stigma does in fact affect the market, that it does so negatively, and in this case, the stigma created by the contaminant issue, taken together with the consequent limitations of use as a result of the monitoring wells, the diminution in value of the property should be assessed at 20%. [ 113 ] Mr. Steele criticizes the Umlah Report on a number of bases, the primary ones being that Mr.

Umlah used properties located in Surrey and Maple Ridge, not Victoria or a comparable market, and that the grow-up properties considered were inferior properties which, in a number of instances, were court ordered sales and unremediated when marketed. [ 114 ] Mr. Steele testified that in his view, Mr. Umlah’s analysis of the stigma effect is entirely unreliable. He bases this conclusion, in part, on his discussions with at least one realtor who subsequently sold properties in the Fairfield neighbourhood. As a result, Mr.

Steele satisfied himself that the contaminant issue in the neighbourhood has not amounted to a stigma negatively affecting the market. However, he agrees that he did not appraise these properties and made no attempt to determine directly, through the parties involved, whether or not the listing price and the price paid for these properties was impacted in any quantifiable way by the contaminant issue, or indeed whether, for example, active monitoring wells installed on all properties were a consideration. [ 115 ] Mr. Steele also criticizes Mr.

Umlah’s approach to the limitations on unrestricted use of the property as a result of the installation of the wells on the property, testifying that neither the fact nor location of the wells impacts the use of the property. Mr. Steele describes the testing wells as being similar to a sprinkler head, although this determination is based on his viewing of photographs, and not as a result of having attended the rear yard of the property as Mr. Umlah did. [ 116 ] Further, Mr. Steele suggests that the location of the wells would not unduly restrict the property owner’s use of the backyard.

For example, the property owner is able to work around the location of the wells if he/she chose to construct outbuildings or other things like swimming pools. [ 117 ] In Mr. Steele’s opinion, a contaminant issue does not give rise to a stigma on the property and a consequent diminution in value. There is no restriction on the use of the property as a result of the testing wells or the contaminant issue generally, and consequently, the price the plaintiffs paid for the property is reflective of its fair market value on May 8, 2013. [ 118 ] There is no question that Mr.

Umlah, in attempting to illustrate and define the concept of stigma and its negative effect on fair market value, did not have data to use regarding the sale of potentially chemically contaminated properties in Victoria sold in and around May of 2013. However, I am satisfied that he was not attempting, nor should he have been attempting, to equate the values of grow-op properties in Surrey and Maple Ridge with properties in Victoria generally, or Fairfield specifically. [ 119 ] On all of the evidence, I am persuaded by Mr.

Umlah’s assertion that stigma does arise when property is or may be contaminated, and conversely I reject Mr. Steele’s opinion that no stigma arises in such a situation. In my view, the comparisons Mr. Umlah used in formulating his opinion are of some assistance and so substantiate his view of the concept of stigma and its effect on value. Apart from the opinion evidence offered by both Mr. Umlah and Mr.

Steele, it seems to me a matter of common sense that property which is potentially contaminated by chemicals and is subject to ongoing environmental testing for the presence of such contaminants would be viewed as less desirable, and therefore as having a lesser market value than similar property, free and clear of such issues. [ 120 ] Overall, I am satisfied on the evidence and find that the contaminants issue does create a stigma in respect of this property, that stigma negatively affects its fair market value, and did so on May 8, 2013.

Further, I am satisfied that the location of the five wells on the property in the backyard diminishes the use and enjoyment of the property and certainly did so on May 8, 2013. The wells are exposed and are used for testing purposes once a month for approximately one hour each time. The fact that technicians come on to the property for the purpose of testing is an impediment to the privacy and enjoyment of the owners of the home. It is a far greater impediment, in my view, than Mr. Steele’s suggestion that it is similar to a B.C.

Hydro employee coming onto the property to read a meter periodically, or to the delivery of mail to the front door of the home by Canada Post. [ 121 ] The plaintiffs have expressed concern that they will be unable to build a garage in the backyard or even a shed and I accept their evidence that while it may be as Mr. Steele says, possible to work around the location of the wells for such purposes, there is no question that the location of the wells on the property limits the unrestricted use of that property for purposes other than passive recreation.

Similarly, I accept the plaintiffs’ evidence that while they expected to be able to grow vegetables in their backyard, that potential enjoyment has been lost in that they will not eat food grown in contaminated or potentially contaminated soil. [ 122 ] In considering the measure of damages, I have also taken into account Mr. Umlah’s evidence, which I accept, that stigma is more likely to have a negative impact on value in a stable real estate market which, in his view, the market was in May of 2013.

The fact that this property is worth significantly more in 2017 than it was in 2013 is irrelevant to the question of what effect the undisclosed contaminant issue had on the fair market value of the property on May 8, 2013. [ 123 ] I accept Mr. Umlah’s evidence that the concept of stigma and the possibility of its impact on value, is greater in respect of residential real estate transactions than it is in respect of commercial/investment real estate property transactions because, in Mr. Umlah’s

view, and I accept this as common sense, the residential real estate market is driven to a significant extent by emotion as well as economics. As he noted, emotion is a different motivator than that which drives commercial or industrial properties which may be less affected by the concept of stigma. [ 124 ] In conclusion, I am satisfied that the contaminant issue, had it been disclosed, would have amounted to stigma negatively affecting the fair market value of the property on May 8, 2013.

I also agree with the submission of plaintiffs’ counsel that stigma is more likely to be at its greatest when uncertainty is at its highest. In this case, the extent of contamination, if any, and the plan for its remediation, if any, is simply unknown and was unknown on May 8, 2013. Therefore, it would have negatively affected the fair market value on that date. [ 125 ] As to use and enjoyment, I accept that passive recreational use of the property is unaffected by the contaminants issue.

However, I find that the spectre of contamination, the fact of the presence of the wells and the monthly testing, restricts additional uses and overall enjoyment of the property to some degree. [ 126 ] I conclude that the plaintiffs are entitled to be compensated because they paid more for this property than it was worth. [ 127 ] In quantifying the plaintiffs’ loss, I take into account that Mr. Umlah proposes an overall 20% reduction on the purchase price: a 15% discount for stigma and the balance for the loss of enjoyment and use of the property.

The fact that the plaintiffs have not marketed this property for sale, four years after the fact and in a much changed market, has no impact on the finding or quantification of their loss on May 8, 2013. [ 128 ] An assessment of damages is simply that. The court is not required to do a precise scientific or mathematical calculation in the quantification of damages. I am satisfied that as a consequence of the negligent misrepresentation, damages should be assessed at $95,000. [ 129 ] Costs follow the event.

If counsel consider they have legal arguments to raise as to why the usual order should not be made, they may arrange through the Supreme Court Scheduling office to make those submissions on or before July 24, 2017. “J. L. Dorgan, J.” The Honourable Madam Justice Dorgan