2011 QCCQ 5925, 2011 QCCQ 5925

Re/Max Westmount inc. c. Burack 2011 QCCQ 5925 COURT OF QUÉBEC CANADA PROVINCE OF QUÉBEC DISTRICT OF MONTRÉAL Civil Division No: 500-22-151597-088 DATE: June 1 st , 2011 ______________________________________________________________________ PRESIDED BY THE HONOURABLE HENRI RICHARD J.C.Q. ______________________________________________________________________ RE/MAX WESTMOUNT INC. Plaintiff v.

JACOB BURACK and TAMARA FITCH Defendants ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] The real estate broker Re/Max Westmount inc. (hereinafter “ Re/Max ”) claims from Tamara Fitch and Jacob Burack $37,813.13 in damages further to the alleged non-performance of their obligations under a promise to purchase. [ 2 ] In defence, Ms Fitch and Mr Burack argue that they acted in good faith, as they had the right to refuse to purchase the property in question given the foundation problems their building expert found.

Questions in dispute [ 3 ] (

a) Have Ms Fitch and Mr Burack committed a fault by not purchasing the immovable referred to in their promise to purchase? (

b) If so, how much can Re/Max claim in damages? The facts and analysis [ 4 ] On January 14, 2008, the owners of a residential immovable located in Hampstead retain the services of Re/Max to be the exclusive intermediary for the sale of the immovable.

The brokerage contract is to terminate on April 30, 2008. [ 5 ] On March 27, 2008, Ms Fitch and Mr Burack sign a promise to purchase that is conditional, in particular, on their obtaining a hypothec loan and on the inspection of the immovable by a building expert. [ 6 ] The following two clauses refer to the condition regarding the inspection of the immovable: B2.4 INSPECTION BY A PERSON CHOSEN BY THE BUYER .

This promise to purchase is conditional upon the BUYER being permitted to have the IMMOVABLE inspected by a building expert within a period of [April 11, 2008] days following acceptance of this promise to purchase. Should this inspection reveal the existence of a factor relating to the IMMOVABLE and liable to significantly reduce the value thereof, reduce the income generated thereby or increase the expense relating thereto, the BUYER shall so notify the SELLER in writing and shall give him a copy of the inspection report within four (4) days of the expiry of the above- mentioned deadline.

This promise to purchase shall become null and void upon receipt by the SELLER of the notification together with a copy of the inspection report. Should the BUYER fail to notify the SELLER within the time period and in the manner provided above, he shall be deemed to have waived this condition.

B2.5 Purchaser to have foundation examined by expert within same time period + must be satisfied or offer becomes null and void. [ 7 ] Ms Fitch and Mr Burack’s promise to purchase is followed by two counter-proposals, the last of which is accepted by the owners of the immovable in question on March 31, 2008. In the last counter-proposal, the parties provide for the following, among other things: Re 2.4: Building inspector to be Allan White. [ 8 ] On April 8, 2008, building expert Allan White inspects the immovable for almost four hours.

He prepares an elaborate inspection report, stating, among other things, “Expect clay soil conditions”. [ 9 ] Regarding the immovable’s concrete foundation, Ms Fitch and Mr Burack’s building expert notes that the rear portion of the property has subsided, a portion he refers to as the “rear extension”, and gives the following explanations: As for the rear extension, it has clearly subsided (by approx. 1.5" at the southeast corner) despite the use of oversized (5' wide) spread footings indicated on the structural drawings which are in the owner's possession.

Given the amount of movement to date, and should movement progress, it may be (or could become) necessary to install hydraulically-sunk bearing piles about the entire perimeter of the rear extension to the home. When site repairs are taken into consideration (gardens, sun deck, etc…), and in consideration of a cost of over $1,200 per pile, with each pile placed at roughly 10' intervals, and double-piled at corners, such a project can cost close to $20,000. The need for piling of the rear extension should be considered a long-term liability, and the situation should be closely monitored.

On a positive note, the lack of significant fracturing within the home (particularly at the junction of the extension to the original sector) since the home was last painted (approx. 13 years ago) is encouraging. As a starting point, it is strongly advised that a geotechnical engineer be consulted, in order to conduct a proper soil analysis that will in turn determine the risk or likelihood of experiencing further movement.

The alternative is to monitor the foundations over the long-term, but this implies a certain liability on the buyer's part, since the risk is unknown without further investigation. [ 10 ] The evidence shows that Ms Fitch and Mr Burack do not have the foundation or the soil further analyzed. [ 11 ] On April 15, 2008, Ms Fitch and Mr Burack visit the immovable again in order to check the condition of the attic and the operation of the air conditioning system. [ 12 ] After that visit, Ms Fitch and Mr Burack decide not to purchase the property in question, invoking, in particular, their building expert’s comments regarding the subsidence of the rear extension of the immovable and the possibility of having bearing piles installed in order to permanently resolve the problem. [ 13 ] Ms Fitch and Mr Burack are informed of the need to put their decision in writing in order to terminate their promise to purchase, which they do in a letter dated April 15, 2008 and worded as follows: We are sorry for any inconvenience we may have caused by our slow decision making.

After reviewing the inspector's report, we were not entirely satisfied due to the immediate and potential long term costs for repairs the inspector had suggested. Again, we apologize for any inconvenience. [Exhibit P-9] [ 14 ] As indicated above, the brokerage contract entered into between Re/Max and the owners of the immovable terminates on April 30, 2008. The contract with Re/Max is not renewed.

The owners retain the services of another real estate broker, who is unable to sell their immovable. [ 15 ] Hence, the owners decide to sell their property themselves, which they manage to do in the fall of 2008. [ 16 ] According to the evidence adduced by Re/Max, after sending the April 15, 2008 letter (Exhibit P-9), cited above, Ms Fitch and Mr Burack allegedly change their mind and say they are willing to buy the immovable.

Hence, a meeting is arranged on April 16, 2008 in order to prepare the appropriate documents. [ 17 ] This change of mind by Ms Fitch and Mr Burack is allegedly communicated orally by their real estate agent, Deena Caplan, who does not testify at the hearing. Mr Burack formally denies having announced any change of mind whatsoever after the P-9 letter, cited above.

In that regard, the Court concludes that there is no preponderant evidence establishing that Ms Fitch and Mr Burack change their mind after the P-9 letter. [ 18 ] Furthermore, the evidence shows that, in order to reassure them and encourage them to sign the deed of sale, the owners of the immovable referred to in Ms Fitch and Mr Burack’s promise to purchase propose to keep the sum of $20,000 in trust to be reimbursed gradually and yearly in the event that there is no problem with the foundation of the rear portion of the immovable.

That offer remains oral and is never made in writing to Ms Fitch and Mr Burack. [ 19 ] The evidence of Re/Max shows that, prior to April 15, 2008, Ms Fitch and Mr Burack wonder about the price offered and whether the transaction is a “good deal”. [ 20 ] In paragraph 20 of its motion instituting a proceeding, Re/Max alleges that Ms Fitch and Mr Burack “have acted in bad faith throughout the whole transaction, alleging different unfounded justifications to withdraw from their obligations, despite “ the sellers ’”

numerous attempts to satisfy their requests”. [ 21 ] Moreover, in support of its contentions, Re/Max invokes

section 11.1 of the promise to purchase, which is worded as follow: 11.1 Nothing stipulated in this PROMISE TO PURCHASE shall be interpreted as restricting the real estate broker’s rights to obtain, where applicable, payment of any sums of money that may be due to him as compensation or damages according to the ordinary rules of ordinary law, particularly, but without limiting the generality of the foregoing, where a sale does not take place because the SELLER or the BUYER voluntarily blocks the sale or otherwise voluntarily prevents its conclusion. [ 22 ] Since Ms Fitch and Mr Burack refuse to purchase the immovable referred to in their promise to purchase “without any serious reasons”, Re/Max argues that “they voluntarily blocked the sale and prevented its conclusion” (paragraphs 22 and 23 of the motion). [ 23 ] As indicated above, Ms Fitch and Mr Burack’s promise to purchase is conditional upon an inspection of the immovable by a building expert (clause B2.4, cited above).

Moreover, clause B2.5 provides that Ms Fitch and Mr Burack could have the foundation examined by an expert.

Despite Re/Max’s contentions, the Court cannot conclude that the expert referred to in clause B2.5 is necessarily different from the expert referred to in clause B2.4. [ 24 ] In fact, building expert Allan White, whose services are retained by Ms Fitch and Mr Burack, examines the foundation and issues detailed comments regarding the obvious subsidence of part of the foundation and the need to have bearing piles installed for approximately $20,000. [ 25 ] This case is particular because of clause B2.5, cited above.

Regarding the foundation of the immovable, it is provided that Ms Fitch and Mr Burack “must be satisfied or offer becomes null and void”. Thus, in this regard, there is no reason to enquire into “the existence of a factor relating to the IMMOVABLE and liable to significantly reduce the value thereof, reduce the income generated thereby or increase the expense relating thereto” (clause B2.4, cited above).

On the contrary, the parties provide for the possibility for the buyers, Ms Fitch and Mr Burack, to make their promise to purchase null and void if they are not satisfied with the condition of the foundation examined by an expert. [ 26 ] In the above-cited letter P-9, dated April 15, 2008, Ms Fitch and Mr Burack invoke “the immediate and potential long term costs for repairs the inspector had suggested”. They necessarily refer to the condition of the foundation at the rear portion of the immovable. [ 27 ] The wording of clause B2.5, cited above, leaves some discretion to Ms Fitch and Mr Burack.

Obviously, that discretion cannot be used in a purely arbitrary or capricious manner. [1] [ 28 ] In this case, the evidence shows that Ms Fitch and Mr Burack's decision not to purchase the immovable is based on the observations and conclusions of their building expert, Allan White. Their decision is not capricious or arbitrary, and Ms Fitch and Mr Burack do not act in bad faith. [ 29 ] It seems likely that, in addition to being dissatisfied with the condition of the immovable’s foundation, Ms Fitch and Mr Burack may have expressed other concerns regarding the price offered.

Re/Max interprets those concerns as indicating that they purely and simply change their mind and want to avoid their obligation to buy the immovable. [ 30 ] With respect for the position of Re/Max, the Court must apply and implement the contract entered into between the owners of the immovable and buyers Tamara Fitch and Jacob Burack. The parties specifically provide for the possibility for the buyers to make the promise to purchase null and void if they are not satisfied with the condition of the foundation. That is what they do and they cannot be criticized for anything in that regard.

In saying they are dissatisfied with the condition of the foundation, they act in compliance with the terms of the promise to purchase agreed upon by the parties, as they base their decision on the inspection report by their building expert, who objectively notes a subsidence problem with the rear portion of the immovable. [ 31 ] In the Court’s opinion, the buyers are justified in basing themselves on their building expert’s report that indicates such subsidence problems with the foundation and the possibility, even on a long-term basis, of having to install bearing piles in order to straighten or stabilize the immovable.

Given the wording of clause B2.5, cited above, the Court does not have to examine the significance of the costs incurred as a result. The Court only has to determine whether the buyers, Ms Fitch and Mr Burack, commit a fault by deciding not to follow up on their promise to purchase. [ 32 ] From all of the evidence adduced, the Court concludes that Ms Fitch and Mr Burack do not commit any fault when they decide to terminate their promise to purchase by sending the above-cited letter P-9.

They have the right to terminate the promise to purchase since it provides for the possibility of their making it null and void if they are not satisfied with the condition of the foundation. As indicated above, their decision is justified by the comments of their building expert. [ 33 ] Given all of the above, the Court concludes that Re/Max does not discharge its burden of establishing, through preponderant evidence, any fault whatsoever on the part of Ms Fitch and Mr Burack toward Re/Max.

As a result, its motion instituting a proceeding must be dismissed. [ 34 ] In closing, the Court indicates that, given its conclusion and the absence of fault on the part of Ms Fitch and Mr Burack, it is not ruling on the various objections to the evidence that it takes under reserve during the trial. THEREFORE, the Court:

DISMISSES Re/Max Westmount Inc.’s motion instituting a proceeding; THE WHOLE with costs. __________________________________ Henri Richard J.C.Q. Mtre Alain Mongeau, Attorney for the Plaintiff Mtre Lazar Sarna, (SARNA NEUDORFER) Attorney for the Defendants Date of hearing: May 4, 2011