TERESE KARWANDY v. BERNARD BÉDARD, 2003 SKQB 158

2003 SKQB 158 Q.B.G. A.D. 2002 No. 2376 J.C. R. IN THE QUEEN’S BENCH JUDICIAL CENTRE OF REGINA BETWEEN: TERESE KARWANDY and BERNARD BÉDARD APPELLANT S - and - LORRAINE SEBASTIEN, Executor of the estate of the late Albert Sebastien RESPONDENT Appellants in person William J. Herle for the respondent JUDGMENT MATHESON J. April 3, 2003 [ 1 ] The appellants have appealed from the judgment of Bogdasavich P.C.J. which awarded them the sum of $1,334.19, plus $50.00 in costs. [ 2 ] The basis of the appeal is that the appellants were awarded nothing with respect to the other aspect of their claim.

CLAIM OF APPELLANTS [ 3 ] In the spring of 2001 the appellants purchased a quarter

section of land in the Lumsden area from Albert and Lorraine Sebastien. The appellants claimed that, after taking possession of the property, it was necessary for them to expend $1,905.98 for electrical repairs to bring the dwelling and a shop up to electrical code standards, and in excess of $5,000.00 for removal of trash from the property. However, the appellants only claimed $5,000.00, in total, from the respondent. TRIAL JUDGMENT [ 4 ] The appellants had been provided with a property condition disclosure statement signed by Lorraine and Albert Sebastien.

The trial judge concluded that the representation in the property condition disclosure statement relating to the electrical system on the property was misleading, but that the property condition disclosure statement had not been incorporated as part of the purchase and sale contract.

Nevertheless, he concluded that the Sebastiens were liable for making a negligent misrepresentation, as to the state of the electrical system, which was relied upon by the appellants. [ 5 ] Because a Saskatchewan Power Corporation inspector had testified that many of the electrical deficiencies were clearly visible, and because the appellant, Bédard—who makes his living installing and repairing electrical equipment—admitted having noted some of the electrical problems, the claim of the appellants for electrical repairs was reduced by 30% by virtue of their own contributory negligence.

They have not, in their appeal, taken issue with that result. [ 6 ] With respect to the claim for damages for removing trash from the property, the appellants had asserted that the Sebastiens failed to disclose the existence of a garbage dump on the property. The appellants relied on question 2.A in the property condition disclosure statement: Are you aware of any additions or alterations made without a required permit?

Lorraine Sebastien placed her initials under the “NO” column. [ 7 ] Because he had decided that the property condition disclosure statement did not form part of the purchase and sale contract, the trial judge concluded that the claim of the appellants could not succeed in contract.

He further concluded that the foregoing question was not specific enough, with respect to the existence of a garbage dump, to constitute a basis for the tort of negligent misrepresentation. [ 8 ] But the appellants had also relied on statements made by Lorraine and Albert Sebastien to a realtor who completed an environmental assessment form for Farm Credit Corporation, who had been requested by the appellants to provide mortgage financing in the amount of $100,700.00 to enable them to complete the sale.

The Sebastiens had responded “No” to questions as to whether chemical waste, waste oil, pesticides, herbicides, or fertilizers were ever used, dumped, stored or disposed of on the property. The trial judge stated, “Clearly, the answer to these questions would be yes in nearly every farm in Saskatchewan”. He nevertheless concluded that the Sebastiens did not understand the environmental assessment form or its implications. [ 9 ] The trial judge also noted that condition No. 1(b) 5) in

Schedule “A” to the contract of purchase and sale stated: Buyers are aware and accept the condition of surrounding yard site. [ 10 ] Most of the trash, however, which included over 300 used tires, 80 batteries and 30 cubic yards of other garbage, was located at the garbage dump. The trial judge stated that several witnesses testified that the garbage dump had not been concealed in any manner by the Sebastiens and that, in fact, a trail ran from the main yard of the property approximately one-third of a mile to the garbage dump. Consequently, he concluded that it was the responsibility of the purchasers to properly inspect the property before completing the

sale. APPEAL [ 11 ] The appellants stated that they obtained the requisite mortgage financing on the basis of the environmental assessment form submitted to Farm Credit Corporation. However, when the appellants applied to Farm Credit Corporation for a further mortgage loan for home improvements, a representative of Farm Credit Corporation examined the property and would not approve the additional loan until the property had been satisfactorily cleaned up.

They cannot comprehend why the trial judge would allow them to recover most of the cost of remedying the electrical deficiencies, on the basis of an innocent representation on the part of the Sebastien’s, but under the same circumstances not be entitled to recover any of the cost of cleaning up the property. CONCLUSION [ 12 ] The agreement of purchase and sale contained the following clause: 12.

IT IS UNDERSTOOD AND AGREED that there are no other representations, warranties, guarantees, promises or agreements between the Buyer and Seller other than those contained in this contract and the Buyer hereby agrees to purchase the above described property as it stands at the price and terms and subject to the conditions above set forth. [ 13 ] In addition, one of the conditions set out in

Schedule “A” to the purchase and sale contract stated: 1.(b) 5) Buyers are aware and accept the condition of surrounding yard site. [ 14 ] It is clear that the property condition disclosure statement was not, as the trial judge concluded, part of the purchase and sale agreement. However, the appellants have insisted that the Sebastiens misrepresented the state of cleanliness, beyond the yard site, in their negative response to questions in the environmental assessment form relating to waste on the property.

The appellants have pointed out that the first condition set out in the purchase and sale agreement was that the agreement was subject to the buyer obtaining mortgage approval in the specified amount; completion of the environmental assessment form was necessary to obtain the mortgage approval; thus, the environmental assessment form became part of the purchase and sale agreement. [ 15 ] The condition that the sale of the property was subject to obtaining mortgage financing was inserted for the benefit of the purchasers.

If the requisite financing could not be obtained by the purchasers, the agreement would be at an end; the purchasers could not then be compelled to complete the transaction. But the mortgage financing condition did not impose any obligation on the sellers. [ 16 ] The environmental assessment form is not referred to in any of the documents which constitute the purchase and sale agreement. Nor could it be. The environmental assessment form was for the benefit of Farm Credit Corporation, which was not a party to the purchase and sale transaction.

Any misrepresentations by the Sebastiens, in the environmental assessment form, were made to Farm Credit Corporation, not to the appellants. Farm Credit Corporation has not asserted any claim with respect to the misrepresentations. [ 17 ] The trial judge was therefore correct in his conclusion that the Sebastiens are not liable for any innocent misrepresentations which may have been made, particularly in view of the foregoing conditions 1.(b) 5) and 12. [ 18 ] Consequently, the appeal must be dismissed. There will be no order as to costs. J.