Larson v. Lotus, 2021 NSSM 19

IN THE SMALL CLAIMS COURT OF NOVA SCOTIA Citation: Larson v. Lotus , 2021 NSSM 19 2021 Claim No. 502618 BETWEEN: ELIZABETH JEAN LARSON and SEBASTIAN JOHN ROBERTS Claimants - and - GEM LOTUS Defendant Date of Hearing: March 30, 2021 DECISION [ 1 ] This is a claim for $4,140 for the cost to repair a chimney at the Claimants’ home. The subject property was sold by the Defendant to the Claimants on or about May 28, 2020. The Claimants say that the Defendant misrepresented the true state of affairs on a Property Disclosure Statement she prepared on May 4, 2020.

They further state that water damage was caused by the poor state of the chimney which was known to the Defendant at the time she signed that Property Disclosure Statement. [ 2 ] On review of the evidence and the applicable law, I am dismissing this claim. In arriving at this decision I have looked at the law and the facts of this case which I will set out in the balance of these reasons. Law [ 3 ] One of the leading Nova Scotia cases on Property Condition Disclosure Statements is the case of Gesner v. Ernst et al 2007 NSSC 146 . In that decision, Associate Chief Justice D.K.

Smith (as then was), stated (para 44): As a general rule, absent fraud, mistake or misrepresentation, a purchaser of existing real property takes the property as he or she finds it unless the purchaser protects him or herself by contractual terms. Caveat emptor. She further states (para 54): A property condition disclosure statement is not a warranty provided by the vendor to the purchaser. Rather, it is a statement setting out the vendor’s knowledge relating to the property in question.

When completing this document the vendor has an obligation to truthfully disclose her knowledge of the state of the premises but does not warrant the condition of the property… [ 4 ] At paragraph 100, A.C.J. Smith refers with approval to the Prince Edward Island case of Davis v. Kelly , [2001] PEIJ No. 123 , where the Prince Edward Island Court states: …Property condition disclosure statements… do not require vendors to warranty properties but rather to state problems of which they are aware.

Upon sufficient disclosure the maxim of buyer beware applies as the purpose of the property condition disclosure statement is to raise questions and concerns rather than to give detailed answers.

[5] To similar effect is the following statement from the Manitoba Court of Appeal in the case of Alevizos v. Nirula, 2003 MBCA 148, [2003] M.J. No. 433, at paragraph 36 as follows: While, as we have seen, the PCS is a relatively new phenomena in Winnipeg, at least three provinces (British Columbia, Saskatchewan,and Prince Edward Island) have utilized PCS’s for some time. From a review of decisions from those jurisdictions, and the one report inManitoba decision to date (of which more later), the following general statements can be made: 1.

Declarations made in a PCS are representations as opposed to terms of the contract… 2. Such statements do not constitute a warranty, rather the purpose of a PCS is to put purchasers on notice, to make purchasers awareof a problem if there is one… 3. Since the purpose of the PCS is to give the purchasers a “heads up” with respect to potential problems, liability will ordinarily bedisallowed when the problem in question is obvious… 4. If the Vendor answers the PCS honestly and does not deliberately intend to mislead then liability will not follow even if therepresentation turns out to be inaccurate… 5.

Based on the experience of those provisions that have employed the PCS, it seems to present a ripe ground for litigation. Doubtlessthis is due in no small measure to the problems inherent in an informal “fill in the blank” form which can have such serious legalconsequences when problems subsequently develop in a real estate transaction. The wisdom of maintaining in use a form fraught withsuch inherent difficulties, exacerbated by the conflicting statements within the form concerning its purpose and effect, should beaddressed by lawyers and the real estate agents alike.

Application of Law to Facts in Present Case [6] There are three parts of the Property Condition Disclosure Statement which are relevant here: 1.1 Are you aware of any structural problems, unrepaired damage, dampness or leakage? Yes If yes provide details: water intrusion chimney side of house 1.2 Are you are aware of any repairs to correct structural damage, leakage or dampness problems? Yes If yes provide details: tar and spray foam used by previous owner 2.6 Are you aware of any problem with the chimney? No [7] In this present case, the Claimants rely on

Section 2.6 stating that the Defendant must have known that the water incursion was dueto the poor state of the chimney.

In the Defendant’s defence she states that other than the obvious poor visual state of the chimney, it wasoperational to her knowledge. [8] Further, in her evidence the Defendant testified that her understanding was based on a report dated March 14th (approximately amonth and a half before she did the Property Condition Disclosure statement) by Philip DeBay, a certified building inspector, that thewater incursion was not a result of the chimney but was ground water that was at the foundation level. [9] She referred to one incident in particular on February 26, 2020, when water was coming in the chimney cleanout but it was notraining at the time.

I note as well that there apparently still is some leaking and the Wise Cracks company had been consulted at somepoint. In other words, it is not entirely clear to me that the Claimants have proven that the water incursion was due to defects in thechimney. [10] In all events, I particularly refer to item 4 in the Alevizos case which states that if the vendor answers the question honestly anddoes not deliberately intend to mislead, liability will not follow even if the representation turns out to be inaccurate. [11] This statement of principle applies to the case here. That is, in my view, Ms.

Lotus did answer question 2.6 honestly and was notintending to mislead. It remains an open question whether or not her representation was inaccurate but at the time it was honestly givenand I would add, based on a reasonable understanding of the situation as it was based on what Mr. DeBay, an expert, had told her.Accordingly, there has been no breach of the Property Condition Disclosure Statement. [12] I am further supported in my overall conclusion by the fact that the Defendant did in fact fully disclose that there was waterincursion on the chimney side of the house in item 1.1.

This should have put the Claimants clearly on notice that further investigationswere to be undertaken ORDER [13] It is hereby ordered that the within claim be and is hereby dismissed without costs to either party.

DATED at Halifax, Nova Scotia, this 17th day of June, 2021. MICHAEL J. O’HARA ADJUDICATOR