Michael Yawney QC was asked by an Alberta lawyer to take on a complex injury claim from a collision that occurred on Hwy # 1 in BC, near the Alberta border. A tractor trailer lost control on winter roads and hit a family travelling back to Alberta. A young baby was severely injured in the collision, suffering a severe brain injury and other injuries that compromised her development. The effect on the little girl and her family had been devastating. After many years of work on the file, one trial and a pending further trial, the infant girl’s claim was resolved for over $14,000,000.00; most of that amount was to cover her daily care needs for the rest of her life because she would never be able to live on her own or have her own life. Mr. Yawney’s team included a case manager/paralegal, many legal assistants lawyers and two of his partners, Allyson Edwards and Ryan Irving.
Written by: Krystin Kempton, Associate
A recent case in the British Columbia Supreme Court allowed a buyer to back out of a contract to buy a $6.5 million house in West Vancouver based on a standard contract clause dealing with permitted encumbrances.
The contract stated that the land would be transferred “free and clear of all encumbrances” except for “restrictive covenants and rights of way in favour of utilities and public authorities.” Title to the property contained an old restrictive covenant that imposed restrictions on the use of the property and alterations to the property. The restrictive covenant was in favour of a developer.
The seller was not able to obtain a release of the restrictive covenant and the buyer refused to close. The seller sued the buyer for the $300,000 deposit. The seller argued that the buyer was aware of the restrictive covenant and approved a title search of the property, and therefore should not be able to back out on that basis.
The court ruled in favour of the buyer. The buyer was allowed to rely on a literal reading of the contract which did not include the restrictive covenant as a permitted encumbrance since it was not in favour of a utility or public authority.
As a seller, it is important to carefully draft purchase and sale agreements to set out every encumbrance which will remain on title following closing.
Written by: Andrew Powell, Partner
People often ask if there is any obligation on the part of the seller of a house to advise potential buyers that someone has died in the house; there may even be a sincerely-held belief that the house is haunted by a deceased person, or that the property is subject to a malevolent supernatural presence. If so, do you have an obligation to disclose it?
Legally, probably not.
Disclosure obligations relate to defects or qualities of a property that are fairly objective. Patent defects require no disclosure, because they are obvious; latent defects are those that are not discoverable upon a reasonable investigation by the buyer. If there are latent defects that directly relate to the intrinsic quality of the building or property which, objectively, materially affect the property’s use or value, then those must be disclosed. Material defects are those that affect whether a property is dangerous or unfit for habitation.
And therein lies the question. There can be several qualities of a property which are not immediately apparent upon investigation, but which can nevertheless possibly affect the value of the property. These qualities are called “stigma”.
Despite being subjective, stigma can be significant. In order to lessen the stigmatic effect, for instance, the house in St. Catharines, Ontario, in which Paul Bernardo committed his assaults and murders had to be demolished by its owners. A new home was constructed and was given a different street address, all in order to eradicate its association with Bernardo.
So stigma is real — but does the fact of a death, even a reported haunting, count as a latent defect, such that it must be disclosed?
The question has come under the consideration of the Courts a number of times, and the courts have usually held that stigma need not be disclosed. In 1784773 Ontario Inc. v. K-W Labour Assn Inc,  ONSC 5401, the Ontario Superior Court of Justice directly addressed the question: if a property is haunted, does that fact need to be disclosed to a purchaser? According to that court, it turns out the answer is “no”. Having a ghost in the house is not a latent defect.
The case was appealed:  ONCA 288. The Ontario Court of Appeal agreed with the Superior Court, adding: “there is no direct evidence of economic loss or damage as a result of the stigma of a haunted property, nor is there any direct evidence from anyone who observed any strange occurrences in the property.” Hence, it may just be a question of having enough evidence. If you can prove that the stigma, in that case a ghost, is actually causing or threatening harm, then you need to disclose it like any other latent defect. If on the other hand it is friendly or harmless, you don’t.
In the Real Estate Council of British Columbia’s Professional Standards manual, duties of disclosure are considered for “stigmatized” properties; these properties include (but are not limited to):
• Properties located in neighbourhoods where a sexual offender is reported to live;
• Properties formerly occupied by a member of a criminal organization or gang; and
• Properties that are reportedly haunted.
According to the manual, stigma do not affect the “appearance, function or use of the property”, but rather affect the psychological value of it based on the beliefs or background of the property owner. Stigma are therefore not material latent defects. However, the manual acknowledges that existence of certain stigma may still have serious impacts on the value of the property to certain buyers. Therefore the manual advises that although there is no direct obligation to disclose stigma, the best practice for an agent is as follows:
Sellers and their licensees who choose to answer such questions are expected to use reasonable skill and care to ensure the accuracy and completeness of the information provided to buyers.
It seems though that despite the lack of a specific legal obligation, a safer practice and one which would avoid risky lawsuits would be to err on the side of disclosure, especially if there is any concern that the particular buyer would be sensitive to the particular stigma associated with the property
The mother of a 17 year old Kelowna student retained Michael Yawney QC to help her daughter with a claim from a head on accident on Hwy 33 east of Kelowna. The defendant driver was driving too fast for the winter road conditions and crossed the centre line into the client’s lane of travel injuring her spine which required surgery and the placement of hardware in her back. The injuries from the collision had a significant impact on her career plans and her ability to complete her post secondary schooling. At mediation months before a scheduled trial, Mr. Yawney was able to resolve the claim for over $1,000,000 plus costs.
Pictured Above: Krystin Kempton, Associate at Nixon Wenger Lawyers.
Congratulations to Krystin Kempton who was recently elected as the new Vice President of the Greater Vernon Chamber of Commerce!
Krystin has served on the Chamber Board for two years and is proud to serve her third year as Vice President. Way to go Krystin!
Fellow board members include:
Diana Wilson, President
Markus Schrott, Past President
Krystin Kempton, Vice President
Ben Robinson, Treasurer
Mr. Yawney was retained by a middle aged Okanagan woman who suffered soft tissue injuries in a rear end accident. The client’s past medical history showed prior problems that were aggravated by the injuries in the accident. Michael Yawney QC and fellow partner Allyson Edwards were able to resolve the woman’s claim short of trial for over $123,000.00.