2006 BCSC 1059 Holt v. Thompson et al

Before: The Honourable Mr. Justice Curtis

Reasons for Judgment

Counsel for the Plaintiff	Aseem P.S. Dosanjh
Counsel for Ada Van Leeuwen	William E. Knutson, Q.C.
Date and Place of Trial:	June 7-9, 2006
	Vancouver, B.C.

[1] Simma Holt has sued her realtor Ada Van Leeuwen for damages for selling her a leaky condo. Ms. Van Leeuwen is the only defendant against which the action proceeded to trial.

[2] Simma Holt met Ada Van Leeuwen at a real estate kiosk in the Lougheed Mall about October or November 1998.

[3] In the fall of 1998, Simma Holt was 76 years of age. She had sold her townhouse in Arbutus Village in 1990 or 1991, invested the proceeds and was renting a condominium but thinking of buying one of her own. Ms. Holt is a graduate of the University of Manitoba. She worked as a journalist for the Vancouver Sun from 1944 to 1974, served as a member of Parliament from 1974 to 1979 and has written four published books, the last being published in 1981. At the time she was (and still is) continuing with her career as a writer and wanted a small conveniently located condominium from which she would travel and pursue her writing. She had an income of about $60,000 a year.

[4] Ada Van Leeuwen, in the fall of 1998, was a realtor working for Royal LePage. She had worked for Sears for 25 years, taken her real estate sales course in 1992, and her agent’s course in 1994 at UBC, and had worked since that time in real estate sales, mostly residential. She said she liked to limit herself to 20 to 25 clients a year.

[5] When Ms. Van Leeuwen saw Ms. Holt looking at the advertising at the kiosk, she introduced herself and asked if she could be of help. Ms. Holt told her she had been thinking about buying a condo but was in no rush. Ms. Van Leeuwen phoned Ms. Holt a week later and they met at McDonald’s restaurant where she gave Ms. Holt a set of real estate listings and told her if she wanted to see any to call. They talked on the phone and arrangements were made to view some properties. Ms. Van Leeuwen took Ms. Holt out to Coquitlam and Maple Ridge to look at some of the possible areas.

[6] Ada Van Leeuwen said Simma Holt told her she had heard of problems with some of the condos and in her evidence, Ms. Van Leeuwen said, “I assured her I would not sell her a leaky condo.” She said she took Ms. Holt to look at some of the problem condos which were covered with tarps. Simma Holt told her she could afford to pay $80,000 to $100,000 or maybe $110,000.

[7] Subsequently, Ada Van Leeuwen took Simma Holt to look at condominiums in New Port Village in Port Moody. Simma Holt loved the location and made an offer of $109,000 on a condominium that was listed for $120,000, however, that offer was rejected. Ada Van Leeuwen testified that Ms. Holt inquired about the Heritage Grand condominiums across the street from New Port Village and she told her, “I have heard rumours there is a problem”, but Ms. Holt insisted on looking at them.

[8] Ms. Van Leeuwen testified she called the property management for the Heritage Grand and was advised that there were problems with buildings 4 and 5, but that the New Home Warranty program and Richardsons, the builders, were taking care of it. Ada Van Leeuwen arranged to show Simma Holt condominiums in building number 3 of the Heritage Grand, and Simma liked unit 420 which she eventually bought and is the subject of the present law suit.

[9] The list price on unit 420 was $114,000. An offer of $106,500 was presented and $110,000 agreed upon, as evidenced by a written contract of sale and purchased dated February 17, 1999.

[10] Schedule A to the accepted offer reads:

Seller to provide to the Buyer within 48 hours of acceptance of this offer the by-laws, financial statements, minutes of the past two years’ Annual General Meetings, minutes of any Extraordinary General Meetings held during the past two years, Strata Council Meeting Minutes for the past two years, and any Engineering Reports relating to the Strata complex.

Subject to the Buyer reading and approving the abovementioned documents provided by the Seller, on or before Feb 22, 1999.

This condition is for the benefit of the Buyer.

The Seller warrants that the Seller is not aware of any circumstances that could lead to special assessments being approved for remedial work in the Strata Complex.

ALL OTHER TERMS AND CONDITIONS CONTAINED IN THE SAID AGREEMENT REMAIN THE SAME AND IN FULL FORCE AND EFFECT.

[11] The seller’s disclosure statement included the following:

21. Are you aware of any structural problems with any

of the buildings on the property? YES

26. Are you aware of any leakage or unrepaired damage? YES

[12] Ada Van Leeuwen put question marks beside these two answers. She contacted the seller’s realtor and was advised that the questions were answered yes because buildings 4 and 5 were on the property and had such problems. She told Simma Holt that the disclosure statement applied to the whole property and because buildings 4 and 5 were having problems the questions had been answered yes but the problems were being taken care of.

[13] Several days later, Ada Van Leeuwen received a large binder of the minutes of the Strata Corporation. She testified she telephoned Simma Holt who told her she was very busy. Ms. Van Leeuwen testified it was not her usual practice to read the strata minutes, but to leave that to the purchaser. In this case, she told Simma Holt she would read the minutes and put yellow stickies on the important parts. Ada Van Leeuwen said she read the whole of the minutes which took her four or five hours.

[14] When she took the minutes to Simma Holt marked with yellow stickies and urged her to read them, Simma said, “I am very busy” and she told her there were important things she had to read. Ms. Van Leeuwen agreed Simma Holt told her, “I rely on you” to which she replied, “Yes you can do that but you have to read, you are the one making the decision.”

[15] Ms. Van Leeuwen testified, “When I brought over the minutes I told Simma buildings 1, 2 and 3 were under investigation but the property manager told me if a problem was found as in 4 and 5, water ingress or structural damage, both would be taken care of by Home Warranty and Richardsons (the builder).

[16] Ms. Van Leeuwen agreed that she was acting as Simma Holt’s agent throughout the transaction and was responsible to protect her interests. She agreed she told Simma Holt she would do her very best to find her the right property. She also agreed that while it was not her usual practice to read the minutes, “… in this case I knew it was very important.” She said, “I told her I would do anything to protect her or find the right place.”

[17] Simma Holt agreed that Ada Van Leeuwen urged her to read the minutes and that she did read them. She said all she noticed were problems between people. She said Ada Van Leeuwen kept telling her everything was okay. She didn’t recall parts of the minutes being flagged for her.

[18] What the minutes of the Strata Corporation reveal is significant. In particular, the following is found:

Report on Water Ingress Problems at LMS 2188.

301 Maude Road Port Moody

Buildings four and five appear to have more severe water ingress than buildings one, two and three, but all five buildings have some degree of water ingress problems. The problem of too thin stucco prevails on all buildings in the complex.

(Aqua-Thermal

Consultants Ltd.

June 17, 1997.)

Strata Corporation LMS

2188 Annual General Meeting

February 1, 1999

-an owner asked about the status of the report being done by the engineering firm. The firm has completed approximately 80% of the work, but have been held back by the weather. They wish to have access to a few of the top floor units on buildings 1, 2 or 3 and the manager is arranging for this. Their report should be completed shortly after this inspection. The manager also advised that New Home Warranty indicated that they have set a deadline for the insurance adjusters for Richardsons (February 28/99) and they have indicated that they would be prepared to commence work shortly thereafter.

[19] When cross-examined about what she thought when she read the June 17, 1997 Aqua-Thermal report, Ada Van Leeuwen agreed the issue was not whether building number 3 had a problem but what the extent of that problem was. She said, “Yes of course but it would be repaired at no cost to the owners” and that is what she told Simma Holt.

[20] On the 22^nd of February 1999, Simma Holt signed a removal of subject clause agreement. On the advice of Ada Van Leeuwen, a holdback of $10,000 was added to the agreement. The holdback agreement provides in part as follows:

The Buyer acknowledges being advised that certain deficiencies may need to be repaired for the strata complex which may result in the approval of a special assessment or assessments as the contingency fund may not be adequate to pay the total cost or it may be decided not to deplete the contingency fund for such deficiencies. The Seller agrees that the Buyer’s Solicitor, shall retain in trust the sum of $10,000 (the “Holdback”). The Holdback shall be retained by the Buyer’s solicitor as stakeholder, to off-set any special assessments to repair the Work (as defined below), that are passed from the date hereof to 12 months from the date of completion of this purchase and sale (the “Holdback Period”).

OPTION 1:

The Holdback shall be applied to any work (the “Work”) in respect of which a special assessment is passed during the Holdback Period, regardless or whether or not the deficiencies have been currently identified.

OPTION 2:

The Hold Back shall be applied only to the following items

1. water ingression

option 3:

the work – definition

the work is defined as the work that is directly related to the possible water ingression problems only.

[21] Ada Van Leeuwen testified that she added the holdback as extra protection for Simma Holt. She originally suggested $20,000 but the seller would not agree to that and $10,000 was settled upon. Simma Holt testified that as far as she knew the holdback was simply extra protection but she relied on Ms. Van Leeuwen to advise her how to proceed.

[22] Simma Holt used a notary recommended by Ada Van Leeuwen to do the conveyance. The notary obtained a Certificate of Strata Corporation dated April 27, 1999. That Certificate included the following:

g) The expenses of the Strata Corporation for the current fiscal year are expected to exceed the expenses budgeted for the fiscal year. A special assessment may be pending.

[23] Patricia Mclean, the property manager for the Heritage Grand testified that she phoned the notary’s office to ask her if Ms. Holt was aware of a potential special assessment. The Notice however refers to budgeted expenses not repair costs. The notary did not testify. By the 27^th of April 1999, Simma Holt was already legally bound to complete the purchase.

[24] The closing date was May 1^st, 1999. Simma Holt moved in May 3^rd and immediately left for a trip planned earlier. When she returned from her travels on May 11^th, she found under her door a Notice of an Extraordinary Meeting of the Strata Corporation disclosing a proposed special assessment for water damage. In the end, she paid special assessments of $31,280.08 and $9,384.02. An action against the municipality recovered $16,136.14 for her with the result that she was out of pocket $24,527.96. After the $10,000 holdback is applied, her loss was $14,527.96. In addition, of course, there was the disruption caused by the repair work which started in May 2000.

[25] On top of the financial and construction problems, Simma Holt testified she had severe problems caused by the damp and mould in her unit. She said she never really unpacked and lived in about 150 square feet of her condo. She encountered coughing, breathing and eye problems that were so bad she often had to leave at three or four in the morning and stay with friends or go to her property in Washington. She tried working with a mask and could not. For a period of time she rented an office downtown near the Burrard bridge which cost her $514.93 per month. She also was short of money from paying the special assessment and fell behind in her payments to Revenue Canada resulting in assessments and penalties she estimated to be $17,000. She sold the condominium in 2004 for $180,000. She summed up her experience as “I feel my life and my career were taken from me, perhaps a death sentence, terrible cough, from the mould.”

[26] New Home Warranty went bankrupt in or about March 1999 and the builder similarly failed such that no funds or assistance was available from either source.

[27] Ada Van Leeuwen testified she acted reasonably in not warning Simma Holt not to complete because it was reasonable at the time to believe the New Home Warranty program would cover the potential problems, although she agreed she was not familiar with the terms of the New Home Warranty coverage.

[28] The position of Simma Holt is that she relied on Ada Van Leeuwen as her realtor to protect her interest. Ada Van Leeuwen had told her she would not sell her a leaky condo and that she was properly protected. The position of Ada Van Leeuwen is that she had informed Simma Holt of the issues, took reasonable steps to protect her interest and Simma Holt knowingly took the risk of buying the condominium.

[29] I find Ada Van Leeuwen failed in her duty to her client Simma Holt. She told her she would not sell her a leaky condo and that is exactly what happened in circumstances in which Ada Van Leeuwen either knew or ought to have known the condominium had significant water ingress problems. Ada Van Leeuwen was well aware of Simma Holt’s desire to rely on her judgement in the matter. I find it unlikely that Ada Van Leeuwen fully discussed the specific concerns raised in the minutes with Simma Holt. I am satisfied that if Simma Holt had properly appreciated those issues, she would not have proceeded with the purchase. Having told Simma Holt she would not sell her a leaky condo and would protect her interest, Ada Van Leeuwen had a duty to make the specifics of the risk Simma Holt was undertaking very clear to her, not just to urge her to read the minutes when she knew Simma was very busy and not inclined to. Furthermore, Ada Van Leeuwen had decided that it was safe to rely on the New Home Warranty program, yet she was unfamiliar with its terms and did not fully explain the nature of this reliance or its risks to Simma Holt. Ada Van Leeuwen told her the property manager had said that if the problems were water ingress or structural damages, they would be taken care of by the builder and New Home Warranty without discussing how reliable such representations might be. I find Ada Van Leeuwen negligently misrepresented to Simma Holt the state of the condominium being purchased, and that her interests were properly protected when they were not. I also find that Simma Holt was reasonably relying on the advice of Ada Van Leeuwen who had encouraged her to do so. I find Ada Van Leeuwen liable for the damages caused to Simma Holt by her negligent misrepresentation.

[30] I do not find the claims for renting the downtown office space to have been proven to be caused by the defendant’s negligence. Simma Holt testified she chose the location because she wanted to be near the library and needed a convenient location to do interviews. Nor do I find the claim for tax penalties and interest recoverable – there is no evidence why Simma Holt did not use some of her savings to pay her taxes.

[31] The construction which started around May 2000 obviously caused significant inconvenience. There is no medical evidence that Simma Holt’s health problems were caused by the wet conditions and mould in her unit, in the absence of which I am not persuaded that element of her claim has been proven. Simma Holt is entitled to damages for inconvenience and difficulties caused by having purchased a leaky condominium. I assess Simma Holt’s claim for general damages for inconvenience and the disruption to her life proven to have been caused by the purchase of a condominium she would not have purchased if properly informed at $5,000.

[32] I find Ada Van Leeuwen liable to Simma Holt for the balance of the special assessments not recovered, namely, $14,527.96 plus general damages in the amount of $5,000.

[33] The parties may address the issues of costs.

“V. R. Curtis, J.”
The Honourable Mr. Justice V.R. Curtis