Mar 17, 2014

Summary of Hancock v Richardson

Hancock v Richardson, 2012 SKPC 132 (CanLII)
The plaintiff purchased a house from the defendants in 2007. In 2010, he observed water coming into the basement and upon investigation, discovered that a large portion of the foundation had caved in under the north wall of the house. The exterior wall in question had been obscured behind a new wall erected by the defendant, a plumber by trade with experience in building renovation, sometime before the plaintiff purchased the house. The plaintiff engaged the services of a contractor to determine what had happened and to make the necessary repairs. The contractor's report, entered into evidence, stated that the defendant would have seen the soil from the cave in and the rotten and broken grade beam when the new false wall was created and that the renovation was not done to Code standards. At the time of purchase, the plaintiff relied on the defendant's Property Condition Disclosure Statement which stated that there had been flooding or drainage problems and that that they had been corrected and that they were aware of structural defects in the house in that there had been some cracking in the house footing on the north side of the house. A home inspection had been conducted before purchase and the plaintiff testified that there were no issues identified by it because the siding on the exterior of the house and the interior walls of the basement prevented a thorough inspection. He claimed that the defendants knew or should have known of the problem and if he had known of the true condition of the foundation prior to purchase, he would not have purchased the house for the same price or at all. He sued the defendants for reimbursement in the amount of $19,600 for the cost of repairs. The defendants took the position that nothing had occurred during their purchase of and subsequent residence in the house nor the repair that they effected on the north wall alerted them to a problem with the foundation beyond what they had disclosed in the Statement.HELD: The Court reviewed the principle of caveat emptor and exceptions to it where the seller has actively concealed a defect. In this case, there was a latent defect which was not discoverable by observation and which was discovered after the purchase took possession. Non-disclosure or concealment of a latent defect of which the vendor has knowledge will set aside the rule of caveat emptor. The Court found that there was a structural defect in the wall of the house and that the defendants were aware of the seriousness of it during their ownership. The defendants were negligent in not informing the plaintiff of the condition of the wall and then acted both negligently and fraudulently by covering what had been a patent defect into a latent one. The manner in which they disclosed the defect in the Statement was both a negligent and a fraudulent misrepresentation. The plaintiff was entitled to damages to cover the cost of repair