April 04, 2018
Marcotte, Schrager, Roy
Appeal from a judgment of the Court of Quebec allowing an action for damages and dismissing a counterclaim for damages. Allowed in part, with dissenting reasons.
The respondents claimed damages from the appellant further to the cancellation of a promise to purchase. The appellant claims he was entitled to breach this promise because of a municipal by-law protecting against landslides, limiting the construction he could undertake. According to the appellant, the failure to disclose this charge constitutes fraud. The trial judge found that there was no objective risk in purchasing the immovable and that the appellant had not established that the by-law caused him actual prejudice sufficient for him to refuse to sign the deed of sale. According to the judge, the appellant was trying to get out of a transaction he no longer wanted by invoking baseless pretexts. She dismissed the appellant’s allegations of fraud and ordered him to pay the respondents $62,545 in damages.
The trial judge committed palpable and overriding errors in establishing the chronology of facts and failed to take into account important facts entered in evidence. The appellant had a valid reason to refuse to honour his promise to purchase the immovable. A few days before the date scheduled for the transfer of title, the appellant learned, upon receiving a recent certificate of localization, that the immovable he was planning to purchase was partly located in a zone with limitations due to landslides and a zone at high risk for mass movement. It was because of this new information, indicated on the certificate of localization, that he decided not to purchase the immovable. He did not want to incur the risk associated with purchasing an immovable on land subject to mass movements or landslides. The stability of the land on which an immovable is located is an essential element of a purchaser’s consent. Had the appellant known that the land was located in a high-risk zone for mass movement, he would not have made an offer. He could not have suspected that this was the case. Even if they did not commit fraud, the respondents failed in their duty to inform the appellant. They failed to disclose the public law charges limiting the property right. The municipal by-law constitutes such a charge because it imposes restrictions on the enjoyment and use of the property. The sellers cannot invoke their lack of knowledge to discharge them from this obligation. Finally, the appellant was not required to show that the fragility of the land currently affected the solidity of the immovable. The defect may be merely foreseeable. The risk of landslides and mass movement and the restrictions imposed by the municipal by-law thus appear to be sufficient justification to refuse the transfer of title. This error gives rise to the nullity of the contract but, in the absence of fraud, it does not give rise to damages. The appeal is therefore allowed in part.
For his part, Schrager J.A. would have dismissed the appeal given the lack of evidence showing that the by-law affected the intended use or enjoyment of the immovable in a significant manner.
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