The Lawyers Weekly - May 20, 2011

The Federal Court has upheld an arbitrator’s award of overtime pay and travelling time pay to 2,700 federal prosecutors and government lawyers.

On May 6, Justice John
O’Keefe rejected the attorney
general of Canada’s argument
that the overtime and travel
provisions awarded by an arbi-
trator Oct. 23, 2009 to the Fed-
eral Law Group bargaining
unit—as part of settling the
lawyers’ terms and conditions of
employment in their first col-
lective agreement — were con-
trary to the restraint measures
imposed on the lawyers’ per-
formance pay and performance
bonuses by the March 12, 2009
Expenditures Restraint Act

“From their perspective it might be expedient to pre-ordain the outcome, but from ours it is certainly not good faith bargaining.

Real estate agent had to ‘further verify’ vendors’ statements

Krawchuk
Continued From Page 1

tle, or no, effect.”
The case before the court
arose in 2004 when a first-time
homebuyer purchased a house
in Sudbury, Ont. which,
unknown to her, had very ser-
ious foundation problems (it
was sinking) and ongoing
plumbing defects (the sewers
backed up several times a year).
The listing real estate agent
represented both the purchaser
and the two vendors.

At trial the vendors (but not their real estate agent) were held liable for $110,000 for their negligent misrepresentations that they were unaware of any current plumbing or foundation problems.

In its judgment, the Ontario Court of Appeal upheld the vendors’ liability to the purchaser for negligent misrepresentation, but went on to hold the real estate agent equally liable for “egregious lapses” during her representation of both the purchaser and the vendors.

The Court of Appeal held that in respect of the purchaser, the real estate agent ought to have inquired further into the vendors’ disclosure (which subsequently turned out to be incomplete) that the foundation issues with the house were resolved years earlier. Failing that, she should have strongly urged the purchaser to hire a home inspector, the court said.

And with respect to the sellers, who had consulted with the agent when filling out the SPIS, she should have inquired more deeply into the problems they mentioned with the foundation, the court held. (She did not, however, know that they were making false statements.)

Winning counsel David S.
Steinberg of Toronto’s Pape
Barristers, who represented the
purchaser, told The Lawyers
Weekly the decision doesn’t
impose “a sweeping duty which
will make being a real estate
agent very difficult.”
“I think its important to real-
ize, and this may allay some of
the concerns, I hope, that Mr.
Aaron and people like that
have,…the court went to great
lengths to say in a couple of
places ‘in the circumstances of
this case’ [and] ‘on the facts of
this case.’ This is what I would
call a principled decision, not a
categorical decision,” Steinberg
said. “They didn’t lay down
some absolute duty for all time.
And I don’t think they created
one where none existed before.
They simply applied it.”
Counsel for the real estate
agent defendants, Amelia
Leckey of Toronto’s Miller
Thomson told The Lawyers
Weekly there has been no deci-
sion yet on whether to seek
leave to appeal.

“They didn’t lay down some absolute duty for all time. And I don’t think they created one where none existed before. They simply applied it.

lems with the plumbing system”
the vendors answered “No.”
When the purchaser dis-
cussed with Weddell the house’s
visible defects, such as the
sloped floors, a foam-filled
crack in the northwest corner of
the crawlspace and sloping
exterior brick and block work,
the agent conveyed the vendors’
explanation to her that the
house had settled, been repaired
and there were no further prob-
lems for 17 years. Because there
was considerable market inter-
est in the house, Krawchuk
decided to make a “clean offer,”
$10,100 above the asking price,
with no conditions (including
home inspection).

The severe structural problems became apparent not long after she moved in and she sued.

In its decision, the Court of Appeal reversed the trial judge who had dismissed the claims against Weddell by both Krawchuk and the Scherbaks.

Justice Epstein held that
Weddell was negligent in
respect of the purchaser Kraw-
chuk because “whatever the
standard of care, given the
obvious defects in this house,
Ms. Waddell had to either fur-
ther verify the [sellers’] assur-
ances herself or recommend, in
the strongest terms, that Ms.
Krawchuk get an independent
inspection either before submit-
ting an offer, or by making the
offer conditional on a satisfac-
tory inspection. The failure to
do either was an egregious
lapse.”
With respect to the vendors,
Justice Epstein held, “the
Scherbaks specifically sought
Ms. Weddell’s advice about
answering the question on the
SPIS concerning the [founda-
tion] settlement issues. At the
very least, Ms. Weddell had an
obligation to question the
Scherbaks further about their
experience with the settlement
issues— whether they had per-
formed any work on the house
that shed light on the state of
the foundation of the house and
then appropriately counsel
them with respect to the impli-
cations of the representations
they made in the SPIS. Ms.
Weddell’s failure to do so repre-
sented a cavalier treatment of
the settlement issue—an issue
that was on the minds of every-
one involved. This failure
amounted to an egregious lapse
in terms of her duty to the
Scherbaks.”
The Court of Appeal noted
that because the Scherbaks were
themselves negligent for the
incomplete and false represen-
tations they made to Krawchuk,
they were not entitled to indem-
nification from Weddell. How-
ever her negligence vis-a-vis the
Scherbaks had to play a role in
apportioning their respective
degrees of fault for Krawchuk’s
losses— which the appeal court
split 50/50 per cent between
the vendors and the agent.