We Should Not Forget

By Brian Madigan LL.B.

We should not forget. Our rights and freedoms in the “free world” were given to us by those who went to war.

Our right to own land, exists only because we have a constitution that guarantees peaceable ownership of private property. Within the country, our rights exist by way of agreement. Ownership of land is evidenced by a Deed or other title documents. However, not so, when it comes to countries.

A nation has “title” to its lands not by a deed, document or some written evidence of ownership; it has “title” by what is known as “allodial title”. This is actually, the highest form of ownership that one can achieve. It is ownership by brute force. It is ownership by conquest. It is ownership by success in war and in battle. It is confirmed by occupancy and the ability to defend its borders.

In a true sense, it has been obtained only because we have had soldiers willing to give up their lives to provide others with the right to freedom and the right to be secure in their homelands. These two concepts are repeated in the constitutions of every free country.

Oddly at times, over the centuries, and with an examination of the history of war for the last 5,000 years, one will often see leaders who exercised greater freedom than anyone else, and whose personal freedom was never really at risk, making decisions for the soldiers. Their names are, of course, recorded in the historical documents of almost every nation.

But, today, we honour the “unkown soldier” and the “unforgettable soldier” to whom we express our appreciation for our freedom and our security within our homelands.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com

TD Bank ~ Canadian Economy: Dismal Prospects for 20 Years

By Brian Madigan LL.B.

Well, that’s what the TD Bank says! Maybe, we should just bailout now. The TD Bank just released a report on 10 November 2009 about the Canadian economy over the next 20 years. The prospects are dismal.

And, don’t forget that this is the bank, (just like every other bank) that missed the opportunity to predict the world financial crisis just 3 months before it happened. So, what makes them think that they can come up with a good 20 year projection? Who knows! But, they did, so we may as well deal with it.

This type of report is one of those economic reports based upon “all things being equal”. Of course, they never are. Also, in 20 years, is anyone going to remember this projection? So, we’ll really never know whether it’s right or whether it’s wrong.

But, in the meantime, let’s have a look at some of the comments, points, predictions and projections in the TD Bank report:



• "A combination of post-recession adjustments, the aging population and low productivity will limit Canada's potential growth to about two per cent over the next 10 years

• Things will not simply return to how they were

• Very slow potential growth in the next three years averaging 1.6 per cent


• Canadian economic growth potential will be half of the historic average

• Better, but still modest 2.1 per cent expansion expected in the 2013-2019 period

• Restructuring challenges facing corporations will act as a speed bump to Canada's growth

• This presents a ‘new normal' for the budgets of households and governments, with annual nominal growth to average around 4 per cent


• But since the economy is currently operating well below potential, actual growth rates in the next few years will likely exceed the 1.6-per-cent potential

• The aging population in Canada will slow labour force growth and the country will need significant productivity gains just to keep the economy on track

• In the near term, the restructuring challenges for major sectors, resulting in displaced workers and obsolete production capacity, will slow potential growth substantially

• Unemployment will result in the atrophying of certain skills and, with the permanent closure of plants

• Certain work experience that is process specific will become obsolete

• Unemployed workers' success in retraining is crucial to boosting the longer-term growth in labour quality

• Successful training will not happen overnight

• As the labour force ages, Canada's future growth will rely increasingly on productivity


• Productivity gains will be well below those achieved in the boom of the late 1990s

• We do not see a compelling case for a major productivity resurgence, given Canada's poor record on innovation

• Slumping expenditures on research and development and low investment in high-tech capital by Canadian businesses appear the prime culprits for Canada's lack of innovation and overall slowing of productivity growth

• Growth in aggregate corporate profits for domestically-focused firms will be restrained by the growth rate of the economy

• Household income similarly cannot outpace economy-wide growth over the long haul

• Investors must increasingly look abroad for better returns, but high-growth emerging markets will be volatile and more risky

• The new normal is sluggish growth going forward

• The slower economic growth will impact Canadians' standard of living

• Household income cannot outpace economy-wide growth over the long haul

• Households cannot continue to borrow at rates exceeding income growth and prospective asset appreciation

• Canada is poised to benefit further from a relative protection of its banks from the still-festering wounds of the financial crisis

• Benefits will continue to flow from large public infrastructure investments in recent years, which were enhanced substantially in this year's round of stimulus budgets"

Really, I don’t know what that says, and I don’t know what it means. Canada as a country will do better than other countries. The reason is simple, there are more natural resources. Our immigration policy encourages substantial growth. That is in the works right now. Lots of money is being spent on infrastructure. Sure, there could always be more, but foreign investment is welcomed. So, that will increase.

Over the next 20 years, it will not just be a rudderless ship, this country is going in the right direction. Prosperity will be based on growth, the investment in people and the wise use of capital. The combination of all three will contribute to that success.

If you look carefully, you will notice some very important moderations in the bank’s position, so obviously there is “hope”, and they can later do a little “backtracking” later, if necessary.

Oh, by the way, if they were so smart why didn’t they know about the world financial crisis?


Brian Madigan LL.B., Broker is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com

Seller Responsible for Inaccurate Answers in Disclosure Statement

By Brian Madigan LL.B.

The case of Seaman and Phinney came on for trial in the Court of Queen’s Bench in New Brunswick. It is another case based of a poorly completed Disclosure Statement.

A 10 year old septic tank and disposal field for a home overflowed through a "cheater pipe" into a ditch. The purchaser Mr. Seaman bought the home and noticed the out-flow approximately one month after moving in.

The defendants are the vendors of the home, Mr. and Mrs. Phinney. They had built the home and occupied it for 10 years. Mrs. Phinney had signed a Property Disclosure Statement. It was one of the papers relied on by Mr. Seaman when he agreed to buy.

Mrs. Phinney answered "No" to the question: "Are you aware of any problem with the septic system?"

The Judge stated:

“In her evidence Mrs. Phinney describes the care they took of the septic system and the views of her husband in these words:

... You don't do all your laundry at once, you space it out. I had a 'sudsaver' on my washing machine so that the water from the whites I could use to wash the dark clothes and, and he was always harping about the amount of toilet paper we would use and that, you know, it would block the septic system ... he'd notice the number of rolls in the garbage can I guess, empty rolls ... it was one of his fetishes...".

As noted on the Property Disclosure Statement Mrs. Phinney answered simply "No" to the question: "Are you aware of any problem with the septic system?".

In my opinion with her knowledge of the care taken of the septic system she would have been more accurate if she had said:

"No, but we are very careful to space out our laundry, to reuse washwater and to minimize our use of toilet paper".

I find that Mrs. Phinney's answer "No" was untrue. The evidence forces me to find that she misrepresented the condition of the septic system to Mr. Seaman on the Property Disclosure Statement.

Court Findings

• I find that Mrs. Phinney is liable to Mr. Seaman for her misrepresentation and breach of contract.

• As Mr. Phinney has benefited from his wife's misrepresentation, he is liable to Mr. Seaman as well.

• Damages were determined on the basis of the cost of early hookup to the municipal sewer system

Comment

This is just another example of how imporatnt it is to answer questions in the Disclsoure statement:

1) truthfully, and

2) accurately.

All too often, sellers are rather “cavalier” in the approach to the document. The answers are treated in a “best guess” manner.

It is noteworthy that the disclosure statement need not be completed at all, but if it is, the answers must be both truthful and accurate.

No comment was made by the trail Judge in respect to the role of the real estate agents in the completion of the document.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com

Seller Property Information Statements ~ Cases (Part 3)

By Brian Madigan LL.B.

Here are some very short index points for some of the SPIS cases. The more recent the case, the more relevant it is. The higher the Court, the more important the decision is. The higher the decision is from an Ontario Court, the more binding (in terms of legal precedents) it is, in terms of Ontario law.

There are no cases yet in the Supreme Court of Canada.

Liability may be founded in either contract or tort. With a contractual relationship between the parties, the terms of the contract will prevail. If there is a fraudulent or negligent misrepresentation, liability may be founded in tort. In those cases, the terms of the contract are not important, unless there is a specific limitation of liability.


Case……………… Morrill and Bourgeois

Court………………Superior Court

Province…………… Ontario

Date………………..2007

Defect ……………..basement leakage

Part of contract…….no

Truthful…………….no

False ………………..yes

Misrepresentation…...yes

Negligent……………no

Buyer Reliance……...no

Liability……………..no

Favours……………..vendor



Case………………Whaley and Dennis

Court………………Superior Court

Province…………… Ontario

Date………………..2002

Defect ……………..septic system

Part of contract…….no

Truthful…………….no

False ………………..yes

Misrepresentation…...yes

Negligent……………yes

Buyer Reliance……...yes

Liability……………..yes

Favours……………..purchaser



Case………………Cartwright and Fournier

Court………………Provincial Court

Province…………… Alberta

Date………………..2004

Defect ……………..roof leakage

Part of contract…….no

Truthful…………….n/a

False ………………..n/a

Misrepresentation…...no

Negligent……………no

Buyer Reliance……...no

Liability……………..no

Favours……………..vendor



Case………………Hunt and Eagle Auto

Court………………Small Claims Court

Province…………… Ontario

Date………………..2003

Defect ……………..dishwasher

Part of contract…….yes

Truthful…………….no

False ………………..no

Misrepresentation…...yes

Negligent……………yes

Buyer Reliance……...yes

Liability……………..yes

Favours……………..purchaser


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com

Seller Property Information Statements ~ Cases (Part 2)

By Brian Madigan LL.B.

Here are some very short index points for some of the SPIS cases. The more recent the case, the more relevant it is. The higher the Court, the more important the decision is. The higher the decision is from an Ontario Court, the more binding (in terms of legal precedents) it is, in terms of Ontario law.

There are no cases yet in the Supreme Court of Canada.

Liability may be founded in either contract or tort. With a contractual relationship between the parties, the terms of the contract will prevail. If there is a fraudulent or negligent misrepresentation, liability may be founded in tort. In those cases, the terms of the contract are not important, unless there is a specific limitation of liability.


Case………………Riley and Langfield

Court………………Superior Court

Province……………Ontario

Date…………………2004

Defect ………………basement leakage

Part of contract………no

Truthful……………...no

False ………………..yes

Misrepresentation…...yes

Negligent……………no

Buyer Reliance……...no

Liability……………..no

Favours ……………..vendor




Case………………Alevizos and Nirula

Court………………Court of Appeal

Province……………Manitoba

Date…………………2003

Defect ………………basement leakage

Part of contract………no

Truthful……………...no

False ………………..yes

Misrepresentation…...yes

Negligent……………yes (fraudulent)

Buyer Reliance……...yes

Liability……………..yes

Favours ……………..purchaser




Case………………Bond and Richardson

Court………………Small Claims Court

Province……………New Brunswick

Date…………………2007

Defect ………………tax deferral

Part of contract………yes

Truthful……………...no

False ………………..yes

Misrepresentation…...yes

Negligent……………yes

Buyer Reliance……...yes

Liability……………..yes

Favours ……………..purchaser




Case………………Taschereau and Fuller

Court………………Court of Queen’s Bench

Province……………Manitoba

Date…………………2001

Defect ………………basement leakage

Part of contract………no

Truthful……………...yes

False ………………..yes

Misrepresentation…...no

Negligent……………no

Buyer Reliance……...no

Liability……………..no

Favours ……………..vendor



Case………………Csada and Williams

Court………………Small Claims Court

Province……………Saskatchewan

Date…………………2006

Defect ………………roof leakage

Part of contract………no

Truthful……………...n/a

False ………………..n/a

Misrepresentation…...n/a

Negligent……………n/a

Buyer Reliance……...n/a

Liability……………..no

Favours ……………..vendor



Case………………Usenik and Sidorowicz

Court………………Superior Court

Province……………Ontario

Date…………………2008

Defect ………………basement leakage

Part of contract………no

Truthful……………...no

False ………………..yes

Misrepresentation…...yes

Negligent……………yes

Buyer Reliance……...yes

Liability……………..yes

Favours ……………..purchaser



Case………………Karwandy and Sebastien

Court………………Small Claims Court

Province……………Saskatchewan

Date…………………2002

Defect ………………electrical

Part of contract………no

Truthful……………...no

False ………………..yes

Misrepresentation…...yes

Negligent……………no

Buyer Reliance……...yes (30% contributory negligence)

Liability……………..yes

Favours ……………..purchaser



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com

Seller Property Information Statements ~ Cases (Part 1)

By Brian Madigan LL.B.


Here are some very short index points for some of the SPIS cases. The more recent the case, the more relevant it is. The higher the Court, the more important the decision is. The higher the decision is from an Ontario Court, the more binding (in terms of legal precedents) it is, in terms of Ontario law.

There are no cases yet in the Supreme Court of Canada.

Liability may be founded in either contract or tort. With a contractual relationship between the parties, the terms of the contract will prevail. If there is a fraudulent or negligent misrepresentation, liability may be founded in tort. In those cases, the terms of the contract are not important, unless there is a specific limitation of liability.


Case.................Weinman and Brinkman

Court................Small Claims Court

Province.............Ontario

Date.................2006

Defect...............basement leakage

Part of contract.....no

Truthful.............yes

False ...............no

Misrepresentation....no

Negligent............no

Buyer Reliance.......no

Liability............no

Favours .............vendor




Case Royt and Goldenberg

Court...........Superior Court

Province..........Ontario

Date ..........2006

Defect............encroachment

Part of contract.......no

Truthful..........no

False .........yes

Misrepresentation......no

Negligent...........no

Buyer Reliance.......no

Liability........no

Favours .........vendor




Case Wiebe and Loconte

Court.........Court of Queen’s Bench

Province........Manitoba

Date............2007

Defect..........mice infestation

Part of contract........yes

Truthful...........yes

False............n/a

Misrepresentation.....n/a

Negligent............n/a

Buyer Reliance........n/a

Liability............no

Favours .............vendor




Case Sask and Brooke

Court...........Supreme Court

Province.........British Columbia

Date.............1997

Defect............water leakage

Part of contract......yes

Truthful............no

False .............yes

Misrepresentation.......yes

Negligent.............yes

Buyer Reliance.........no

Liability..............no

Favours ...............vendor





Case Boychuk and Butler

Court.............Small Claims Court

Province...........Nova Scotia

Date...............2007

Defect.............septic system

Part of contract........yes

Truthful..............yes

False..................yes

Misrepresentation.......yes

Negligent...............yes

Buyer Reliance..........yes

Liability...............yes

Favours.................purchaser





Case Cole and Vankoughnett


Court.............Small Claims Court

Province...........Ontario

Date..............2003

Defect...........water leakage

Part of contract.........unknown

Truthful..............yes

False ................yes

Misrepresentation.......yes

Negligent................yes

Buyer Reliance...........yes

Liability.................yes

Favours...................purchaser





Case Kaufman and Gibson


Court.............Superior Court

Province...........Ontario

Date...............2007

Defect.............prior roof water leakage

Part of contract...........yes

Truthful.............yes

False ..........yes

Misrepresentation........yes

Negligent............ yes

Buyer Reliance........yes

Liability.............. yes

Favours ...........purchaser

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com

Disclosure Statement Forms Part of the Contract

By Brian Madigan LL.B.

This Hunt and Eagle Auto case went to trial in the Small Claims Court at Stratford, Ontario in 2003.

Mr. and Mrs Hunt acquired certain premises in Stratford comprising both a residential building and a commercial building.

At issue were a number of items relating to fixtures and chattels and whether they could be removed or left behind. In any event, there appeared to be a great deal of animosity between the plaintiffs as purchasers and the vendor.

One particular matter involved the representations made by the vendor concerning the dishwasher in the Seller Property Information Statement.

The Court Analysis:

• On May 15 and 17, 2002 the parties executed an agreement of purchase and sale. Physically attached to the agreement and referred to is a Seller Property Information Statement signed by the defendant sellers March 21, 2001. In schedule "A" to the agreement the plaintiff buyers acknowledge receipt of the information statement, a copy of the M.L.S. "listing agreement" and a copy of the survey.

• That statement answers "no" to the question: "Are there any defects in any appliances or equipment included with the property?" That statement was executed by the defendants in March of 2001 shortly after the dishwasher had received a substantial repair and the question was undoubtedly accurately answered at that time. The defendants had an ongoing obligation to disclose changes in that information. The Court is satisfied that as of the date of closing there was a problem with the dishwasher, a problem about which the defendants were probably unaware but this item turns on the contract rather than on any latent defect.

• The Court finds there is a defect involving the dispenser but is not confident in the telephone opinion of what is required to remedy that defect. In any event it is not a serious defect but rather a matter of convenience for which the Court is prepared to allow $100.

COMMENT

A review of the reasons for judgment make it quite clear the Court favoured the vendors and made every effort to come down on the side of the vendors where possible. Nevertheless, here is a small problem with an appliance. As it turns out, there was one small defect. It didn’t matter that the vendors were unaware of the defect. It operated fine as far as they were concerned. But, truly, in fact, there was a defect.

The Court decided that the SPIS was part of the contract. The representation was “no defects”. The question relates to a guarantee or warranty. It is not directed to the vendors’ awareness. Even if the defect occurred after the repair, which was after the SPIS was signed, there was an obligation to update the SPIS to the closing date. Therefore, the Court decided in favour of the purchaser.

Even though this is an interesting strict interpretation SPIS case, it deals with appliances. In most cases, they are old. In many cases, they are really not worth repairing. Further, they add little to no value to the real negotiated purchase price of the property. So, why guarantee them? Why provide a warranty? Why not simply sell them “as is” and leave it, at that? By the time they are 5 or 6 years old they are truly worth little on the resale market.

Something that was omitted in this lawsuit was the examination of the Land Transfer Tax affidavit. In many cases, purchasers will value the appliances at $100.00 or less. They will state that value “under oath”, so as to limit the amount of retail sales tax payable, which would be about fourteen times the amount of the land transfer tax. If all the appliances and all other chattels were only worth $100.00, then what would be the value of the dishwasher alone?

This case also prompts consideration of the allocation of the purchase price between fixtures and chattels in the agreement. This way, any future issues will be much easier to resolve.

Obviously, accurate, complete and up to date information is required if the disclosure document is to be provided.

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com