Alberta, Edmonton, Quail Ridge: Court determines purchasers of leaky rotten condos have triable issues; refuses to dismiss claims against Re/Max realtors

Condominium Plan No. 822 2960 (Owners) v. 75252 Manitoba Ltd., 1999 ABQB 111 (CanLII)

Reflex Record (noteup and cited decisions)

Related decisions

Decisions cited

  • Allied-Signal Inc. v. Dome Petroleum Ltd. et al., 1991 CanLII 2722 (AB Q.B.) — [1991] 6 W.W.R. 251 • (1991), 81 Alta. L.R. (2d) 307
  • Alpine Resources Ltd. v. Bowtex Resources Ltd., (reflex-logo) reflex[1989] 96 A.R. 278 • (1989), 66 Alta. L.R. (2d) 144
  • Anchor Fence Inc. v. Polaris Realty Corp., (reflex-logo) reflex(1994), [1995] 156 A.R. 81 • [1994] 10 W.W.R. 574 • (1994), 22 Alta. L.R. (3d) 311
  • Beer v. Townsgate I Ltd., 1997 CanLII 976 (ON C.A.) — (1997), 36 O.R. (3d) 136 • (1997), 152 D.L.R. (4th) 671 • (1997), 104 O.A.C. 161
  • Betker v. Williams, 1991 CanLII 1160 (BC C.A.) — (1991), 86 D.L.R. (4th) 395 • (1991), [1992] 2 W.W.R. 534 • (1991), 63 B.C.L.R. (2d) 14
  • Bright v. Tanguay, (reflex-logo) reflex(1995), [1996] 1 W.W.R. 62 • (1995), 32 Alta. L.R. (3d) 116
  • Condominium Plan No/ 86-s-36901 (Owners) v. Remai Construction (1981) Inc., (reflex-logo) reflex(1991), 84 D.L.R. (4th) 6 • (1991), [1992] 1 W.W.R. 66 • (1991), 93 Sask. R. 211
  • Exchanger Industries v. Dominion Bridge Co., (reflex-logo) reflex[1986] 69 A.R. 22
  • Fletcher v. Hand, (reflex-logo) reflex(1994), [1995] 156 A.R. 142 • (1994), 21 Alta. L.R. (3d) 346
  • H.W. Liebig Co. v. Leading Investments Ltd., 1986 CanLII 45 (S.C.C.) — [1986] 1 S.C.R. 70 • (1986), 25 D.L.R. (4th) 161 • (1986), 14 O.A.C. 159
  • L.K. Oil & Gas Ltd. v. Canalands Energy Corp., 1989 CanLII 223 (AB C.A.) — (1989), [1990] 98 A.R. 161 • (1989), 60 D.L.R. (4th) 490 • [1989] 6 W.W.R. 259 • (1989), 68 Alta. L.R. (2d) 269
  • Novel Energy (North America) Ltd. v. Glowicki, (reflex-logo) reflex(1994), 16 Alta. L.R. (3d) 26
  • Ocean City Realty Ltd. v. A & M Holdings Ltd., (reflex-logo) reflex(1987), 36 D.L.R. (4th) 94
  • Queen v. Cognos Inc., 1993 CanLII 146 (S.C.C.) — [1993] 1 S.C.R. 87 • (1993), 99 D.L.R. (4th) 626 • [1993] 45 C.C.E.L. 153 • (1993), 60 O.A.C. 1
  • Ramrakha v. Zinner, (reflex-logo) reflex(1994), [1995] 157 A.R. 279 • (1994), 24 Alta. L.R. (3d) 240
  • Reidy Motors Ltd. v. Grimm, (reflex-logo) reflex(1996), 38 Alta. L.R. (3d) 131
  • Soulos v. Korkontzilas, 1997 CanLII 346 (S.C.C.) — [1997] 2 S.C.R. 217 • (1997), 32 O.R. (3d) 716 • (1997), 146 D.L.R. (4th) 214 • (1997), 46 C.B.R. (3d) 1 • (1997), 100 O.A.C. 241
  • Suncor Inc. v. Canada Wire & Cable Ltd., (reflex-logo) reflex[1993] 3 W.W.R. 630 • (1993), 7 Alta. L.R. (3d) 182
  • Waterloo North Condominium Corp. No. 64 v. Domlife Realty Ltd, (reflex-logo) reflex(1989), 70 O.R. (2d) 210
  • Zippy Print Enterprises Ltd. v. Pawliuk, 1994 CanLII 1756 (BC C.A.) — (1994), [1995] 3 W.W.R. 324 • (1994), 20 B.L.R. (2d) 170 • (1994), 100 B.C.L.R. (2d) 55

Condominium Plan No. 822 2960 v. 75252 Manitoba Limited, 1999 ABQB 111

 

                                                                                                                              Date:  19990211

                                                                                                                    Action No. 9703 06875

 

 

                                IN THE COURT OF QUEEN’S BENCH OF ALBERTA

                                             JUDICIAL DISTRICT OF EDMONTON

 

 

BETWEEN:

 

                        THE OWNERS: CONDOMINIUM PLAN NO. 822 2960 and

                              THE OWNERS: CONDOMINIUM PLAN NO. 822 2961

 

                                                                                                                                            Plaintiffs

 

                                                                        - and -

 

                              75252 MANITOBA LIMITED, 539902 ALBERTA LTD.,

                                    RE/MAX REAL ESTATE (EDMONTON) LTD.,

                    SHELDON WOLANSKI, MARK KORNELL, RANDY JOHNSON,

                     JOHN (JACK) JOHNSON, LARRY HURTIG, ROBERT SHAER,

                           DON McFEELY, LAURETTE BARON, JOHN DO. NO. 1

                                                         and JOHN DOE NO. 2

 

                                                                                                                                                           

                                                                                                                                      Defendants

 

                                                                        - and -

 

                                 DEBI HOLM, LORELEI CALENDA, ERIC KRENZ,

                                       LINDA THEBERGE and SHAUNA ROWAN

 

                                                                                                                                    Third Parties

 

                                                                        - and -

 

                                    THE REAL ESTATE COUNCIL OF ALBERTA

 

                                                                                                                                Statutory Party

 

 

 

 


                           _____________________________________________

 

                                                   REASONS FOR JUDGMENT

 

                           OF THE HONOURABLE MADAM JUSTICE J.C. COUTU

                           _____________________________________________

 

 

THE APPLICATION:

 

[1]               The Defendants Re/Max Real Estate (Edmonton) Ltd., Sheldon Wolanski, Mark Kornell and John (Jack) Johnson (the “Realtors”) apply for summary judgment to dismiss the Plaintiffs’ causes of action. The application is made pursuant to Rule 159 of the Alberta Rules of Court. The Realtors submit that there is no merit to the action; that there are no issues to be tried; and that the Realtors know of no facts which substantiate the claim against them.

 

[2]               The Plaintiffs submit that the Realtors’ application should be dismissed as there are triable issues of fact and law as to whether the Plaintiffs have valid causes of action.

 

[3]               To date, there have been no exchange of Affidavits of Documents and no discoveries in the action.

 

FACTS AS ALLEGED IN THE AMENDED STATEMENT OF CLAIM:

 

[4]               The Plaintiffs (the “Condominium Corporations”) are two adjacent Edmonton condominium properties called Quail Ridge. The Condominium Corporations bring the action as the statutory representatives of the individual unit owners.

 

[5]               From 1986 through 1993, the Defendant, 75252 Manitoba Limited (the “Vendor”) owned all the units and operated them as rental properties. By an agreement executed on September 7, 1993, the Vendor agreed to sell the condominium units to 539902 Alberta Ltd. (the “Intervening Purchaser”), which in turn sold condominium units to the public.

 

[6]               The Intervening Purchaser hired real estate salesmen employed by Re/Max Real Estate (Edmonton) Ltd. (“Re/Max”) or employed by the Intervening Purchaser. These salesmen, named Sheldon Wolanski (“Wolanski”), Mark Kornell (“Kornell”), Randy Johnson (“Randy Johnson”) John (Jack) Johnson (“Jack Johnson”) (the “Realtors”) sold the units to individual buyers (the “Individual Purchasers”).

 

[7]               Wolanski and Kornell were also the directors and shareholders of the Intervening Purchaser.

 


[8]               The Defendants, Larry Hurtig (“Hurtig”), Robert Shaer (“Shaer”), Don McFeely (“McFeely”), Laurette Baron (“Baron”), (collectively, the “Former Board”) were the Board of Managers for the Condominium Corporations prior to the appointment of a Board of Managers elected by individual unit owners in 1994. McFeely and Shaer were also directors of the Vendor. Hurtig and Shaer were directors of 406342 Alberta Ltd., an encumbrancee of the lands. Hurtig, Shaer and McFeely were also, at all material times, employees or officers of Chartered Financial Services Inc., 406342 Alberta Ltd.’s sole shareholder.

 

[9]               During 1993 and 1994, the Realtors marketed units to the general public. The Realtors and the Intervening Purchaser represented to the Individual Purchasers that the common property of the Condominium Corporations was in a state of good repair. In particular they represented that the roofs had recently been re-roofed, the furnaces and hot water tanks had been inspected and were in good repair, the roofs and other common property had been inspected by an engineer and had passed inspection, and all decks were repaired or would be repaired.

 

[10]           In the course of marketing the units, the Realtors verbally represented to certain Purchasers that the Condominium Corporations were in good financial condition and condominium fees were unlikely to go up after sale to the Individual Purchasers.

 

[11]           In addition, during the course of marketing the units, the Realtors and the Intervening Purchaser provided prospective purchasers with a “1994 Detailed Budget” for both Condominium Corporations. The Realtors and Intervening Purchaser knew or ought to have known that the Condominium Corporations’ financial condition and state of repair were material considerations in any prospective purchaser’s decision to buy a unit, and that they would rely on the budget. The budget and the estimated condominium fees generated from the budget were expressly included as part of the Purchasers’ Real Estate Purchase Contracts as Schedule “A” to such contracts.

 

[12]           The budget represented, among other things, that repairs to the walls and decks would be completed at no cost to purchasers, minor repairs were budgeted for roofs, condominium fees would range between approximately $54.00 and $64.00, and that a yearly capital reserve contribution of $9,600.00 would be made.

 

[13]           The Plaintiffs allege that pursuant to Schedule “A” to the Real Estate Purchase Contracts, the representations contained in the budget formed part of the contracts, and that all representations contained in the budget survived execution and closing of the Purchasers’ Real Estate Purchase Contracts.

 


[14]           After the sale transactions were concluded, the Purchasers and subsequent Purchasers learned that the representations were false. That is, the property had not been inspected by an engineer and there were numerous deficiencies: the roofs were in an advanced state of deterioration; balconies, railings and stairwells were unsafe and in a state of severe deterioration caused by water leakage; ventilation and insulation were inadequate; furnace room floors, corner posts and studs were severly deteriorated. 

 

[15]           The Plaintiffs incurred expenses of $567,276.46 to repair some of the deficiencies, and further monies need to be spent to rectify deficiencies. The Plaintiffs total claim is for $859,620.00.

 

[16]           The Plaintiffs state that the representations were false and were known by the Realtors and Intervening Purchaser to be false. Alternatively, they were recklessly made without knowing whether they were false or true. These respresentations were relied upon and induced the Purchasers to purchase.

 

[17]           In addition, the Plaintiffs state that the Realtors and Intervening Purchaser fraudulently concealed deficiencies. In particular, they directed or authorized repairs to the decks by covering the decks with plywood, thereby concealing the severe rot from visual inspection. Further, the Realtors and Intervening Purchaser instructed workers to install drywall and to paint walls and ceilings which were disclosing water stains so that purchasers would not be aware of the extent of water leakage or damage.

 

[18]           The Plaintiffs state that the Realtors held themselves out as professional real estate salespersons knowledgeable in condominium real estate transactions, common property ownership issues, the purpose of condominium fees and the importance of providing realistic reserves and budgets for necessary capital improvements. The Purchasers relied on the Realtors’ expertise in their decisions to purchase.

 

[19]           The Plaintiffs state that the Realtors’ verbal and written representations in the budget were false and were relied upon and materially induced the Purchasers to purchase. These representations were negligently made by the Realtors: in failing to confirm the accuracy of the budget figures, in failing to advise the Purchasers that the common property had not been professionally inspected and in failing to advise the Purchasers that condominium fees were set at a level which could not realistically meet the Condominium Corporations’ expense and capital reserve requirements.

 

[20]           The Plaintiffs state that the Vendor and Intervening Purchaser are liable as principals for the Realtors’ fraudulent or negligent misrepresentations or active concealment.

 

[21]           Alternatively, the Vendor and Intervening Purchaser are liable for breach of contract in respect of the deficiencies. Wolanski and Kornell, as agents of the Vendor and Intervening Purchaser, agreed to repair various deficiencies.

 


[22]           Alternatively, the Realtors acted as purchaser’s agents for certain Purchasers and owed a fiduciary duty, including the obligation to disclose any material fact that might affect the Purchasers’ decision to enter into the transaction. The Realtors breached their fiduciary duties or were negligent in the performance of their duties to the Purchasers. Some of the particulars of breach of fiduciary duty or negligence, include: the failure to disclose the existence of deficiencies, failure to verify the accuracy of the information contained in the budget, failure to advise that the common property had not been professionally inspected prior to preparation of the budget, failing to disclose the need for major repairs and that the reserve fund was inadequate, failing to act in the best interests of their clients by placing their personal and financial interests in conflict with their duties as agents for the Purchasers.

...

CONCLUSION:

 

[53]           For the reasons outlined above, I dismiss the Defendants’ application for summary judgment. I decline to order that the action proceed with respect to only certain causes of action. In my view, there are triable issues of law and fact with respect to each of the causes of action.

 

COSTS:

 

[54]           The Plaintiffs having been successful in this application, I award costs in any event of the cause, under the appropriate column as against those Defendants who brought the application.

 

 

 DATED at Grande Prairie, Alberta this 17th day of February, 1999

 

 

 

                                                                                         ______________________________

                                                                                                                                          J.C.Q.B.A

 

 

READ MORE

http://www.canlii.org/en/ab/abqb/doc/1999/1999abqb111/1999abqb111.html