Chantal Beaupré

Purchasers of a residential property sued the vendors over an undersized septic system, alleged misrepresentations about a loft apartment, water issues, a retaining wall defect, and a sprinkler system.

The court held that the vendors breached the agreement of purchase and sale and committed civil fraud by marketing the property as including a habitable loft apartment while installing or procuring approval for a septic system that was inadequate for the property as marketed.

The court found the vendors could not rely on caveat emptor or lack of due diligence in relation to that fraud, but rejected the claims for lost rental income, well water damages, plumbing damages, and sprinkler damages.

Damages were awarded for the cost of replacing the septic system and repairing the retaining wall, plus pre-judgment interest.

On the return of a civil contempt motion, the plaintiff sought incarceration after the defendant failed to purge an earlier contempt finding by providing complete answers to undertakings.

The court found the defendant continued to mislead the court through repackaged, redacted, and unreliable documents and had not purged his contempt.

Applying the established principles governing civil contempt sentencing, the court held that a further custodial sanction was unnecessary given the prior striking of the defence, partial judgment, and earlier costs award.

The court instead imposed a $7,500 fine, authorized further tracing steps through signed authorizations, and awarded substantial indemnity costs of $12,000.

Following a finding of contempt and a motion to strike the defence, the successful party sought full indemnity costs exceeding $67,000.

The court considered the aggravating factors under Rule 57.01 of the Rules of Civil Procedure and the conduct of the responding party, including findings that the responding party had deliberately misled the court and bankruptcy officials.

The court held that the contempt finding justified costs on a higher scale, namely substantial indemnity.

However, the court reduced the amount claimed to account for prior cost awards and some duplication related to a previous motion to lift a stay of proceedings.

Costs were fixed at $50,000 inclusive of HST and disbursements.

Costs were determined following a successful motion removing the plaintiffs’ solicitors due to a conflict of interest arising from the hiring of a lawyer who previously acted for the defendant and the deceased in related matters.

The court found that the lawyer possessed confidential and privileged information and had disclosed it to the firm representing the plaintiffs, and that the firm failed to implement effective screening measures.

The defendant and a supporting third party sought substantial or full indemnity costs.

The court concluded that the conduct of the plaintiffs’ counsel was sufficiently egregious to warrant full indemnity costs.

Costs were awarded to both the moving defendant and the third party, with a portion ordered to be paid personally by the solicitors under Rule 57.07 of the Rules of Civil Procedure.