The appellants, a real estate agent and broker, appealed a trial judgment ordering them to pay damages to the respondents (purchasers) for water and mould damage to a residential home, due to the agent's negligence.
The appeal primarily concerned the measure of damages.
The Court of Appeal found that the trial judge erred by applying the cost of repair measure, as the appellants' negligence did not cause the property defect itself, but rather caused the respondents to enter into a transaction they would have otherwise avoided.
In such cases, the proper measure of damages is the diminution in value of the property.
The Court upheld the trial judge's findings on mitigation of damages and the foreseeability of frost heave damage.
The matter was remitted to the trial judge for reassessment of damages based on diminution in value and for a redetermination of costs from the first trial.