A recourse for latent defects declared abusive by the court: buyers are ordered to pay the sellers they sued more than $100,000 for their legal fees

This post, published on Éditions Yvon Blais’ blog on latent defects on June 5, 2018 (FR), discusses the judgment in Tremblay v. Internoscia (Full Text | Fiche Quantum), rendered by the Superior Court in 2017, in which the buyers who had sued their sellers for latent defects were ordered to pay them more than $100,000.00 for the legal fees they had to incur as a result of the recourse that the court found to be abusive.

In this case, practically the entirety of the buyers’ claim, totalling at $528,549.15, was rejected. It is important to note that the buyers had acquired the property in question for a purchase price of $390,000.00.

After a lengthy analysis of the various amounts claimed in relation to the various defects in question (over the course of a 257-paragraph judgment), the court granted the buyers $684.78, namely $3.39 for a pool thermometer, $200 for the repair of a septic pump, $20 for the installation of moldings, and $461.39 for cutting the grass.

In its consideration of the sellers’ cross demand, the court concluded that the buyers’ recourse was ill-founded and abusive, which justified the awarding of damages, particularly for the reimbursement of the defendants’ professional fees incurred to defend themselves against the abusive proceedings. Specifically, practically the entirety of the plaintiffs’ claims for latent defects were without merit, as they had been aware of these defects; the defects were disclosed in the pre-purchase inspection report.

Additionally, many of the defects and problems alleged were not considered to be serious: the financial value of many of the defects and problems was minimal, not to mention the fact that the buyers did not notify the sellers of many of the defects and problems, or they did not notify them in a timely manner, and not to mention that the buyers provided no proof at trial for certain elements of their claim.

The plaintiffs also made a series of claims that were insignificant or of little value to which the defendants had to respond, which forced the court to use its time to rule on “peccadillos.”

The plaintiffs also made substantial claims for damages, claims that had no factual basis in the evidence put forward or that were clearly prohibited by the terms of the contract between the parties.

The court’s sanction of the buyers was draconian: they were ordered to fully reimburse the defendants for the professional fees they incurred, totalling at $108,648.90, and ordered to pay additional compensatory damages.

The key takeaway from the decision: courts no longer hesitate to severely sanction abusive proceedings by ordering the party responsible for the abuse to pay the other party’s professional fees incurred as a result of the abuse.

Unfortunately, we still see (and too often in the undersigned’s opinion) recourses where buyers sue their sellers for defects that are apparent, and often identified in the pre-purchase inspection report, or for defects causing no deficit of use, not to mention the many cases where the buyers claim the near-full refurbishment of an old building with no consideration of its depreciation, forcing the sellers to defend themselves, and incur significant expenses to do so, against recourses that are often ill-founded in law and doomed to failure, or recourses where the amounts claimed are disproportionate to the actual economic value claimed by the buyer. A claim for latent defects must not become a tool for the a posteriori renegotiation of a transaction when the defects were apparent or are insignificant or not serious.