The mere presence of a contaminant cannot, in itself, constitute a latent defect covered by the legal warranty of quality in the absence of a deficit of use

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June 13, 2018 Real Estate and Construction

This post, published on Éditions Yvon Blais’ blog on latent defects on May 24, 2018, discusses the judgment in Société en commandite de l’Avenir v. Familia Saint-Jérôme (Full Text | Fiche Quantum), in which, in 2017, the Court analyzed a claim for a reduction of an immovable’s sale price due to the soil’s contamination with oil on the basis of various guarantees, namely (i) the legal warranty of quality of section 1726 C.C.Q., (ii) the warranty against violations of public law restrictions of section 1725 C.C.Q., as well as (iii) the seller’s contractual warranty, his specific declaration to the buyer, at the time of the sale, that the immovable in question did not violate any environmental protection laws.

Citing the Court of Appeal’s 2006 judgement in 126385 Canada inc. v. Groupe Collège LaSalle inc. (Full Text | Fiche quantum), the court reminds us that the mere presence of a contaminant cannot constitute a latent defect covered by the legal warranty of quality if this contamination does not affect the use that the buyer had intended for the property at the time of the purchase.

The Court, therefore, concludes that the contamination problem in question does not constitute a latent defect covered by the legal warranty of quality of section 1726 C.C.Q., particularly because of the absence of a deficit of use for the buyer, who was able to use the property as he had intended to since the purchase.

In terms of the warranty of section 1725 C.C.Q., the court concludes that the contamination in question does not entail a violation of a public law restriction, and, therefore, rejects this warranty as a basis for the buyer’s recourse.

Considering the absence of a violation of a public law restriction under section 1725 C.C.Q., the seller had not violated the alleged contractual warranty resulting from his representations on the act of sale according to which the immovable in question did not violate any environmental protection laws, on the grounds that there was simply no violation of such laws. Consequently, the buyer’s recourse was rejected.

Ultimately, this decision is interesting in that it reminds us that a buyer who has acquired contaminated land cannot simply prove the cost of the decontamination work to demonstrate a loss of value for the immovable due to the contamination problem. Specifically, and to demonstrate such a loss in value, which in this case was a deficit of economic use, a separate proof is required, which can be provided by a certified appraiser. In this case, the buyer did not prove a loss in value resulting from the contamination problem before the court, and accordingly, he could not invoke this alleged loss in value caused by the oil contamination problem.

This bulletin provides general comments on recent developments in the law. It does not constitute and should not viewed as legal advice. No legal action should be taken on the basis of the information contained herein.

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