Canadian Underwriter

Basement flood victims lose suit against previous owners

July 20, 2020   by Greg Meckbach

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British Columbia homeowners who tried to sue the people who sold them the home for water damage allegedly caused by hydrostatic pressure lost their case at the Civil Resolution Tribunal.

Seth Nanayakkara, Julia Wells and Linda Adams bought took possession of their home — purchased from Linda and John MacIntyre — in July 2019.

The buyers allege that early in 2020, they had widespread and repeated drainage problems due to insufficient drain pipes for the size of the property.

They took the MacIntyres to the CRT asking for $5,000 in compensation, the maximum amount the CRT can award.

As evidence, the new owners provided a portion of a letter from their insurance company that attributed the water problems on the property a high-water table that caused a build-up of hydrostatic pressure, which forced water into the basement through the foundation walls and concrete floor.

“This statement apparently was based on information from the applicants’ plumbing contractor, but there is no report from that contractor or any other plumbing professional to comment on the cause of the water problems,” CRT member Lynn Scrivener wrote in Nanayakkara v. MacIntyre, released July 15.

The new owners also say they learned of previous water problems from neighbours, contractors and others. But the CRT found that the available evidence does not prove the cause of the water issues.

Before they sold the home, the MacIntryes provided a property disclosure statement to buyers.

If homeowners discover problems that they say were pre-existing, and not disclosed on a PDS, they could sue the sellers in B.C. for negligent misrepresentation.

In the end, Scrivener found that the MacIntyres did not negligently misrepresent their property.

The PDS asked the MacIntyres whether they were aware of any damage due to wind, fire or water. In response, they disclosed a 2017 basement flood that was related to a blocked pipe. They answered “no” when asked if they were aware of any material defects “that cannot be discerned through a reasonable inspection of the property.”

The evidence does not show that the sellers were aware of any other water or drainage problems on the property, Scrivener found, nor does the evidence establish the cause of the water-related problems. So the new owners did not prove that the sellers ought to have known about the issues that caused the flooding problems after 2019.

In the context of suing a previous owner for negligent misrepresentation in B.C., a plaintiff must prove that a statement from the seller is untrue, inaccurate, or misleading. On top of that, the plaintiff must also prove the defendant acted negligently in making the misrepresentation and that the buyer relied in a reasonable manner on the negligent misrepresentation, wrote Scrivener, quoting case history.

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