Introduction
Professionals owe a duty to exercise the skill, care and diligence which may be reasonably expected of a person of ordinary competence, measured by the professional standard of the time. Generally speaking, in order to succeed at trial, a plaintiff must adduce expert evidence to establish that the professional breached this standard. Recently, the British Columbia Supreme Court decided a case in which the court recognized two exceptions to this evidentiary requirement.
Shave v Century 21 Assurance Realty Ltd.
In Shave v. Century 21 Assurance Realty Ltd., 2022 BCSC 183, the British Columbia Supreme Court held a lawyer and realtor liable for professional negligence, despite the plaintiffs’ failure to adduce expert evidence.
The genesis of this claim relates to the implementation of the Property Transfer Tax Act, R.S.B.C. 1996, c. 378 (the “PTTA”), which took effect February 20, 2018. The PTTA provided that the Foreign Buyers’ Tax (the “FBT”) would apply to properties located in British Columbia. Foreign buyers purchasing property in the Kelowna, British Columbia area were subject to a 20% surtax.
In January 2018, the plaintiffs, Robert Shave and Kelly Ashford, immigrated to Kelowna, British Columbia from Great Britain. On February 15, 2018, the plaintiffs entered into a Buyer’s Agency Exclusive Contract with a realtor, Dean Desrosiers. Mr. Desrosiers knew that the plaintiffs had recently immigrated to Canada and would be considered “foreign buyers”. He never advised them of the applicability of the FBT.
On May 23, 2018, the Plaintiffs entered into a Purchase and Sale Agreement for a residential home. Mr. Desrosiers spent a considerable amount of time with the plaintiffs reviewing the contract. The plaintiffs retained a lawyer, Roy Sommerey, to complete the purchase. In their initial email to Mr. Sommerey, they advised him that they recently moved from Great Britain and were new to Canada. Ultimately, the sale did not complete, as the plaintiffs were unable to obtain financing.
The plaintiffs entered into a subsequent contract to purchase a property in Kelowna. Mr. Desrosiers prepared the contract in the same fashion as he did for the first property, but changed the plaintiffs’ residency status to “permanent residents.” During a viewing of this property, the plaintiffs had informed Mr. Desrosiers that their “citizen status had been finalized”, which Mr. Desrosiers mistakenly understood to mean that they had obtained their permanent residency. Mr. Desrosiers emailed the contract to the plaintiffs without reviewing it with them in person. The plaintiffs signed the contract, which stated that they were permanent residents.
The plaintiffs contacted Mr. Sommerey to assist with the transaction. The plaintiffs signed the property transfer tax return, prepared by Mr. Sommerey’s firm, and the purchase was completed the next day. Despite being aware of their immigration status, Mr. Sommerey did not notice that the plaintiffs’ residency status, as stated in the first contract, had changed in the second contract. He did not alert them to the applicability of the FBT.
The plaintiffs received a Notice of Assessment for the unpaid FBT on the property totalling $172,400.
Evidence required to prove a breach of the standard of care
Before the standard of care is considered, the court must first find the existence of a duty of care. The court held that Mr. Desrosiers owed the plaintiffs a duty of care as he knew that they had recently immigrated to Canada and knew or ought to have known of the recent changes to the PTTA with respect to the FBT’s applicability in Kelowna and that he had a duty to advise the Plaintiffs in this regard. Mr. Sommerey conceded that he owed a duty of care to the plaintiffs as their solicitor.
Both Mr. Desrosiers and Mr. Sommerey argued that since the plaintiffs failed to tender expert evidence on the standard of care, they were unable to meet the requisite burden of proof in order to establish liability. The defendants argued that such evidence was required in order to prove that they failed to meet the respective industry standards.
The court stated that, while a plaintiff is ordinarily required to provide some expert evidence on the standard of care in professional negligence cases, there are two exceptions to this rule, which are set out in Krawchuk v Scherbak, 2011 ONCA 352 as follows:
[133] The first exception applies to cases in which it is possible to reliably determine the standard of care without the assistance of expert evidence … this will by the case only where the court is faced with “non-technical matters or those of which an ordinary person may be expected to have knowledge.”
…
[135] The second exception applies to cases in which the impugned actions of the defendant are so egregious that it is obvious that his or her conduct has fallen short of the standard of care, even without knowing precisely the parameters of that standard.
The court held that the plaintiffs were able to establish that both Mr. Desrosiers and Mr. Sommerey failed to meet the requisite standard of care, despite the fact that they failed to tender expert evidence. The court held that Mr. Desrosiers had a fundamental undertaking as the plaintiffs’ realtor to act in their best interests. Further, the plaintiffs provided the court with case law, which indicated that the test for a realtor’s disclosure to their client is an objective one, as follows: “what a reasonable man in the position of the agent would consider, in the circumstances, would likely influence the conduct of his principal.” The court determined that any reasonable person would expect their realtor to make them aware of the FBT if they were a foreign buyer.
As for Mr. Sommerey, the court held that he failed to meet the standard of care of a reasonably competent solicitor in relation to real estate conveyancing, since he ought to have inquired about their residency status. Further, the court found that he had actual knowledge of the fact that the plaintiffs had recently arrived to Canada and was aware of the first real estate contract, which listed the plaintiffs as foreign buyers.
The court held that the plaintiffs were contributorily negligent as a result of failing to properly review the contract and conveyancing documents. The court apportioned liability as follows: Mr. Desrosiers: 75%; Mr. Sommerey: 20%; and the Plaintiffs: 5%.
Takeaway
In most professional liability claims, expert evidence will be required to establish a breach of the standard of care by the professional. However, Underwriters should be aware that liability may be imposed in the absence of such evidence in two circumstances. Firstly, if it is possible to reliably determine the standard of care without the assistance of expert evidence in cases where the court is faced with “non-technical matters or those of which an ordinary person may be expected to have knowledge.” Secondly, standard of care evidence is not required in cases in which the impugned actions of the professional are so egregious that it is obvious that their conduct has fallen short of the standard of care, even without knowing precisely the parameters of that standard.
