Case: Stanley v. Grech, 2023 BCCA 348 (CanLII)
Keywords: professional negligence; real estate; standard of care; evidentiary requirements; causation
The Appellant, Mr. Stanley, enters into a contract with the Respondents, Mr. Grech and Angell Hasman & Associates Ltd. The Respondents act as listing agent and broker for real property being sold by the Appellant. (See para. 1).
The Property in question is subject to “certain limitations on development”. (See para. 2; property details outlined at paras. 6-13). As stated by the Court of Appeal (Groberman, Horsman, and Skolrood, JJ.A.), these limitations “were not well understood by either party and that impacted the price that could be obtained on a sale”. (See para. 2).
The Appellant sues the Respondents in negligence for:
- failing to understand the nature of the property and its limitations,
- failing to seek and recommend legal advice, and
- suggesting an inordinately high list price.
Ultimately, the Appellant’s position is that the Respondents’ negligence resulted in the property taking longer to sell than it should have, causing damage (i.e. significant interest charges). (See para. 3). The Trial Judge (Norell J.) finds the Appellant failed to prove breaches of the standard of care for all but the failure to seek and recommend legal advice, and, with respect to this claim, that the Appellant failed to show causation. (See para. 4). The Court of Appeal dismisses the appeal. (See para. 5).
A key issue examined by the Trial Judge was whether expert evidence was required to establish the breaches of the standard of care alleged by the Appellant. As summarized by the Court of Appeal at para. 34, the Trial Judge relied on a framework developed by the Court of Appeal for Ontario in Krawchuk v. Scherbak, 2011 ONCA 352:
- It is generally inappropriate for the court to determine the standard of care in a professional negligence case in the absence of expert evidence. (See Krawchuk at para. 130).
- Unless the conduct in issue is particularly egregious, the court likely requires expert evidence of the usual or customary standard in the real estate industry regarding:
- the kind of information that must be verified where it has not been demonstrated that the realtor had cause to doubt the information;
- a duty to take positive steps to confirm the nature, identify, and extent of the property being advertised; and
- a duty to recommend that the purchaser secure an inspection regarding the soundness of the premises, including any structural defects. (See Krawchuk at para. 131).
- There are two recognized exceptions to the requirement for expert evidence to establish the standard of care:
- where the matter in issue is non-technical such that an ordinary person may be expected to have sufficient knowledge; and
- the actions of the defendant are so egregious that it is obvious that the conduct falls short of the standard of care. (See Krawchuk at paras. 131, 135).
The Trial Judge observed there was no expert evidence about the applicable standard of care on any of the three bases upon which the Appellant sued the Respondents in negligence. According to the Trial Judge, published materials by the Canadian Real Estate Association and the Real Estate Council of B.C. “provide no guidance as to how they might apply in a given situation”. (See para. 37).
On the issue of failing to understand the nature of the Appellant’s property and suggesting an inordinately high list price, the Trial Judge determined this case was not subject to the exception to the principle that expert evidence is required to establish the standard of care. (See para. 38). However, the Trial Judge did find that the Respondent’s failure to recommend or obtain legal advice fell within both exceptions to that principle. (See paras. 42-43). The Court of Appeal agreed with these conclusions.
On the issue of causation, the Trial Judge concluded the Appellant had not proven the failure to recommend or obtain legal advice caused the damage. (See para. 47). On this point, the Court of Appeal provided a helpful summary of the two-step causation analysis:
- the plaintiff must prove the defendant’s breach was “the factual cause of the plaintiff’s loss”, an inquiry which “is generally assessed using the ‘but for test’”;
- the plaintiff must establish legal causation, which requires an assessment of whether the injury sustained was “the reasonably foreseeable result of the defendant’s negligent conduct”. (See paras. 55-56).
With respect to step one, the Court of Appeal described the “but for test” as a requirement to establish on a balance of probabilities “that the harm would not have occurred but for the defendant’s negligent act”. (See para. 55; see also Nelson (City) v. Marchi, 2021 SCC 41 at para. 96; Clements v. Clements, 2012 SCC 32 at para. 8; Engman v. Canfield, 2023 BCCA 56 (CanLII) at para. 93).
In this case, the Court of Appeal determined that the Trial Judge appropriately focused her causation analysis on the Respondent’s failure to recommend or obtain legal advice. (See para. 59). The Court did not agree that the Trial Judge should have “inferred causation” between that failure and the damage based upon a “robust, common sense analysis”. In so doing, the Court described a difference between drawing an inference from circumstantial evidence and drawing an inference from “no relevant evidence at all”. On this point, the Court of Appeal quoted para. 94 from Engman, where DeWitt-Van Oosten J.A. held: “[w]here factual causation is sought to be established by inference, any such inferences ‘must be based on proven facts and cannot be simply guesswork or conjecture’”. (See para. 61).
Ultimately, the Court of Appeal found no error in the Trial Judge’s conclusion that the evidence did not establish the Respondent’s breach of the standard of care caused the Appellant any economic injury. (See paras. 62, 65). A key takeaway, therefore, would be that one should be prepared to establish “proven facts” when asking a court to draw an inference of causation in professional negligence matters.
Counsel for the Appellant: Cam McKenchie and Kevin Yee (McKenchie & Company, Vancouver)
Counsel for the Respondents: Scott Twining and Stefanie Gladders (Twining, Short & Haakonson, Vancouver)