Executive Summary: Key Legal and Evidentiary Issues

• Effect of a “sale without legal warranty, at the buyer’s risk and peril” clause on the buyers’ ability to sue for hidden defects in a residential real estate transaction.
• Whether the seller, as a non-professional, remained liable despite the exclusion clause because of alleged bad faith, misrepresentation, or dol (fraud) regarding prior water infiltration in the basement.
• Sufficiency of the buyers’ evidence to prove, on a balance of probabilities, that the seller knew or could not have ignored the rotten beams and prior water issues.
• Impact of the pre-purchase inspection report highlighting potential water infiltration problems, and the buyers’ decision not to investigate further, on their claim for latent defects and dol.
• Application of the Civil Code of Québec provisions on burden of proof, good faith, and error induced by dol (arts. 2803–2804, 1732–1733, 1399–1401 C.c.Q.) to a small claims hidden defects dispute.
• Determination that the plaintiffs failed to establish the seller’s bad faith or fraudulent concealment, leading to dismissal of their $15,000 claim and an order of costs against them.

Facts of the case

Sarah Du Temple-Quirion and Gabriel Jr Van Wijk purchased a residential property from Giuseppe Cappucio in Saint-Jacques-le-Mineur on 19 April 2021. The transaction was formalized by deed of sale, identified in the record as exhibit D-1. As is common in Québec residential real estate practice, the deed included a specific clause providing that the sale was made without legal warranty, “aux risques et périls de l’acheteur” – at the buyer’s risk and peril. This clause purported to exclude the conventional legal warranty normally implied under the Civil Code of Québec against latent defects affecting the quality of the property. Before the purchase, the buyers retained a building inspector, who produced a pre-purchase inspection report (exhibit P-5). That report highlighted numerous indications of possible water infiltration, essentially warning of potential moisture problems and related structural issues. Despite these flags, the buyers did not undertake additional investigations or require corrective work or price adjustments before going ahead with the transaction. The buyers took possession of the property on 21 May 2021. Once in possession, they carried out renovation work. During this work, they discovered mould in the lower parts of the walls and evidence of earlier repair work in the basement: for example, the gypsum in the lower wall sections did not match the gypsum in the upper wall sections, suggesting prior intervention. The buyers interpreted these findings as signs that there had been previous water infiltration and related damage, and that remedial work had already been performed before the sale. They concluded that the seller must have known of water problems and structural deterioration, particularly rotted wooden beams in the basement, and had not disclosed them.

Legal allegations and issues raised

The buyers commenced a small claims action in the Civil Division of the Court of Québec, seeking $15,000 in damages from the seller. Their theory was that Cappucio had made a false declaration, leading them to buy the property without legal warranty, and that they were effectively in the presence of undisclosed latent defects. Central to their claim was the seller’s declaration form (exhibit P-2), where, under clause d) 3.1, Cappucio stated that there had never been water infiltration in the basement. The buyers asserted that this statement was untrue and amounted to a misrepresentation or dol, particularly in light of the later discovery of mould, different gypsum panels, and alleged prior repairs. On this basis, they argued that the seller should remain liable despite the exclusion of legal warranty, and that they were entitled to recover the cost of correcting the defects they discovered after purchase. The court identified two main legal questions: first, whether buyers can pursue a seller’s liability despite a “sale without legal warranty” clause; and second, if so, under what conditions they may succeed in such a claim.

Legal framework and key contract clauses

The judgment is firmly anchored in the Civil Code of Québec’s rules on the burden of proof, legal warranty, and contractual obligations. The court recalled that under articles 2803 and 2804 C.c.Q., the party asserting a right must prove the facts supporting its claim on a balance of probabilities. This set the evidentiary standard that the buyers had to meet to establish both the existence of latent defects and the seller’s bad faith or dol. Turning to the effect of the exclusion clause, the court discussed articles 1732 and 1733 C.c.Q. These provisions allow the parties to modify the effects of the legal warranty, either by increasing, reducing, or completely excluding it. Article 1733 specifically contemplates sales made at the buyer’s risk and peril when the seller is a non-professional, as in this case. The clause in the deed of sale excluding legal warranty was therefore, on its face, valid in Québec law for a non-professional seller. However, the court emphasized that such clauses are interpreted strictly and must be read in light of general obligations law. It cited doctrinal sources (including Professor Jacques Deslauriers and Professor Pierre-Gabriel Jobin) and case law to stress that even a non-professional seller cannot escape responsibility for his own personal acts, including bad faith, fraud, or gross fault. The court also emphasized the overarching duty of good faith contained in articles 6 and 1375 C.c.Q. This duty applies at the formation, performance, and termination of contractual obligations and circumscribes the scope of exclusion clauses. In the context of a real estate sale, the obligation to inform forms part of this duty: a seller who knows of a defect affecting the property, or is presumed to know of it, must disclose it to the buyer. A failure to disclose may amount to dol, especially if it induces the buyer to contract or to contract on less favourable terms. The court referred to article 1401 C.c.Q., which defines dol as conduct by one party that provokes error in the other party, including through silence or reticence. Error vitiates consent if, absent the deception, the party would not have contracted or would have contracted on different conditions. The judgment also referenced appellate and superior court decisions, such as Théberge c. Durette, Ruel c. Duquette, and Girard c. Développement du Lac Hamelin inc., to underline that, even where an exclusion of warranty is valid for a non-professional seller, an aggrieved buyer can still invoke error and dol to seek annulment of the exclusion clause or even of the sale itself if the seller deliberately concealed an important defect.

Assessment of alleged bad faith and dol

With this legal framework in mind, the court turned to the evidence. The critical question was whether Cappucio knew or could not have ignored the state of the property—particularly the alleged rotted beams and past water problems in the basement—and whether he intentionally or grossly failed to disclose them. The buyers pointed to the post-purchase discovery of mould, different gypsum in the lower and upper wall sections, and prior repair work as evidence that the seller must have known about past water infiltration. They also relied on the contradiction between these physical findings and Cappucio’s declaration that there had never been water infiltration in the basement. The court, however, did not accept that the buyers’ inferences satisfied their burden of proof. It noted that the property was not the seller’s principal residence, and that construction of the residence spanned several years (from 1978 to 1981), during which the seller was not always present. This weakened the inference that he necessarily observed or knew of any water issues that might have arisen during that period. Moreover, the testimony of Yolaine Lecours, who acted as caretaker of the premises and served as the seller’s trusted person for 27 years, was significant. She testified that during all that time she had never seen water in the basement and had never seen repair work being done there. This evidence tended to corroborate Cappucio’s assertion that he had never experienced basement water infiltration. The court also examined the causal link required under article 1401 C.c.Q.: for dol to exist, the concealed information must be such that disclosure would have altered the co-contracting party’s decision to contract or the conditions under which it contracted. Here, the buyers had received a detailed pre-purchase inspection report (P-5) expressly flagging several potential problems, including indications of possible water infiltration. Despite this, they chose not to seek further expert advice, to negotiate a price reduction, or to withdraw from the transaction. The court concluded that, even if one assumed for the sake of argument that the seller knew of earlier water problems (which the court did not actually find proven), the evidence did not establish that the buyers would have acted differently—by demanding a lower price or walking away—had they been given more information. Most importantly, the court held that the buyers had not met their burden to establish dol. There was insufficient proof that Cappucio’s statement denying basement water infiltration was a deliberate lie or a manoeuvre intended to mislead, or that he concealed information that he clearly knew. In the absence of persuasive evidence of bad faith or fraudulent silence, the exclusion clause remained effective, and the legal warranty against latent defects did not revive in these circumstances.

Outcome and implications

Given the failure to prove dol, bad faith, or knowledge of a serious latent defect on the seller’s part, the court held that the buyers could not circumvent the valid clause excluding legal warranty “aux risques et périls de l’acheteur.” Their claim for the costs of correcting the alleged defects therefore had no legal foundation. The Court of Québec, Small Claims Division, accordingly dismissed the entirety of the plaintiffs’ $15,000 claim. The judgment formally rejects the buyers’ action and orders costs of justice against them. In practical terms, this means that the defendant, Giuseppe Cappucio, emerges as the successful party. No damages or monetary compensation are awarded to the buyers, and the only financial consequence in the judgment is that court costs are taxed against them. The decision does not quantify the exact amount of those costs, so the total monetary award in Cappucio’s favour cannot be precisely determined from the text of the judgment itself.