Executive Summary: Key Legal and Evidentiary Issues

• The central issue on appeal was whether the small claims court Trial Judge erred in law by finding negligent misrepresentation without applying the established legal elements of that tort.
   
• Negligent misrepresentation requires proof of five elements, including a special relationship giving rise to a duty of care, an untrue or misleading representation made negligently, and detrimental reliance by the representee.
   
• At trial, the nature of the alleged misrepresentation shifted from a claim about an encroaching retaining wall to one about the appellant's failure to disclose a change in the required building setback from 1.2 metres to 1.79 metres under RS-5 zoning.
   
• A disclaimer clause in the contract of purchase and sale — providing that there were no representations or warranties beyond those in the contract — was identified as a likely complete defence to the respondent's claim.
   
• Contractual terms expressly required Mr. Grewal to investigate all matters related to zoning, property boundaries, and title charges to his own satisfaction before the subject clauses were removed.
   
• Publicly available information, including the Wedler Engineering grading plan attached to the lot grading control covenant filed in October 2018, meant that Mr. Grewal's reliance on any representations by the appellant was not reasonable.

Facts of the case

On January 8, 2021, Avninder Grewal filed a claim in the Provincial Court of British Columbia (Small Claims) against 1114136 B.C. Ltd., the seller of a residential lot in Abbotsford, British Columbia. Mr. Grewal's claim arose from the purchase of a lot on which a retaining wall and fence, constructed by the appellant, encroached onto his property and interfered with the footings of his prospective home. The notice of claim was amended twice, with particulars ultimately set out in an attached schedule. As the matter evolved toward trial in January 2025, the core allegation shifted: Mr. Grewal came to argue that the appellant had misrepresented that the lot line setback in the contract of purchase and sale had been changed from 1.2 to 1.79 metres. He submitted that the property was zoned RS-5, which under s. 370 of the City of Abbotsford zoning bylaw ordinarily requires a minimum setback of 1.2 metres, and that no one had disclosed to him that the required setback for this particular lot had, in fact, changed to 1.79 metres. Mr. Grewal pleaded that, in reasonable reliance on the appellant's misrepresentations, he purchased the property and then paid for the entire cost of relocating the retaining wall.

Policy terms and contractual clauses at issue

The contract of purchase and sale contained a disclaimer clause stating that "there are no representations, warranties, guarantees, promises, or agreements," other than those set out in the contract itself. The contract also contained subparagraph (l), under which Mr. Grewal acknowledged satisfaction with the size, dimensions, suitability, and layout of the property and accepted that measurements shown on an attachment to the contract were approximate and subject to change. He further acknowledged awareness that the property may be affected by influences not readily noted, such as flood plain, municipal and transportation infrastructure, agricultural land reserve, green zone, and current and future zoning. The contract was subject to Mr. Grewal obtaining legal and/or professional advice concerning all aspects of the purchase and required him to investigate, to his own satisfaction prior to all buyer's subject clauses being fulfilled or removed, any questions or concerns regarding property size, property boundaries, zoning, usage, or environmental restrictions. Additionally, the lot had attached to its title a "lot grading control covenant," which prohibited construction unless consistent with the approved as-built lot grading plan of Wedler Engineering — a plan acceptable to the city's general manager of engineering and available for viewing on the city's internet website or during regular business hours. That Wedler Engineering grading plan, which reflected a 1.79 metre setback, had been filed in October 2018, before the contract of purchase and sale was signed.

Reasoning and analysis

After two days of evidence, the Honourable Judge P. Nijjar of the Provincial Court made several findings of fact: that the appellant had failed to respond to the claimant's attempts at contact before the retaining wall was taken down and reconstructed at the claimant's expense; that the lot was zoned RS-5 and should have included a setback of approximately 1.2 metres; that the amended grading plan provided to the claimant in November 2020 contained measurements consistent with a setback of approximately 1.8 metres, of which the appellant should have been aware and had a duty to disclose; and that the claimant had exercised sufficient due diligence. However, the Trial Judge did not apply these findings to the elements of any tort or assess damages, simply concluding that the appellant was responsible for paying the amount sought in connection with the removal of the retaining wall.

On appeal, Justice Fowler of the British Columbia Supreme Court found that this approach was a legal error. The Supreme Court noted that the tort of negligent misrepresentation — as affirmed by the Supreme Court of Canada in Queen v. Cognos Inc., [1993] 1 S.C.R. 87 — requires proof of five elements: a duty of care based on a special relationship; an untrue, inaccurate, or misleading representation; negligence in making the representation; reasonable reliance by the representee; and resulting damages. The Trial Judge had not analyzed the facts against any of these elements. Justice Fowler also observed that the exact nature of the alleged misrepresentation was never clearly defined at trial, having shifted from an encroachment claim to a setback disclosure claim, which meant the Trial Judge was never in a position to assess whether any representation was untrue or negligently made. Further, the disclaimer clause in the contract of purchase and sale was identified as a likely complete defence, citing Kokanee Mortgage M.I.C. Ltd. v. Burrell, 2018 BCCA 151. Justice Fowler was satisfied that, given the terms of the contract, the publicly available Wedler Engineering grading plan filed in October 2018, and the contractual obligation on Mr. Grewal to independently satisfy himself on all zoning and title matters, any reliance by Mr. Grewal on representations by the appellant was not reasonable.

Ruling and overall outcome

Justice Fowler allowed the appeal, finding that the Trial Judge had erred in law by failing to apply any findings of fact to the legal elements of a recognized tort. The Supreme Court declined to order a new trial, noting that the claim of $25,000 was deficient in many respects and that Mr. Grewal would not be able to establish reasonable reliance given the contractual terms and the readily available information in the lot grading covenant. The claim was dismissed. The appellant, 1114136 B.C. Ltd., was the successful party and was awarded costs and disbursements, including the cost of preparing the transcript.