DISCLAIMER © Copyright: 2017 · DISCLAIMER: This publication is intended for EDUCATIONAL purposes only.The information contained herein is subject to change with no notice, and while

DISCLAIMER: This publication is intended for EDUCATIONAL purposes only. The information contained herein is subject to change with no notice, and while a great deal of care has been taken to provide accurate and current information, UBC, their affiliates, authors, editors and staff (collectively, the "UBC Group") makes no claims, representations, or warranties as to accuracy, completeness, usefulness or adequacy of any of the information contained herein. Under no circumstances shall the UBC Group be liable for any losses or damages whatsoever, whether in contract, tort or otherwise, from the use of, or reliance on, the information contained herein. Further, the general principles and conclusions presented in this text are subject to local, provincial, and federal laws and regulations, court cases, and any revisions of the same. This publication is sold for educational purposes only and is not intended to provide, and does not constitute, legal, accounting, or other professional advice. Professional advice should be consulted regarding every specific circumstance before acting on the information presented in these materials. © Copyright: 2017 by the UBC Real Estate Division, Sauder School of Business, The University of British Columbia. Printed in Canada. ALL RIGHTS RESERVED. No part of this work covered by the copyright hereon may be reproduced, transcribed, modified, distributed, republished, or used in any form or by any means – graphic, electronic, or mechanical, including photocopying, recording, taping, web distribution, or used in any information storage and retrieval system – without the prior written permission of the publisher.

©Copyright 2017 by the UBC Real Estate Division

THE PROFESSIONAL LIABILITY OF REAL ESTATE LICENSEES

C H A P T E R 5

Learning ObjectivesAfter studying this chapter a student should be able to:

List the three elements of negligence and give an example of a negligent act which might arise in a real estate licensee’s daily activities

Discuss the principle of vicarious liability and its significance to real estate licensees

List the elements of negligent misrepresentation and give an example of this tort

Describe the tort of deceit and distinguish between deceit and negligent misrepresentation

Provide examples of the three types of trespass and explain the three major characteristics of that tort

Explain who can sue for trespass

List the defences to trespass

Explain what remedies are available to the victim of trespass

Describe private nuisance

Compare nuisance and trespass

Discuss the significance of the occurrence of physical damage in an action for nuisance

Name who is liable for nuisance

Describe the valid defences to nuisance and be able to give examples of two or three excuses that are not valid defences

Explain what remedies are available to the victim of nuisance

Explain the purpose of the Occupiers Liability Act and give an example of how a real estate licensee might incur liability under this Act



5.1Chapter 5 – The Professional Liability of Real Estate Licensees

INTRODUCTION

In British Columbia, real estate licensees may arrange for the sale or lease of residential and commercial real estate, manage properties on behalf of owners, and assist in mortgage financing. Successful licensees work long hours and face many challenges as they deal with some of the largest assets acquired or disposed of by individuals. In all areas of the real estate industry, licensees run the risk of being exposed to potential liability to those for whom they work. The courts of British Columbia require high standards of conduct from licens-ees acting in their professional dealings; this standard of care is not one of perfection, but it is very close to it. In this chapter you will be introduced to the most common grounds on which liability has been found against real estate licensees.1 You will also be introduced to specific tort actions concerning real property which can affect licensees in their professional capacity and also as property owners and as occupiers of property.

COMMON GROUNDS OF LIABILITY AGAINST LICENSEES

The Real Estate Errors and Omissions Insurance Corporation reports that the majority of claims that they investigate deal with real estate sales licensees. The most common grounds on which liability has been found against licensees are:

• negligence;• negligent misrepresentation;• fraudulent misrepresentation and deceit;• errors in drafting agreements; and • breach of fiduciary duties.

Figure 5.1 provides a breakdown of claims, by type, from 2011 to 2015.

NEGLIGENCE

The tort of negligence involves a failure by a person to exercise a duty of care in circumstances which require that person to take care. The potential scope of negligence is very great because the number of situations in which the law may determine that a duty to take care exists is unlimited; however, not every accident will support a claim of negligence. Before a person will be held to be negligent, certain criteria must be met. The plaintiff must prove three things:

1. That the Defendant Owed the Plaintiff a Duty to Take Care. A person will be held to owe a duty to take care to all persons whom he or she can or should reasonably foresee as being affected by his or

1 Part of this chapter is adapted from The Professional Liability of Real Estate Licensees, a copyright publication of the Real Estate Errors and Omissions Insurance Corporation of British Columbia. It is used in this form with the express consent of the Insurance Corporation.

You should be aware that the Courts have little sympathy for licensees, whom they think of as professionals, and insist upon high standards of conduct being met. The following quotations, taken from cases, are representative of the attitude of the Courts:

“It must be remembered that offers to purchase are frequently made by and submitted to individuals with little or no knowledge of real estate transactions. Of necessity and with propriety such individuals rely on the professional knowl-edge and skill of the real estate [licensees] they employ for their protection when they buy or sell property. Frequently large amounts of money are involved and in view of the adequate commission charges made by real estate [licens-ees], the fact that under the Real Estate Act they are given a virtual monopoly of this type of business based on the theory that this is the best way of protecting the public interest, the vendor and purchaser are surely entitled to expect that such agents will carry out their duties without the likelihood of either the vendor or purchaser having to meet the expenses and uncertainties of a lawsuit.”

Hawryluk v. Korsakoff (1956), 20 WWR 394 (MBCA)

“I am of the opinion that the appellants (the licensees) were possessed of a special skill. That skill did not consist simply of bringing sellers and buyers of real estate together. It went beyond that, and, what is important to the present case, included the preparation and completion of the offer to purchase and the [Contract of Purchase and Sale].”

Russell v. Wispinski, 1987 CanLII 2775 (BC SC)

As a Licensee...


5.2 Real Estate Trading Services – Licensing Course Manual

her actions. In addition to situations where foreseeability of harm exists, the courts in Canada are willing to find a duty of care in situations where, as a matter of policy, it is felt the public has a right to expect persons involved in a particular activity to take care in the way they conduct themselves in that activity.

2. That the Defendant Breached the Standard of Care Owed. The relevant standard of care in any situation of duty will be to take the same care that a reasonable person would take in all the circum-stances of the case. Generally, the greater the risk involved in a particular activity, the higher the standard of care that will be imposed on persons engaging in that activity.

3. That the Damages Suffered by the Plaintiff as a Result of the Defendant’s Breach were not Too Remote in Law. The type of damage caused must have been reasonably within the contemplation of the defendant as a possible consequence of his or her acts or omissions. Types of damage not reasonably foreseeable are considered too “remote” in law, and a plaintiff will not be able to get compensation for them.

Where a plaintiff is able to prove that the defendant owed him or her a duty of care which the defendant failed to fulfill, and that the failure of duty resulted in reasonably foreseeable damages, the plaintiff will succeed with a claim in negligence. If any one of the required elements is not proven by the plaintiff, the action in negligence will fail.

Example

A man ran for a train that was starting to leave the train station. Two railway employees tried to help him get on board the moving train and in the process dislodged the man’s package. The innocuous-looking package turned out to contain fireworks, and when it fell on the tracks it exploded. The vibrations from the explosion knocked down some scales at the opposite end of the train platform which fell on a woman and injured her. She sued the railway company in negligence but failed to prove her claim. The court held that there was no duty of care owed to the woman by the railway employees concerning the package. There was no way the railway employees could have known the package would explode and harm the woman, and therefore there was no duty owed to the woman as a person likely to be affected by their actions. In the absence of a duty to take care, the dropping of the package did not amount to negligence toward the woman.

FIGURE 5.1: Errors and Omissions Insurance Claims by Type



How Does Negligence Affect Licensees?

In the context of the real estate profession, it is common for negligence to form the basis of liability on the part of licensees. A licensee can be liable to one of the parties to a transaction for failing to use reasonable care in dealing with that party. The law imposes a duty of care on the part of a licensee to maintain a reason-able standard of conduct in the performance of his or her professional tasks. When a licensee fails to perform to the required standard of care and damage or loss results to a party, the licensee can be found liable.

Vicarious Liability

A real estate brokerage will be held liable for the negligent or other wrongful acts of its licensees when those acts are committed in the ordinary course of employment. This is known as the common law doctrine of vicarious liability, which was introduced earlier in the material dealing with the additional responsibilities of brokerages under the Real Estate Services Act.

Where an employee commits a wrongful act in the ordinary course of employment, the injured party can sue both the employee and the employer for damages caused by the employee’s act; however, if the wrongful act does not occur in the ordinary course of employment, the employer will not be liable.

Employers may even be vicariously liable for wrongs such as fraud or assault, if such acts are committed in the course of an employee’s employment. It is important to note that representatives are treated by the courts as employees.

You can imagine that the standard of care expected of a licensee – that is, what a reasonable licensee ought to have done in all the circumstances, is not always clear. The standard of care varies based on the particular circumstances and is dependent on the facts and evidence brought forward by the parties. As a result, when in doubt, it is always better to be cautious or seek professional advice.

Shaw v. Thody (2014 BCSC 688) is an example of a case where the standard of care of a licensee was in dispute. The plaintiff buyers argued that their licensee had breached the standard of care by failing to make inquiries about a landslide risk in North Vancouver on their behalf when they purchased their property. A landslide subsequently occurred three lots away from their property, which the plaintiffs later discovered had previously been the subject of a landslide. To determine the standard of care, the Court looked to the plaintiffs’ expert evidence – the opinion of an experienced licensee. The expert was of the opinion that the licensee had a duty to disclose this landslide risk to the parties in the transaction. Despite this, the Court was not satisfied that the expert’s report sufficiently addressed what standard of care was required of a licensee in the specific circumstances of this case; therefore, the case was dismissed.

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Example

An employee of a dairy used the dairy’s truck to take his family to the movies outside of work. While using his employer’s truck, the employee caused a collision. The court found no vicarious liability on the facts because the employee’s wrongful act did not occur in the course of performing his employment duties. The employee alone was found liable to the plaintiff.

There are a number of situations in which licensees have been found to be negligent. Some common examples are:

1. A real estate licensee may be found to be negligent if he or she fails to provide competent advice on the value of the property being sold by the vendor.

Lewis v. Simcoe Real Estate Limited et al., (1984) 33 RPR 315 (ONPC) Virtue et al v. United Reality et al., (BCSC) February 15, 1985

2. Negligence may be found against a real estate licensee who fails to recommend to the purchaser that the purchaser insert a “subject to financing” clause in an offer to purchase.

Shulist v. Hunt et al., 1987 CanLII 3364 (ABQB) Lord et al v. Arts et al., (BCSC) June 10, 1986

3. A real estate licensee may be found negligent for failing to disclose or discover inadequacies in the water supply. Sedgemore v. Block Bros. et al., (1986) 39 RPR 38 (BCSC)

ALERT!

continued next page



MISREPRESENTATIONS AND DECEIT

Misrepresentation can be defined as any manifestation by words or other conduct by any one person to another that, under the circumstances, amounts to an assertion not in accordance with the facts. Misrepresentation is

the most common basis for liability against licensees. Generally speaking, real estate licensees can face liability for two types of misrepresentation:

1. negligent misrepresentation; and2. deceit and fraudulent misrepresentation.

Negligent Misrepresentation

Negligent misrepresentation is also referred to as negligent misstatement or as the rule in Hedley Byrne, which is the name of the English case in which this type of liability and the rules governing it were established. The principles governing liability in negligence also apply to negligent misrepresentation. The Supreme Court of Canada has stated the particular requirements for liability for negligent misrepresentation as follows:

1. there must be an untrue statement;2. it must have been made negligently;3. there must be a special relationship between plaintiff and defendant giving rise to a duty of care; and 4. there must be reliance by the plaintiff on the negligent statement which is reasonable.

Where the reliance results in foreseeable loss, the person who relied upon the statement may recover damages from the person who made the negligent misrepresentation.

The special relationship giving rise to a duty to take care will be created where a skilled person, or expert, gives advice in the course of his or her business to a person who is reasonably going to rely on that advice. In such a situation, there are three courses of action open to the skilled person:

1. the skilled person can refuse to give the advice or opinion sought;

2. the skilled person can give the advice or opinion with a clear qualification that he or she accepts no responsibility for the accuracy or reliability of the advice; or

3. the skilled person may give the advice with no qualification or disclaimer of liability.

If a skilled person chooses option (3), then that person must take reasonable care in giving that advice or face liability for losses arising from the advice if it is negligently given.

Liability for negligent misrepresentation has been imposed on licensees, who are considered skilled persons or experts in the area of real estate. This means that where a licensee is asked for advice or an opinion in a business relationship, the licensee must be aware that if he or she elects to give advice or state an opinion without qualification, the licensee faces the risk of liability should the advice or opinion be negligent.

misrepresentationa false assertion of fact which, if accepted, leads one to an incorrect belief about a given situation

4. Negligence may be found against a real estate licensee for failing to disclose material facts about the purchaser’s ability to buy the property.

Cuttell v. Bentz, 1986 CanLII 882 (BCSC)

5. Negligence may be found against a real estate licensee for incorrectly ascertaining the boundaries of a property. Legendre v. Riou, (BCSC) December 12, 1985.

6. Negligence may be found against a listing licensee who fails to verify information in the listing agreement. Jung v. Ip (1988), 47 RPR 113 (Ontario Div. Court)

7. Negligence may be found against a real estate licensee who fails to conduct a title search. Price v. Malais, 1982 CanLII 751 (BCSC)

8. Negligence may be found against a real estate licensee who gives an incomplete or misleading estimate of the rental income from a property and fails to inform the purchaser of her report indicating the infeasibility of the rental yields.

Spiewak et al v. 251268 Ontario Limited et al., 1987 CanLII 4124 (ONSC)

ALERT, continued!



Deceit and Fraudulent Misrepresentation

The tort of deceit is similar to the concept of fraudulent misrepresentation which applies to the law of contract. Deceit and fraudulent misrepresentation are different from negligent misrepresentation in two respects. First, they involve a sense of moral fraud as opposed to carelessness. Second, a person does not need to be an expert to be liable. When a misrepre-sentation is false and is made either knowingly (without a belief in its truth) or recklessly (not caring whether it is true or false), the person making the misrep-resentation is liable for damages in tort, in addition to any further right the party may be able to exercise under contract law.

How do Misrepresentations and Deceit Affect Licensees?

The service performed by a real estate licensee includes providing information about a number of matters relating directly or indirectly to a particular property. Before providing information about a property, licens-ees should consider the following.

A licensee who provides incorrect, inaccurate or misleading information to one of the parties to a transac-tion might be found liable. Before providing information about a property, licensees should consider whether they have direct personal knowledge of the information. For example, you may know that the address of a property is 123 Elm Street because you have observed that property on Elm Street. You may think you know the dimensions of that property because the owner told you the dimensions. However, unless you have actually measured the dimensions of the property yourself, you do not have direct knowledge of them. It is not always possible to provide information based on direct personal knowledge. If it is necessary for you to provide information which is not based on direct personal knowledge which you have checked, it would be prudent to provide the information to the party who requested it in written form indicating the source of the information.

Disclosure statements completed by vendors and signed at the time the property is listed can be of assistance in protecting yourself from liability for providing this information. They should not, however, be considered as a coat of armour which will protect you in all situations. You can be exposed to liability if, in all of the circumstances, you knew or ought to have known that the information on the disclosure statement which you communicated to the other party to the transaction was inaccurate or misleading.

Conversely, a real estate licensee can be found liable to a vendor for non-disclosure of information about the property known to the licensee which, if not adequately disclosed, gives the purchaser a cause of action against the vendor.

If the information which you are giving to a party is in the form of an opinion, you should assume that it will be relied upon. As indicated above, this reliance forms the legal basis for your potential liability if you are wrong. Before providing the information you should consider whether or not you are competent to give the opinion. You should also consider whether you have complete factual information on which to base the opinion. Finally, you should always consider whether it is necessary for you to give the opinion or whether it would be more prudent to refer your client to someone who might be more qualified or better informed to provide the information.

In the British Columbia Supreme Court decision in Arthur and Arthur v. Greyfriars Realty et al, (unreported) concerning an allegation that a real estate licensee had failed to discover a structural defect, the court stated:

Nor is it reasonable to suppose that Sidhu should have known of the defect. He was not an engineer, he was a salesperson. He had no special knowledge or experience with structural problems although he was in the house on several occasions before the Plaintiffs’ purchase, he was not reckless in failing to discover the defect, or wilfully blind to the property’s condition. So far as the soundness of the house was concerned, he was in the position of any other layman...

deceita fraudulent or deceptive misrepresentation used by one person to deceive or trick another person ignorant of the true facts

Holt v. Thompson, 2006 BCSC 1059

In Holt, a licensee had assured the purchaser of a condominium that was free from leaks. One week after the purchase had completed, the purchaser was notified of an assessment for water damage to the condominium. The licensee was found to be guilty of negligent misrepresentation as she knew or ought to have known of the leaky condo. Moreover, she had a duty to notify the purchaser of this fact, and the purchaser acted reasonably in relying on the information given by the licensee.



It was the Plaintiffs’ responsibility as purchasers to inspect and inquire into the nature and quality of the premises they proposed to purchase. If they were not qualified to make such an inspection or inquiry them-selves they could delegate that responsibility to someone who was qualified, an appraiser, a builder, or some other knowledgeable person.

These statements indicate that a Court will recognize that real estate licensees are not required to give opinions on the structural soundness of the properties they are selling. Such opinions do not fall within the expertise of a licensee. There are many other examples of opinions which licensees are often asked to provide but which fall outside a licensee’s qualifications. If you offer opinions in these areas, you are inviting a lawsuit.

ERRORS IN DRAFTING AGREEMENTS

A real estate licensee must understand the basics of contract law, including the principles relating to offer and acceptance, counter-offers and revocation of offers. Liability can often arise if these basic principles are not observed. The message from the courts is clear: know basic contract law – if you have any doubts, seek legal advice. Contract law is dealt with in detail later in the course materials.

Real estate licensees must be able to draft legally enforceable documents such as contracts of purchase and sale which reflect the intent of the parties. These documents should be drafted in simple, accurate and understandable terms. Jargon, abbreviations, colloquialisms, and any terms or phrases which give rise to uncertainty should be avoided. When in doubt, a licensee may wish to err on the side of providing more detail and specificity.

The case of Russell v. Wispinski is a good example of the problem which can arise if the documents in a transaction are not drafted carefully.

Russell v. Wispinski (1987), 13 BCLR (2d) 196 (BCSC)

The Plaintiffs listed their house for sale with the Defendant Trust Company and its trading services representative, C. An offer was obtained by C from the Defendant purchaser to buy the house for $182,000 with specified financing and subject to the purchasers obtaining a second mortgage by a certain date. The parties subsequently signed two amending agreements, one altering the amount of the deposit and the other extending the time for obtaining the second mortgage. Since the purchaser was having difficulty obtaining the mortgage, C suggested to the Plaintiffs that the Defendant trust company grant “bridge financing” and drew up an amending document providing for such financing but leaving the details blank. C left the matter with another representative, W, while C was on vacation. The Plaintiffs did not understand the document and took it to their lawyer, who redrafted parts of it for clarification. W advised the Plaintiffs that she would not forward the documents to the purchaser unless the Plaintiffs initialled it and, despite their apprehension that it might be construed as a counter offer, the Plaintiffs initialled it. The purchaser refused to sign the document and refused to complete the transaction.

The Court held that the amending agreement presented to the purchaser did constitute a counter-offer which the purchaser was entitled to reject. The Court found that if the Contract of Purchase and Sale Amendment had been drafted in simple, accurate and understandable terms without statements irrelevant to the bargain as between the buyer and the seller, the transaction would have completed. In failing to conform to a reasonable standard of drafting, the licensees were found to be negligent.

You may encounter clients who wish to speak directly to the other party. For example, the seller may wish to speak with prospective buyers directly because the seller believes that he or she has superb negotiating skills. While the seller may certainly do so, the seller’s licensee should caution the seller that this may expose the seller to substantial legal risks for misrepresentation, and that it is safer for all parties if the real estate professional(s) handles all communications. The licensee is much more attune to the risks associated with making certain representations. Furthermore, the licensee would know exactly what information has been given to whom, which avoids situations where the licensee tells the other party one thing, but the client says something else. The licensee should advise the client that not only has the licensee received professional training, but that the licensee also has a legal duty to protect the interests of the client and mitigate legal risks, such as misrepresentation.

As a Licensee...



BREACH OF FIDUCIARY DUTY

Real estate licensees owe a duty of utmost good faith to their clients. This is called a fiduciary duty. The courts have formulated the following principles as being applicable to a real estate licensee’s duty of utmost good faith:

a. a relationship between a real estate licensee and the person who has retained the licensee to sell his or her property is fiduciary and confidential;

b. there is a duty upon such a real estate licensee to make full disclosure of all facts within the knowl-edge of the licensee which might affect the value of the property;

c. not only must the price paid be adequate but the transaction must be a righteous one and the price obtained must be as advantageous as any other price that the licensee could, by the exercise of diligence on the principal’s behalf, have obtained from a third person; and

d. the onus is upon the licensee to prove that these requirements have been fully complied with.

Some examples of how the courts have dealt with these principles follow.In the British Columbia Supreme Court case of Compar Services Inc. v. Foss, 1983 CanLII 626 (BCSC), the

plaintiff brought an action for specific performance of a contract of purchase and sale in which the defendant agreed to sell two lots to the plaintiff. All of the dealings on behalf of the plaintiff were by T, a licensee who was an officer and had an interest in the plaintiff company. The contract of purchase and sale stated that “T, the real estate agent, has an interest in Compar Services...” The defendant argued that the agreement was voidable because the plaintiff failed to comply with section 38 of the [then current] Real Estate Act relating to disclosures by real estate licensees. The court held that since there was no proper written disclosure by the licensee prior to the offer being made, as clearly required by section 38 of the Real Estate Act, the contract was voidable at the discretion of the vendor. The plaintiff ’s claim was dismissed.

In the British Columbia Court of Appeal decision in Ocean City Realty Ltd. v. A & M Holdings Ltd., 1987 CanLII 2872 (BCCA), the Court held that a vendor was not required to pay the real estate licensee a commis-sion on closing when the vendor discovered that there existed a secret agreement between the licensee and the purchaser that the licensee would split the commission payable with the purchaser. Although on the facts the court found that this secret agreement did not necessarily work to the detriment of the vendor, the court held that the licensee’s duty to disclose material facts is not restricted to those situations where the broker gains an advantage in the transaction or where the information might affect the value of the property. The court had these comments:

In my opinion, the trial judge’s interpretation of the obligation owed to a principal by its agent is too restric-tive. The duty of disclosure is not confined to those instances where the agent has gained an advantage in the transaction or where the information might affect the value of the property or where a conflict of interest exists. The agent certainly has a duty of full disclosure in such circumstances; they are commonly occurring circumstances which require full disclosure by the agent. However, they are not exhaustive. . .

The obligation of the agent to make full disclosure includes . . . ‘Everything known to him respecting the subject matter of the contract which would be likely to influence the conduct of his principal’ or ‘everything which would be likely to operate upon the principal’s judgment.’ In such cases the agent’s failure to inform the princi-pal would be material non-disclosure. . .

I would emphasize that the agent cannot arbitrarily decide what would likely influence the conduct of his prin-cipal and thus avoid the consequences of non-disclosure. If the information pertains to the transaction with respect to which the agent is engaged, any concern or doubt that the agent may have can be readily resolved by disclosure of all the facts to his principal. In the instant case the very withholding from the principal of the information concerning the payments to the purchaser of a portion of the commission could be evidence from which one might properly infer that the agent was aware that such circumstances would be a matter of concern to the principal . . .

In the circumstances of this case I find that the agent’s non-disclosure was motivated by her desire to earn at least a portion of her commission and constituted a breach of her fiduciary duty to her principal and as a consequence she is not entitled to the commission claimed.

fiduciarya person who holds a position of trust with respect to someone else and is obliged, by virtue of the relationship of trust, to act solely for the other person’s benefit



In the case of Yorkland Real Estate Ltd. et al v. Dale, 1987 CanLII 4161 (ONSC), a decision of the Appeal Division of the Ontario High Court of Justice, the court dealt with a claim by a real estate brokerage against the vendor for its commission on the sale of the vendor’s property. The plaintiff real estate brokerage obtained an offer to purchase the vendor’s property. The vendor accepted the offer. Before completion, a third party made an offer at a higher price to the purchasers of the subject property through the plaintiffs. The plain-tiffs failed to inform the vendor of this third party offer. After the original transaction closed, the plaintiffs arranged a re-sale by the purchaser to the third party without informing the defendant. The court held that the real estate brokerage was not entitled to the commission. The court found that there was a high fiduciary obligation owing by the brokerage to the vendor which required the brokerage to inform the vendor of the interest expressed by the third party and their participation in the resale.

STATUTORY AND INDUSTRY LIABILITY

In addition to being found liable by the courts, a real estate licensee can be disciplined by the Real Estate Council of BC. The Real Estate Council is the disciplinary arm of the industry. It is created by the Real Estate Services Act, and its functions and powers are set out in the Act. The Council may discipline a licensee who has committed professional misconduct (which includes committing a breach of the Act, Regulation or Rules) or who demonstrates conduct unbecoming a licensee.

Negligence on the part of a real estate licensee can form the basis of either “professional misconduct” or a “conduct unbecoming” a licensee. As you will recall from an earlier chapter, the Council has the power to reprimand a licensee or suspend or cancel the licensee’s licence.

A real estate licensee may also face disciplinary proceedings by a real estate board. There are eleven real estate boards in the province operating within geographical areas. Each of the boards is incorporated as a society under the Society Act and has its own constitution and bylaws. Among the objects of a board is the adoption and maintenance of a code of ethics and standards of business practice. A board can take jurisdic-tion over its members to deal with a complaint that a real estate licensee has breached the code of ethics or has otherwise conducted him or herself improperly. The penalties which are available to the board range from a reprimand to suspension or expulsion from the board. Sometimes a member can be ordered to pay the costs of the hearing in the event that a penalty is assessed.

The disciplinary committee of a board does not have the power to suspend the licence of a member; however, the suspension or expulsion from membership in the board precludes the expelled member from access to the Multiple Listing Service®. This consequence could be extremely detrimental to a licensee.

WHAT IS THE BOTTOM LINE?

The law is imposing increasingly strict standards on all professionals, including real estate licensees. The very high standards of professionalism and competence imposed by the courts and the Real Estate Council do not decrease in a volatile real estate market. A volatile market only serves to expose licensees to a greater risk of liability.

Because the law is constantly changing and developing, accepted practices of the real estate industry will also change. It is imperative that licensees keep abreast of these changes. It may not be a good defence for licensees to maintain that they conducted themselves in accordance with the accepted practice at the time. The customs of the industry as a whole are evolving to meet the stricter requirements of the law, which in turn reflects a heightened sensitivity to the protection of consumers.

Avoiding liability as a real estate licensee is not easy, but all licensees must consider taking the time to learn how to recognize situations which put them at risk of liability and how to avoid these situations.

Westrheim et al v. Gao et al, 2007 BCSC 274

In the case of Westrheim v. Gao, a licensee was held liable for breach of fiduciary duty even though the licensee was not the plaintiff’s agent. In this case, the defendant licensee purchased a property from the plaintiffs and then quickly resold the property for a large profit. The defendant licensee did not disclose her intention to purchase the property as an investment to the vendor as required by section 5-9 of the Rules. This case illustrates that the Rule is broad in its scope as to what must be disclosed and to whom.



INTRODUCTION TO TORT LAW

In addition to matters of professional liability, licensees must be aware of specific torts that deal with land. Torts are civil wrongs (in which the state is not involved) for which the courts will grant a legal remedy. Some common examples include assault, defamation of character, and false arrest. Deceit and negligence, which were discussed earlier, are also types of torts. The following torts relate to posses-sion or ownership of land, or affect real estate licensees in the practice of their professional activities. As with professional liability issues generally, it is important to concentrate on the way in which such torts occur, the type of liability which follows and how to avoid such problems.

TRESPASS

Trespass consists of wrongfully entering, remaining on, or placing something on another’s land. It is an intentional tort, which means that the act must be a voluntary one over which the trespasser has control. Where a group of men threw another man onto a neighbour’s land, it was held that the men who threw the other man were guilty of trespass. However, the man who was thrown was not a trespasser because he entered the neighbour’s land involuntarily. Trespass must be a direct act, as opposed to an indirect result of an act. For example, it is a trespass to throw stones onto a neighbour’s land, but if a person allows his chimney to disintegrate to the point at which it tumbles down onto a neighbour’s land, that would not be a trespass. The reason for this is that the former example of throwing stones is a direct act, while the latter example is an indirect result of the owner’s act, or failure to act to maintain the chimney. Trespass is actionable per se, which means that, unlike the other torts described in this chapter, no actual damage needs to be proven in order to succeed in a legal action. This, of course, does not remove the right to claim for damages if they occur. A summary of the characteristics of trespass is found in Figure 5.2.

Types of Trespass

There are three types of trespass.

Trespass by Wrongful Entry. This occurs whenever a person enters onto someone else’s land without express or implied permission or other lawful excuse (such as statutory authority). The slightest crossing of the boundary will constitute trespass. For example, if Jeff is wandering through the woods and crosses someone else’s land, Jeff is a trespasser. It makes no difference that he thought he was on his own property. His action is voluntary in the sense that he has control over where he walks. Ignorance is no excuse in this instance. On the other hand, if Laura forces Susan to cross Tom’s land, Laura is the one liable for the trespass; Susan is not liable because her action was not voluntary.

If a person has a limited right to enter another’s land for one purpose, that person will be trespassing if he or she enters for another reason. Finally, a right to enter can apply to a portion of the premises so that if a person wanders into areas where he or she has no right of entry, the person becomes a trespasser.

torta private wrong or injury, other than breach of contract, for which the court will provide a remedy in the form of damages

trespassa legal term for wrongfully entering, remaining on, or placing something on another’s land

FIGURE 5.2: Characteristics of Trespass

1. Intentional – trespasser must have control over his or her actions2. Direct – cannot be an indirect result of another act or occurrence3. Actionable per se – physical damage doesn’t need to occur for an occupier to sue in trespass



Trespass by Wrongful Remaining. This occurs when a person has legally entered upon someone else’s land but remains there after his or her right of entry has ended. For example, this might occur where a customer in a store is asked to leave by the owner. At that point, the implied right of entry is cancelled and if the customer does not leave within a reasonable time, he or she becomes a trespasser. Under this type of trespass, it is usually necessary for the right of entry to be expressly removed.

Trespass by Wrongful Placing. This occurs when a person causes an object to be wrongfully placed or left upon another’s land. An example of this type of trespass can be found in the case of Turner v. Thorne et al., 1959 CarswellOnt 236, where a delivery company was held liable for trespass when a package was mistakenly left at the wrong address. The fact that the package was left by mistake was held not to be a defence to the claim of trespass.

Trespass can occur below the surface and in the airspace above the land. In one case, a person built a sign above his building which crossed 8 inches into the airspace of his neighbour. The court held that this was a trespass even though no actual damage was caused. It was explained in Chapter 3 that legislation permits airplanes to travel through your airspace; they would only be liable if actual physical damage were caused by such entry.

Who Can Sue in Trespass?

Generally, only the person in actual possession of the land at the time of the trespass can sue a trespasser. A landlord who has leased out property can only sue if the trespass results in permanent damage to the rever-sion (the interest in land that the landlord will receive back after the tenancy ends). Therefore, it is a right of occupation or possession that is being protected, not necessarily a right of ownership. A right to merely use the land without possession, such as the right of an easement holder or boarder, is not sufficient to maintain an action in trespass. From a licensee’s point of view, property managers would be the most likely persons to become involved in a trespass action.

Remedies for Trespass

Damages. It was explained above that damage does not need to occur to bring a court action for trespass; however, a claim may be made for damage caused as a result of a trespass. The measure of damages is the amount by which the value of the property is lessened as a result of the trespass, not the “replacement” cost. For example, if an old building is damaged by a trespasser, the plaintiff can recover the loss in value to the property. It is unlikely that this will be the actual cost of repairing the damage to the old building.

Where the trespass is a malicious or gross invasion of the plaintiff ’s rights, an additional award, known as punitive or exemplary damages, may be awarded. For example, this can happen where a trespasser knows that he or she is in the wrong but, with contempt for the plaintiff ’s rights, decides to commit a trespass.

Injunction. An injunction is an order of the court requiring someone to do or stop doing a particular act. It may be obtained to stop the continuance or repetition of a trespass. It is a very useful remedy where no actual damage is being caused but the plaintiff wants the trespass stopped. If the defendant disobeys an injunction, he or she will be liable for contempt of court and subject to fines or possible imprisonment.

Self-Help. A person in possession of land can forcibly remove a trespasser if he or she has first asked the trespasser to leave and uses no more force than is reasonably necessary in the circum-stances. This remedy is available without a court action. However, where the occupier uses more force than is reasonably necessary, he or she will be liable for assault and any damages resulting from the excessive force.

injunctiona court order which either restrains a party from doing something or requires a party to do something

Licensees who are property managers should be aware that, with the exception of the situation where a person is abating a nuisance, all of the following defences can be categorized as situations where the defendant had some “right” to enter, whether obtained through a formal or informal agreement with the owner, or under a statute.

Lawful Exercise of a Right of Way. A person who has an easement is not trespassing when exercising the right of way. This is true even if the owner attempts to cancel this right without mutual consent.

Express or Implied Permission of the Occupier. Express permission speaks for itself. The law will imply permission in certain instances. The purpose for the visit may be one of any number of different reasons, either commercial or non-commercial. A person entering on land to speak to the occupier will not be a trespasser unless he or she ought to have known that the occupier would object to the person’s presence if made aware of it. For example, a person can usually use the normal pathways leading to someone’s house in order to talk with the householder; however, a representative who ignores a “No Soliciting” sign will become a trespasser if he or she enters to sell a product.

Peaceable Entry by a Person Entitled to Possession. As in the case of a tenant, where a person has a right to possession of premises, there is a right to entry.

Entry by a Landlord or Sheriff in Order to Levy a Distress. In commercial tenancies, a landlord has the right to seize and sell a tenant’s belongings to pay any rent owing. This right is called the right of distress. The right to enter is incidental to this right of distress.

Entry by a Person in Order to Abate a Nuisance. Sometimes people may take action themselves to stop a tort from continuing. Nuisance is dealt with in the next section.

Entry under a Statutory Authority. Where a statute gives a person the right to enter someone’s property, that person is not a trespasser. For example, a municipality might have a statutory easement to build and maintain a sewer line or sidewalk.

As a Licensee...Example

XYZ Industries Ltd. follows a practice of giving guided tours through its industrial plant. A, a guest, wanders away from the group and past a “No Entry” sign to an area which was not part of the tour. Although on the premises with permission, A would become a trespasser at this point.



Trespass by Wrongful Remaining. This occurs when a person has legally entered upon someone else’s land but remains there after his or her right of entry has ended. For example, this might occur where a customer in a store is asked to leave by the owner. At that point, the implied right of entry is cancelled and if the customer does not leave within a reasonable time, he or she becomes a trespasser. Under this type of trespass, it is usually necessary for the right of entry to be expressly removed.

Trespass by Wrongful Placing. This occurs when a person causes an object to be wrongfully placed or left upon another’s land. An example of this type of trespass can be found in the case of Turner v. Thorne et al., 1959 CarswellOnt 236, where a delivery company was held liable for trespass when a package was mistakenly left at the wrong address. The fact that the package was left by mistake was held not to be a defence to the claim of trespass.

Trespass can occur below the surface and in the airspace above the land. In one case, a person built a sign above his building which crossed 8 inches into the airspace of his neighbour. The court held that this was a trespass even though no actual damage was caused. It was explained in Chapter 3 that legislation permits airplanes to travel through your airspace; they would only be liable if actual physical damage were caused by such entry.

Who Can Sue in Trespass?

Generally, only the person in actual possession of the land at the time of the trespass can sue a trespasser. A landlord who has leased out property can only sue if the trespass results in permanent damage to the rever-sion (the interest in land that the landlord will receive back after the tenancy ends). Therefore, it is a right of occupation or possession that is being protected, not necessarily a right of ownership. A right to merely use the land without possession, such as the right of an easement holder or boarder, is not sufficient to maintain an action in trespass. From a licensee’s point of view, property managers would be the most likely persons to become involved in a trespass action.

Remedies for Trespass

Damages. It was explained above that damage does not need to occur to bring a court action for trespass; however, a claim may be made for damage caused as a result of a trespass. The measure of damages is the amount by which the value of the property is lessened as a result of the trespass, not the “replacement” cost. For example, if an old building is damaged by a trespasser, the plaintiff can recover the loss in value to the property. It is unlikely that this will be the actual cost of repairing the damage to the old building.

Where the trespass is a malicious or gross invasion of the plaintiff ’s rights, an additional award, known as punitive or exemplary damages, may be awarded. For example, this can happen where a trespasser knows that he or she is in the wrong but, with contempt for the plaintiff ’s rights, decides to commit a trespass.

Injunction. An injunction is an order of the court requiring someone to do or stop doing a particular act. It may be obtained to stop the continuance or repetition of a trespass. It is a very useful remedy where no actual damage is being caused but the plaintiff wants the trespass stopped. If the defendant disobeys an injunction, he or she will be liable for contempt of court and subject to fines or possible imprisonment.

Self-Help. A person in possession of land can forcibly remove a trespasser if he or she has first asked the trespasser to leave and uses no more force than is reasonably necessary in the circum-stances. This remedy is available without a court action. However, where the occupier uses more force than is reasonably necessary, he or she will be liable for assault and any damages resulting from the excessive force.

injunctiona court order which either restrains a party from doing something or requires a party to do something

Licensees who are property managers should be aware that, with the exception of the situation where a person is abating a nuisance, all of the following defences can be categorized as situations where the defendant had some “right” to enter, whether obtained through a formal or informal agreement with the owner, or under a statute.

Lawful Exercise of a Right of Way. A person who has an easement is not trespassing when exercising the right of way. This is true even if the owner attempts to cancel this right without mutual consent.

Express or Implied Permission of the Occupier. Express permission speaks for itself. The law will imply permission in certain instances. The purpose for the visit may be one of any number of different reasons, either commercial or non-commercial. A person entering on land to speak to the occupier will not be a trespasser unless he or she ought to have known that the occupier would object to the person’s presence if made aware of it. For example, a person can usually use the normal pathways leading to someone’s house in order to talk with the householder; however, a representative who ignores a “No Soliciting” sign will become a trespasser if he or she enters to sell a product.

Peaceable Entry by a Person Entitled to Possession. As in the case of a tenant, where a person has a right to possession of premises, there is a right to entry.

Entry by a Landlord or Sheriff in Order to Levy a Distress. In commercial tenancies, a landlord has the right to seize and sell a tenant’s belongings to pay any rent owing. This right is called the right of distress. The right to enter is incidental to this right of distress.

Entry by a Person in Order to Abate a Nuisance. Sometimes people may take action themselves to stop a tort from continuing. Nuisance is dealt with in the next section.

Entry under a Statutory Authority. Where a statute gives a person the right to enter someone’s property, that person is not a trespasser. For example, a municipality might have a statutory easement to build and maintain a sewer line or sidewalk.

As a Licensee...

PRIVATE NUISANCE

There are various types of nuisance, but licensees should be particularly aware of private nuisance.A private nuisance occurs when an owner or occupier of land unreasonably and substantially interferes

with the reasonable use and enjoyment of a neighbouring property. An action to remedy a private nuisance may be brought by the party who is in possession or occupation of the neighbour-ing property.

With private nuisance, the focus is not primarily on the conduct of the person creating the nuisance, but rather on the harm done to the injured party’s land or the interference with that party’s proprietary rights. Common uses of land which would constitute nuisance include activities which produce smoke, unpleasant smells, noxious fumes, noise, heat, vibrations, electrical interference, or allow the escape of germs, animals or water.

Private Nuisance Compared with Trespass

While there can be situations in which trespass and nuisance overlap, it is possible to distinguish between the two torts.

One difference lies in the nature of the way in which the wrong occurs. In trespass, the trespasser enters upon or causes something to be placed upon the injured person’s land. With nuisance, the injury to the other person’s land is usually a consequence of something being done on the land of the person causing the nuisance. The common law holds that a person may not use his or her own property in such a way that it causes injury to another.

A second distinction between trespass and private nuisance can be made on the basis of the usual duration of the wrong. A trespass usually involves a single occurrence, or a few isolated occurrences. With nuisance, where an unreasonable interference with proprietary rights is being complained of, as opposed to actual physical damage, there must be a significant interference. This would normally require the complained of activity to be either continuous or recurring so frequently as to amount to a material interference with the plaintiff ’s proprietary rights.

private nuisancea legal term for wrongfully allowing the escape of injurious things onto another person’s land or the wrongful disturbance of an easement or other interest granted over land



The case of Segal v. Derrick Golf and Winter Club, 1977 CanLII 656 (ABQB), involved a series of many hundreds of individual trespasses (golf balls flying from the defendant’s golf course onto the plaintiffs’ property) which were held by the court to constitute a private nuisance because the balls unreasonably inter-fered with the plaintiffs’ enjoyment of their property.

Another difference between trespass and private nuisance relates to the ability of an injured person to successfully sue a wrongdoer. Where a trespass has occurred, the plaintiff does not need to prove that the trespass caused any damage to a person or property to succeed against the trespasser. However, where the legal action involves a private nuisance, a successful plaintiff must show that damage or sufficient interfer-ence with his or her rights resulted from the defendant’s activities.

Types of Damage

There are two types of damages which are recognized in the case of a private nuisance:

1. unreasonable interference with another occupier’s use and enjoyment of property; and2. interference which causes physical damage to the property.

Interference with Use and Enjoyment

Where the alleged nuisance involves an interference with the occupier’s use and enjoyment of his or her property, the determination of whether the activities complained of constitute a nuisance or not is more complex. This determination will be made by the court based upon what is reasonable in all the circumstances.

For a nuisance to be found, it will have to be determined that the defendant occupier has used his or her land or done something in relation to the land which exceeds the boundaries of what is considered legally and socially acceptable in relation to a neighbouring occupier. Occupiers must be prepared to put up with petty annoyances, and the type of locality will be relevant in deciding what the particular standard of reason-ableness will be. In Toronto, for example, the level of noise that will be considered reasonable is undoubtedly higher than that which would be considered reasonable in a village in Nova Scotia. The occupier’s intention may be relevant in that an intention to do a neighbour harm will contradict the argument that the occupier is making reasonable use of his or her property.

The standard against which reasonableness is measured is that of the average reasonable person. If the plaintiff happens to be unusually sensitive, this will not be relevant, unless the defendant seeks to take advan-tage of that fact. Whether the interference with use and enjoyment is sufficient to constitute a nuisance will be a question of fact to be determined in the particular circumstances of each case.

Segal and Segal v. Derrick Golf & Winter Club, 1977 CanLII 656

The Segals’ house was adjacent to a golf course belonging to the defendant club. Golf balls from the golf course were driven in great number onto the Segals’ property. The danger resulting from the flying balls resulted in the Segals and their children being unable to use their backyard during golf season. The Segals sued in trespass and nuisance.

The court held that the club was not liable for the trespasses (the golf balls driven onto the Segals’ property) committed by its members. However, on the head of nuisance, the court found in favour of the Segals. The court stated that the golf balls amounted to a “serious and substantial” interference with the Segals’ use and enjoyment of their property, and that the club was responsible for the continuance of that interference by its failure to take reasonable steps to prevent the nuisance. The Segals were awarded a sum of money and the courts granted an injunction to prevent the continuance of the nuisance.

Example

A buys a residential home in a highly industrialized area. He is very annoyed with XYZ Factory, which keeps him awake at night with its noise, and he is also upset because it is emitting fumes which have killed his bushes. A cannot sue for interference with his use and enjoyment of the property unless he proves that XYZ has gone beyond the reasonable standard for the area. However, A may sue for the physical damage to his bushes. Reasonableness is no defence in the second situation.



Obviously, extreme cases of nuisance could affect the value of a property listed for sale. For example, suppose two identical homes are listed for sale: one home is in an established subdivision and one is located in the same community but next to a chicken farm. The odours from the farm could be a nuisance, and, as a result, affect the value of the second home as compared to the first home.

Physical Damage

Where an alleged private nuisance has caused physical damage to land or property located on the land, the considerations of reasonable usage in the circumstances will not apply. This means that regardless of how reason-able or correct the behaviour of the person creating the nuisance may be, he or she will be liable for the physical damage caused to the injured party’s property. This type of private nuisance is relatively uncomplicated.

Who Can Sue for Private Nuisance?

As in the case of trespass, the plaintiff must have an interest in the land affected. For example, where the land affected was occupied by a tenant, the tenant could bring an action for interference with use and enjoy-ment, and the landlord could maintain an action for damage to the property which affected the reversion. Both trading services and rental property management licensees can be affected by a private nuisance. Trading services licensees should recognize the effect of nuisances on the value of a property, while property managers may be forced to bring actions for nuisance against those creating the nuisances.

Who Is Liable for Private Nuisance?

Of course, the person who creates the nuisance is liable for creating it. In addition, the occupier of the land on which a nuisance has been created who knows or should reasonably know of it but takes no steps to abate it, is liable for nuisance.

In a landlord and tenant situation, the tenant occupier is primarily liable for nuisances created on the property. Even if the tenant did not create the nuisance, he or she must take steps to abate it. The landlord is not liable unless he or she is responsible for creating the nuisance, for example, where the landlord rents out the premises for a purpose which will necessarily cause a nuisance. However, even though the landlord is liable in these circumstances, the tenant will also be liable.

An owner or occupier is not liable if the nuisance was created by a third party over whom he or she had no control, such as a trespasser. An owner or occupier is also not liable if he or she does not know of the nuisance or should not reasonably be expected to know of it. Figure 5.3 denotes some valid defences to a nuisance action as well as defences that have been tried but have failed.

Example

Company A operated a foundry on land in proximity to land owned by Company B and used by Company B as a storage lot for new automobiles. The foundry emitted corrosive particles of iron and iron oxide which settled on the automobiles stored on Company B’s land and destroyed their paint finishes. Company B sued in nuisance. The court awarded Company B damages and an injunction to restrain the emission of particles from the foundry. The decision indicated that where there is actual damage to another’s land or property on that land, which damage is caused by a person’s use of his or her land, an action in nuisance will succeed even if that use is reasonable.

Example

A landowner hired a crop-duster to carry out a spraying operation over his property. The crop-duster sprayed both the landowner’s property and his neighbours’ adjoining property. In addition, the noise from the low-flying aircraft was objectionable to the neighbours and frightened their horse. The court held both the crop-duster and the defendant landowner liable in nuisance.



Remedies

The two remedies of damages and injunctive relief, explained in the discussion of trespass, are both also available for nuisance. A third remedy is abatement, which is the peaceable prevention of a nuisance, for example, by cutting down the overhanging branches of a neighbour’s tree. This remedy is available without recourse to the courts but, as with the remedy of self-help in regard to a trespass, caution should be exercised because abatement has certain restrictions. It can only be applied if:

1. the abatement is a reasonable method of preventing the nuisance from occurring; 2. the abatement does not endanger the lives or property of others; and3. notice has been given to the occupier before abating a nuisance on his or her property, unless the

danger created by the nuisance is imminent and a situation of emergency exists.

LIABILITY OF AN OCCUPIER

Common Law

At common law, the general rules of negligence imposed liability on an occupier for injury suffered by visitors entering the occupier’s premises. Over the years, the courts developed special categories so that the standard of care owed by the occupier varied according to the type of visitor: invitee, licensee, trespasser or children. For example, an occupier owed a higher standard of care to someone who entered the premises for the occupier’s economic interest (e.g., a customer) than to someone without an economic interest (e.g., a friend). Similarly, an occupier owed a trespasser a limited standard of care, whereas a more onerous standard of care was owed to child visitors.

FIGURE 5.3: Defences to a Nuisance Action

Defences to Private Nuisance Excuses That Are Not Defences

The following are valid defences:• Statutory Authority. Where the nuisance is the

unavoidable result of doing an act authorized by statute. The mere fact of licensing or of statu-tory authority is not sufficient. If the authorized activity can be performed without creating a nuisance, then it must be done that way.

• The Damage Caused is Trifling and of Little Consequence.

The courts have held that the following are not valid defences to a nuisance action:

• Volenti Non Fit Injuriae. It is no defence to say that the plaintiff came to the nuisance.

• Public Benefit. It is no defence to say that the act complained of is beneficial to the majority.

• Suitable Place. It is no defence to say that no other place is suitable for the conduct of this operation.

• Care and Skill. It is no defence to say that the utmost care and skill have been taken or that the act cannot be done without causing a nuisance.

• Contributory Acts of Others. It is no defence to say that no nuisance would be created except for the contributory acts of others. Each person contributing to the nuisance will be liable for his or her share.

• Reasonable Use of Property. It is no defence to say that a person is only making a reasonable use of his or her property.

FIGURE 5.4: Comparison of Trespass and Nuisance

Trespass Nuisance

Act done to another’s land Act done on own land which affects another’s land

No damage need be proven Must prove interference with use and enjoyment or physical damage

Usually occurs once or twice Usually occurs repeatedly or continuously

Remedies are damages, injunction, self-help Remedies are damages, injunction, abatement



It became confusing and difficult to determine which standard of care to apply to a visitor because a visitor could fall into more than one category. For example, what if the visitor was both a child and a tres-passer? To address these concerns, in 1974, the BC Legislature enacted the Occupiers Liability Act (“OLA”). Now, occupiers liability is governed by the OLA rather than the common law. The common law has been replaced by legislation in most of the provinces in Canada.

The Occupiers Liability Act

Section 1 of the OLA defines “occupier” as follows:

1. In this Act “occupier” means a person who(a) is in physical possession of premises, or(b) has responsibility for, and control over, the condition of premises, the activities conducted

on those premises and the persons allowed to enter those premises,and, for this Act, there may be more than one occupier of the same premises;

Section 3 of the OLA sets out the statutory duty of care owed by an occupier:

3. (1) An occupier of premises owes a duty to take that care that in all the circumstances of the case is reasonable to see that a person, and the person’s property, on the premises, and property on the premises of a person, whether or not that person personally enters on the premises, will be reasonably safe in using the premises.

(2) The duty of care referred to in subsection (1) applies in relation to the (a) condition of the premises;(b) activities on the premises; or(c) conduct of third parties on the premises.

(3) Despite subsection (1), an occupier has no duty of care to a person in respect of risks willingly assumed by that person other than a duty not to(a) create a danger with intent to do harm to the person or damage to the person’s property,

or(b) act with reckless disregard to the safety of the person or the integrity of the person’s property.

…(4) Nothing in this section relieves an occupier of premises of a duty to exercise, in a particular

case, a higher standard of care which, in that case, is incumbent on him by virtue of an enactment or rule of law imposing special standards of care on particular classes of person.

There are a few key points for real estate professionals to take from the excerpts from the OLA above. Firstly, the OLA states that there may be more than one occupier of the same premises. The following parties, if they fall within the definition of occupier in the OLA, could be subject to liability under the OLA: registered owners, tenants, house-sitters, real estate agents when hosting open houses, property managers, and strata corporations. Secondly, the duty of care imposed by the OLA on an occupier is to take such care as in all the circumstances is reasonable to see that persons coming onto the property will be reasonably safe. There is no mention of the categories of visitors that developed under the common law. However, it is clear that both the type of visitor and the circumstances under which a visitor has entered the premises, whether an invited guest or a trespasser, would be relevant in determining what an occupier must do to provide for the safety of the visitor.

Section 3(3) provides that an occupier has no duty of care to a person in respect of risks willingly accepted by that person other than to not intentionally harm or act with reckless disregard towards the visitor or the visitor’s property. The OLA further explains when a visitor is deemed to have willingly assumed all risks, including:

• A visitor who is trespassing while committing or having the intention to commit a criminal act.

• A visitor who enters categories of premises as outlined in section 3(3.3), such as certain agricultural or rural premises, while the visitor is

◦ trespassing; or

◦ entering for the purpose of a recreational activity and the occupier receives no payment and is not providing the visitor with living accommodation on the premises.



Finally, section 3(4) notes that the standard of care imposed on occupiers by the OLA does not relieve occupiers of a higher standard of care that may be imposed on the occupier by other statutes. Some examples include:

• Section 32 of the Residential Tenancy Act: a landlord owes a tenant a duty of care to provide and maintain residential property in a state that complies with health, safety, and housing standards required by law, and also to make the rental unit suitable for occupation by a tenant.

• Section 119 of the Workers Compensation Act: there are general duties of an owner of a workplace to provide and maintain the workplace premises in a manner that ensures the health and safety of people at or near the workplace and to give to the employer of the workplace any information that the owner knows is necessary to identify, eliminate, or control hazards.

Your activities as a real estate professional may intersect with occupiers liability law in two respects. Firstly, you may, as a result of your conduct, be classified as an occupier. Secondly, while you may not yourself be an occupier, your clients may be occupiers, and as their agent, they may have empowered you to fulfil some of their duties under the OLA. Furthermore, you have a professional obligation to make your clients aware of the various liabilities they may face as an occupier.

Mann v. Rainsford, 2010 BCSC 410

A visitor attended an open house and injured herself as she exited the front door and fell on an elevated walkway. She did not see that after each step, there was a landing before reaching the next step. The visitor argued that the occupiers were negligent in failing to provide warning signs, a handrail and/or contrasting colors on each step. The Court held that the occupiers met the standard of care imposed upon them by the OLA because it was not reasonably foreseeable that a visitor would be injured on a walkway where the elevation was obvious. The placement of vertical planters along the walkway provided users of the walkway with a reasonable visual cue that each step was followed by a landing. The Court concluded that an occupier is entitled to assume that a visitor will exercise reasonable care for his or her own safety and that the visitor’s injuries were caused by her own inattention to where she was walking.

It is important for real estate licensees to remember that, when given possession of a property for open houses and showings, they can become occupiers, as defined by the OLA; therefore, they can face liability for any injuries that may be suffered by visitors to such properties.


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