Tuesday, April 15, 2014

Real Estate Litigation Over Non-Disclosures...of Ghosts

Okay, here's a crazy one.

In September 2010, 1784773 Ontario Inc. purchased a commercial property from the Kitchener-Waterloo Labour Association.  A few months later, one of the Labour Association's directors remarked to a reporter that the building was "haunted" - specifically that there are apparitions in a third floor office, and "we used to make jokes that Jimmy Hoffa was in the basement".

And so the purchaser sued them.


The allegations were of non-disclosure of a latent defect concealed by the vendor - namely, of a death or murder at the subject property.  It wasn't specifically pleaded, but the implication of the claim was that the building actually was haunted.

On a motion for summary judgment, the action was dismissed:  Firstly, there was no evidence that there was actually a death or murder at the subject property.  Secondly, there was no real evidence of haunting.  The Director's own comments were based on double-hearsay - joking over beers at the local watering hole, by people who didn't really believe the place was haunted.

And, the kicker from the judge:  "There is no evidence before me as to how the plaintiff would prove the existence of a ghost."  (Because, on a motion for summary judgment, a plaintiff would really need to explain what expert they would put on the stand to testify...or, put another way, "Who ya gonna call?")

In some contexts, the 'stigmatization' of property is an interesting debate.  Remember the episode of the Simpsons where Marge sells the Flanders family the "murder house"?  There's some thought that there should be an obligation to disclose a history of homicide or suicide, but there's very little jurisprudential backing for such a notion.  The judge notes a Quebec Small Claims Court case where the court expressed "a great deal of difficulty in agreeing that elements whose importance depends on the sensitivity, phobias, sentiments or purely personal and subjective apprehensions that are not related to the quality of the building should be subject to compulsory disclosure."

I might feel sympathetic to a superstitious family driven out of their new home because they think it's haunted by the poltergeists of murder victims...but this is a commercial property, and I think that's kind of the clincher:  We're talking about corporations dealing with a commercial property for commercial use.  Campfire stories have no place in the discussion.

Very recently, the Court of Appeal dismissed the appeal, largely on the basis of the absence of evidence of damage:  No evidence of economic loss flowing from the stigma, no evidence that ghosts were observed.

As a side comment, even if there were an issue arising from stigma, the fact that the stigma arises from the defendant's representations of haunting, rather than from an objective phenomenon or event (such as it being a 'murder house'), would seem to me to make it something other than a non-disclosure cause of action - after all, the stigma didn't exist until after closing, so how could there be an obligation to disclose?


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation.  If you need legal assistance, please contact him for information on available services and billing.

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