{"id":7925,"date":"2022-01-31T10:23:58","date_gmt":"2022-01-31T15:23:58","guid":{"rendered":"https:\/\/360mediations.com\/en\/?p=7925"},"modified":"2022-01-31T10:24:01","modified_gmt":"2022-01-31T15:24:01","slug":"purchaser-cant-recover-costs-incurred-in-pursuing-land-deal-from-seller-who-withheld-information","status":"publish","type":"post","link":"https:\/\/mail.360mediations.com\/en\/purchaser-cant-recover-costs-incurred-in-pursuing-land-deal-from-seller-who-withheld-information\/","title":{"rendered":"Purchaser Can\u2019t Recover Costs Incurred in Pursuing Land Deal from Seller who Withheld Information"},"content":{"rendered":"\n

According to this recently released case, purchasers who spend money assessing the merits of a purchase of assets must absorb those costs because sellers have no obligation or duty to disclose factors about the asset that could impact its value or quality.\u00a0 In this case it was expenses associated with a real estate purchase and sale (ie: appraisers, surveys, soil tests, consultants, etc).\u00a0 Absent such a duty, the cost to pursue the asset is simply the cost of doing business: not all negotiations end up in a ratified agreement, and often deals fall through when the due diligence is done.<\/p>\n

The case involved a prospective purchaser who was denied the right to recover the costs they incurred in pursuing a land deal with a Municipality, who the prospective purchaser believed wasted their time by not disclosing problems with the land, including environmental and Indian burial site issues.\u00a0 The purchaser argued that the municipality owed them a duty to disclose during the negotiation of the agreement of purchase and sale (\u201cAPS\u201d).\u00a0 The court rejected this argument, concluding that there was no common law duty or obligation to disclose during negotiations: in this case, no obligation or duty to disclose the potential environmental\/archeological issues leading up to or during the negotiations.<\/p>\n

The court came to this view based on commercial policy grounds, as follows:<\/p>\n

\u201c[205] \u00a0A duty to conduct contractual negotiations in good faith or a positive obligation to disclose negative information about one\u2019s product or services, is inherently repugnant to the adversarial process of commercial negotiations.<\/p>\n

[206] \u00a0There is no certainty or standard by which a court could enforce such a duty at common law. Such a common law duty could not adequately or reasonably be \u201cenforced\u201d by the court.\u00a0 Contrast this to situations where such a statutory duty of detailed disclosure exists to protect the public such as in a prospectus in the Securities Act<\/em> or in a franchise offering in the Arthur Wishart Act<\/em>.<\/p>\n

[207] \u00a0Parties are entitled to pursue their own respective interests during the course of contractual negotiations<\/u>.\u00a0 On the other hand, once an agreement is finalized by the parties, courts has jurisdiction to deal with limited aspects of the negotiations such as whether fraudulent or negligent misrepresentations were made during the negotiations but only in the context of the agreed upon terms in the agreement<\/u>.\u00a0 That is because the parties have negotiated and agreed upon the terms of the agreement \u2013 the necessary yardstick for assessing any claims advanced.<\/p>\n

\u2026<\/p>\n

[209] To ensure what is important to them, during contractual negotiations either party can request as a term of the agreement being negotiated representations or warranties from the opposing side. Each party knows what is important to them and know what representations and warranties they want or need for them to come to an agreement.\u00a0 It is for the other party to decide what representations or warranties, if any, will or will not be given and included in the agreement. If a party wants a particular representation or term that the other party refuses to agree to, the remedy is to withdraw from the negotiations.<\/p>\n

[210] Absent some statutory obligation to disclose, to require parties to enter negotiations with an obligation to fully and completely disclose all potential negative facts to the opposing side (whether the other side considers them relevant) would eliminate due diligence, the need for representations, warranties and many terms.\u00a0 And then the issue would be what is material? Was it fully disclosed? Were the consequences of the negative fact disclosed? And so forth.<\/p>\n

[211] \u00a0All parties enter negotiations knowing that an agreement may or may not be reached.\u00a0 Both parties take their chances, spend their time and often money, during the negotiations.<\/p>\n

[212] \u00a0I conclude, there was no duty or obligation of good faith to negotiate before or after the Preliminary Agreement.<\/p>\n

[213]\u00a0 This claim is dismissed.\u00a0<\/p>\n

The case is chock full of analysis on other \u201ctheories\u201d of liability as well, all of which were rejected: these include alleged breach of duty of good faith set out by the Supreme Court in Bhasin v. Hrynew<\/em>, 2014 SCC 71<\/a>, the Municipality\u2019s alleged breach of their own that purported created a duty of \u201copenness, accountability and transparency,\u201d alleged enhanced duties owed by municipal defendants to act in a \u201cbona fide\u201d manner and without \u201cfraud, oppression or improper motives,\u201d the alleged duty to disclose latent or patent defects, misrepresentation (through silence), fraud, breach of fiduciary duty, unjust enrichment, etc.<\/p>\n

Correct Building Corporation v. Lehman<\/em><\/strong>, 2022 ONSC 527<\/p>\n

https:\/\/www.canlii.org\/en\/on\/onsc\/doc\/2022\/2022onsc527\/2022onsc527.html#_Toc94003713<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

According to this recently released case, purchasers who spend money assessing the merits of a purchase of assets must absorb those costs because sellers have no obligation or duty to disclose factors about the asset that could impact its value or quality.\u00a0 In this case it was expenses associated with a real estate purchase and… Continue reading Purchaser Can\u2019t Recover Costs Incurred in Pursuing Land Deal from Seller who Withheld Information<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[45],"tags":[],"class_list":["post-7925","post","type-post","status-publish","format-standard","hentry","category-real-estate","entry"],"yoast_head":"\nPurchaser Can\u2019t Recover Costs Incurred in Pursuing Land Deal from Seller who Withheld Information - 360Mediations<\/title>\n<meta name=\"description\" content=\"The cost incurred in assessing an asset acquisition must be absorbed by the prospective purchaser, even if the Seller kept negative qualities about the asset a secret.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mail.360mediations.com\/en\/purchaser-cant-recover-costs-incurred-in-pursuing-land-deal-from-seller-who-withheld-information\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Purchaser Can\u2019t Recover Costs Incurred in Pursuing Land Deal from Seller who Withheld Information - 360Mediations\" \/>\n<meta property=\"og:description\" content=\"The cost incurred in assessing an asset acquisition must be absorbed by the prospective purchaser, even if the Seller kept negative qualities about the asset a secret.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/mail.360mediations.com\/en\/purchaser-cant-recover-costs-incurred-in-pursuing-land-deal-from-seller-who-withheld-information\/\" \/>\n<meta property=\"og:site_name\" content=\"360Mediations\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/360Mediations-120028596572318\" \/>\n<meta property=\"article:author\" content=\"https:\/\/www.facebook.com\/360Mediations-120028596572318\" \/>\n<meta property=\"article:published_time\" content=\"2022-01-31T15:23:58+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-01-31T15:24:01+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/i0.wp.com\/mail.360mediations.com\/en\/wp-content\/uploads\/2022\/01\/COURT-DECISIONS-360MEDIATIONS-1x1-1.png?fit=406%2C322&ssl=1\" \/>\n\t<meta property=\"og:image:width\" content=\"406\" \/>\n\t<meta property=\"og:image:height\" content=\"322\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"David M. 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