What is the test for fraudulent misrepresentation in the purchase and sale of a residential property?

15. As noted above, fraudulent or negligent misrepresentation are exceptions to the principle of “buyer beware”. The test for fraudulent misrepresentation is summarized in Ban v. Keleher, 2017 BCSC 1132 at paragraph 16. In order to show fraudulent misrepresentation in the purchase and sale of a residential property, the applicant must show the following: a. The respondent made a representation of fact to the applicant, b. The representation was false, c. The respondent knew that the representation was false when it was made, or made the false representation recklessly, d. The respondent intended for the applicant to act on the representation, and e. The applicant was induced to enter into the contract in reliance upon the false representation and suffered a detriment.

16. To prove negligent misrepresentation, the applicant must establish 5 elements (see: Hanslo v. Barry, 2011 BCSC 1624 at paragraph 108): a. There must be a duty of care, b. The representation in question must be untrue, inaccurate, or misleading, c. The respondent must have acted negligently in making the misrepresentation, d. The applicant must have reasonably relied on the negligent misrepresentation, and e. The reliance must have resulted in damages.

17. In real estate transactions the law presumes a special relationship between buyer and seller, and the seller owes the buyer a duty of care: Hanslo at paragraphs 117 to 118. The applicable standard of care is that of the reasonable person: McCluskie v. Reynolds (1998), 1998 CanLII 5384 (B.C.S.C.) at paragraph 67.