Crossed-out property disclosure statement was a misrepresentation, B.C. court rules

The home on West Vancouver's Bellevue Avenue is seen in this 2009 photo from the B.C. Assessment website. (bcassessment.ca)

The would-be buyer of a multi-million-dollar West Vancouver home, who backed out of her purchase when she learned that an unpermitted addition had been made to the structure, has won a refund of her $300,000 deposit from B.C.’s highest court.

Carolyn Eileen Sewell entered a contract of purchase and sale to acquire Ehsan Abadian’s property on Bellevue Avenue in West Vancouver in January 2022.

BC Assessment describes the home as a custom, two-storey dwelling with four bedrooms, five bathrooms and more than 4,000 square feet of living space. Its assessed value for 2025 was $5.66 million.

Details of the contract are explained in a B.C. Supreme Court decision issued last year.

The purchase price was $6.2 million, with a $500,000 deposit to be paid in two installments. Sewell paid the first installment of $300,000, but backed out of the contract after learning that the residence’s “back garden room” had been enclosed without a permit.

When Abadian refused to refund her deposit, Sewell took him to court, arguing that he had known about the unpermitted work, but failed to disclose it, and that this constituted either negligent or fraudulent misrepresentation.

Abadian countersued, arguing that Sewell had repudiated the contract and seeking the remaining $200,000 deposit as damages.

B.C. Supreme Court Justice Bruce Elwood ruled in Abadian’s favour, but his decision was overturned at the B.C. Court of Appeal on Tuesday.

At the centre of both Elwood’s reasons and the appeal court’s decision is the property disclosure statement Abadian prepared when listing the home for sale.

Rather than answering each of the questions listed on the form, Abadian “drew a diagonal line through the disclosure statement, did not fill out any boxes on it, and wrote in the additional comments section: ‘Tenanted Property, Owner has never occupied,’” according to the appeal court decision.

In his ruling, Elwood concluded that Abadian had not made any representations about the unpermitted addition.

While the property disclosure statement included a question about whether the seller knew of any alterations to the property that were done without proper permits or inspections, the lower-court judge found that Abadian had not indicated that he did not know the answer to that question. He had simply refused to answer it.

Writing for the three-judge appeal court panel, Justice Susan Griffin reached a different conclusion, finding that Elwood had “overlooked material evidence in his reasoning.”

The appeal court judge noted that Abadian was “experienced in real estate sales” and had the option not to provide a property disclosure statement.

She also noted that the form itself indicates that the seller is responsible for providing true, accurate and complete responses to the questions it contains.

“It is not reasonable to interpret the form as simply a representation that it was tenanted and Mr. Abadian had not occupied it,” Griffin’s decision reads.

“Since Mr. Abadian chose to provide the form and add his comments to it, he was required to be responsive to the duties it required of complete disclosure, knowing that the buyer, Ms. Sewell, would rely on the form … In the above context, he was representing by the whole of the form that he did not know there were any unpermitted additions. This was a misrepresentation, whether negligent or fraudulent does not matter in this case.”

The other two appeal court judges – Justice Lauri Ann Fenlon and Justice Janet Winteringham – agreed with Griffin. The court set aside Elwood’s order for Sewell to pay Abadian $200,000 and instead ordered Abadian to return Sewell’s $300,000 deposit.

Sewell also asked for a ruling that Abadian had held her deposit in trust for her, but the lower court made no findings on this aspect of the case. The appeal court remitted this question to the B.C. Supreme Court for consideration.