Beware Of Standard Clauses – The Lesson From Walton v. Warren

On January 9, 2020 the British Columbia Supreme Court found in favour of the Purchaser awarding costs against the Seller when an underground storage tank was discovered approximately 2½ years following closing ("Completion Date"). The judge made this finding despite the Purchaser obtaining a UST inspection report prior to closing finding no USTs. In coming to this conclusion, the Judge stated at paragraphs 62 and 63:

There is no language in the Addendum which could be interpreted as limiting the defendants' obligations only to those USTs that were discovered prior to the Completion Date or to those USTs of which they were aware.

The Addendum does not include any condition language. For example, it does not say that the defendants are to remove and remediate "any oil tank that is discovered prior to the Completion Date" or "any oil tank that they are aware of prior to the Completion Date."

Overview

In December 2015 Walton and Hill (the "Plaintiffs" or "Purchaser") entered into an a for the purchase of an older home in British Colombia ("Property") from the Seller or Defendants (the "Contract"). The Contract was the standard form and incorporated the usual terms and conditions for a general real estate sale in addition to other terms and conditions in several addendums that formed part of the Contract.

The Purchaser's real estate agent confirmed that many older homes in the area had buried oil tanks. Based on that comment, the Purchaser incorporated an "oil tank" addendum ("UST Addendum") into the Contract to protect them against the costs of the removal and/or remediation activities associated with the discovery of an underground storage tank ("UST").

UST Addendum

The UST Addendum set out that a term of the Contract was that the Seller ensure that any UST on the Property be removed by a qualified person and that any contamination from the UST be remediated in accordance with the applicable laws. The UST Addendum also required that the "Seller shall remove the tank before the Completion Date."

The Contract also required that the Purchaser obtain and approval an inspection report. The Purchaser's inspection report recommended that a company be retained to "survey/sweep the property to determine the presence of any buried oil tanks." The Purchaser completed the recommended survey/sweep that reported no evidence of a UST on the Property. This survey/sweep which was conducted free of charge and no written report was provided. The Contract was...