Pedophiles, toxic waste, and haunted houses (in your neighbourhood?)

When buying a home, people typically consider affordability, access to hospitals, proximity to work/schools, and the property’s condition. Most purchasers do not consider whether the home is haunted or whether there is a sex offender or radioactive material across the street. For some purchasers, these were realities.

Put simply, when purchasing a property, a buyer has a duty to investigate into a property’s ‘patent’ defects. Generally, patent defects are physical and are discoverable by inspection, such a gurgling septic tank or noticeable water damage. The seller has no duty to draw attention to such defects, but, of course, they cannot actively conceal them. If the purchaser does not investigate further, then little recourse is available as ‘caveat emptor’ applies, which is Latin for ‘buyer beware’.

In addition to patent defects, there are ‘latent’ defects, which are defects that cannot be seen by inspection. For latent defects that are known, the seller (and, if applicable, the realtor) has a duty to disclose to the purchaser. If the seller conceals these defects, the purchaser may be entitled to damages and possibly rescission (the undoing) of the contract after the purchase.

A leading case on this issue is Gronau v. Schlamp Investments Ltd., [1974] M.J. No. 223. In this Manitoba case, the seller actively concealed a significant crack in a wall, knowing that the defect was serious. After the sale completed, the purchaser discovered the issue and sued the seller. The court ordered that the contract be rescinded (undone).

So, how far does this ‘disclosing defects’ duty go? Do sellers (and their realtors) also have to disclose defects that are not physical or that are not actually located on the subject property? In some cases, yes, they do.

Consider Sevidal v. Chopra, [1987] O.J. No. 732. In this Ontario case, the sellers concealed that radioactive material was found in the neighbourhood and there was a “hot spot” across the street from the property. The purchasers sued the sellers and, after trial, the sellers were found liable for damages.

Also, consider Stambovsky v. Ackley, 169 A.D.2d 254 (NY App. Div. 1991). In this New York case, neither the seller nor the seller’s realtor revealed to the purchaser that the home was allegedly haunted, as reported in newspapers, as well as in Reader’s Digest. After the sale completed, the purchaser discovered the rumours/publicity and sued the seller. The court eventually rescinded the contract.

In this New York case, it was irrelevant whether the house was actually haunted. It was, however, relevant that there was publicity regarding the haunting, which impacted its value. It was also relevant that the purchaser could not have discovered poltergeists from inspection. Put simply, the purchaser did not get what he paid for.


Interestingly, the duty of sellers to reveal latent defects may even extend to the presence of sex offenders in the neighbourhood. In Ontario, there is a pending case involving the sale of a property, which is located across the street from someone convicted of possessing child pornography. The presence of this individual was apparently common knowledge in the neighbourhood. The purchasers are parents of two young children and, after finding out about their new neighbour, did not want to move into the home. Not surprisingly, they are currently suing the seller (and the sellers’ realtor).

From the above, three points are clear: 1) sometimes, defects that do not relate to the physical condition of the home should be disclosed; 2) in the near future, there may be big changes in the real estate world; and 3) real property law is complicated and fraught with risk.

**The information contained in this column should not be treated by readers as legal advice and should not be relied on without detailed legal counsel being sought.

Originally posted on on January 31, 2012: Pedophiles and haunted houses.

Corporate criminals: businesses commit crimes, too!

Just as individuals can be charged with ‘true crimes’, such as theft, fraud, and manslaughter, so too can corporations. Obviously, corporations cannot technically be arrested (in the traditional sense); but, if they break the law (i.e. the Criminal Code), there are mechanisms to punish their behaviour and protect the public.

For a bit of context, corporations are a separate legal entity. A corporation itself, is separate from its shareholders and directors. A corporation can sue and be sued, it can enter into contracts, it can own property, and it has the potential of living forever, as the retirement/death of its executives/directors does not impact on its ‘life’.

Also, for further context, ‘true crimes’, such as theft, fraud, or manslaughter, require a mental element, also known as ‘mens rea’, which is Latin for ‘guilty mind’. To further explain, consider this example: if a grocery teller forgets to charge a customer for an item (and the customer does not notice), then that customer should not be found guilty of theft if they leave the store with the unpaid item (as they did not have a ‘guilty mind’).

Having laid the background, you might ask, “How can a corporation have a guilty mind? How can you attribute a mental element to an abstract legal entity, like a corporation?”

Well, very generally speaking, courts will look at the person within the corporation (who did the wrongdoing) and see if they were the acting and directing will/mind of the corporation. If they were the acting/directing mind, then the corporation (by extension) can be brought to criminal court (and charged). The person who did the wrongdoing does not have to be a director/executive of the corporation.

To illustrate further, consider R. v. Waterloo Mercury Sales, [1974] A.J. No. 135. In this case, a used-car sales manager (who was not a director or officer of the corporation) turned back odometers and, as a result, defied orders from senior officials. This manager was found to the directing mind/will of the corporation (i.e. he was making decisions for and directing the corporation’s affairs) and, in the end, the corporation was held criminally liable for fraud.

The leading case in Canada regarding this issue is: R. v. Canadian Dredge & Dock Co. [1985] 1 S.C.R. 662, a case in which several companies were held liable for conspiring to rig bids on government contracts, contrary to the Criminal Code.

So, after getting a conviction, how are corporations actually sentenced? Well, the typical sentence is either a fine, which can be very high, or probation. Within probation, the Criminal Code allows for a ‘shaming order’, which requires a corporation to inform the public of what offence was committed, what sentence the corporation received, and how the corporation will reduce the likelihood of committing another offence. Also, courts can impose orders that a corporation revise its policies (ensuring public safety).

I appreciate that this may be a ‘dry’ topic. But, this is important as corporations are capable of heinous actions.

In 1992, 26 miners were killed in the Westray Mining Disaster/Explosion. Before the explosion occurred, several officials had commented that the mine was very dangerous and unsafe. Despite these warnings, the mine continued to operate. Afterwards, managers were charged with causing the death of the miners, but there wasn’t enough evidence to convict. Many laws regarding corporate criminal liability came from this disaster (and its disappointing outcome).

Corporations play a huge role in today’s world and it is important to know that they are not above our criminal laws. If they break the rules, they will be held to task (and rightly so).

**The information contained in this column should not be treated by readers as legal advice and should not be relied on without detailed legal counsel being sought.

Originally posted on on January 24, 2012: Corporate criminals.

Sue the school for bullying?

Winter vacation is over and children are back in school. For many children, the return to school is less than enjoyable as bullying is common and efforts to prevent it have seemingly fallen short of success.

Bullying can take many forms; it can be physical, analogous to criminal assault, or it can be verbal or mental. Over 30% of students have been bullied and more than 70% of gay, bisexual, lesbian, or transsexual students have felt unsafe while at school. Victims of bullying are more likely to suffer headache/stomach problems, have lower grades, have a poor attitude towards school, and have greater absenteeism. Also, victims of bullying are 2-9 times more likely to commit suicide, the 3rd leading cause of death among youths. Suicide from bullying has been termed, “bullycide” and at least half of youth suicides are related to bullying. Some victims of bullying also develop learned helplessness, post-traumatic stress disorder, depression, fatigue, eating disorders, and insomnia.


In a 2001/2002 World Health Organization survey, Canada ranked 26th and 27th out of 35 countries on measures of bullying and victimization, respectively. In a 1993/1994 study, Canada’s rank was relatively higher, suggesting that other countries have improved and addressed bullying more effectively than Canada.

Obviously, bullying is a problem in Canadian schools.

So, how do we fix it? Well, changes to legislation, to school/teacher procedures, and to community/parental resources may be effective. But, aside for those strategies, consider that litigation/lawsuits (i.e. holding school authorities, like the school or school board, civilly accountable for negligence) would also be effective. Please, hear me out…

At present, some parents spend years going through the prescribed channels, meeting with principals, school board officials, and police, hoping to protect their children, but are unsuccessful. For a few of those parents, taking the matter to court is the next step – a courageous move, knowing that they will be subject to criticism by those who do not understand their plight to protect their children.

Put simply, the legal argument is as follows: there is a legal obligation that children receive schooling and, if children attend a public school, school authorities owe a duty to keep those children safe and protected against preventable and foreseeable harm, including harm from other children. If school authorities fail in keeping children safe from preventable and foreseeable harm, then the school authorities should be held accountable. Seems reasonable, right?

It is not suggested that school authorities be found liable for an isolated incident in which a student assaults another with no warning signs – such an occurrence would be unforeseeable and unpreventable. But, consider a child being repeatedly assaulted and/or harassed, often directly in front of a school’s employee, with the bully never being suspended or expelled. Also, consider that, as a result of the bullying, the victimized child suffers physical and/or mental harm. Such occurrences are preventable and, in such circumstances, the school authorities should be held accountable.

Now, what is a victimized child entitled to? Just as it is with other litigation, plaintiffs are only entitled to fair compensation; they are only entitled to recover their losses (contrary to some public sentiment). Compensation for a victimized child could include the cost of necessary counselling, medication (for mental, stomach, or headache issues), tutoring, or transportation to a different school. The child could also receive compensation for having to endure humiliation and the feeling of helplessness. Also, depending on the level of harm and the interruption to their education/schooling (resulting in lost years), the victimized child may also receive compensation for loss of future income.

Okay, so litigation will compensate victimized children for their losses. But, how will it prevent bullying? Well, the answer is this: self-interest. Litigation forces school authorities to be fiscally motivated to better prevent and detect bullying; the school authorities would view the bully’s behaviour as an unnecessary and preventable cost. As well, taxpayers who see the connection between their tax dollars and litigation will exert external pressure on school authorities to prevent bullying.

As a write this, I can already hear skepticism that litigation will prevent bullying. However, it should be remembered that the law shapes behaviour. For example, consider whether all department stores or gas stations would continue to spend large dollars to keep their parking lots free from ice and snow if there was no risk of litigation (from resulting injury). Also, consider whether some people would choose not to commit a criminal act, like impaired driving, if there was no risk of being held criminally liable. Like it or not, the law regularly influences behaviour (and benefits the common good).

Also consider this: you attend a doctor, a lawyer, or a department store and you suffer loss/harm because of their negligence/wrongdoing. You would expect them to be held accountable and compensate you for your losses, right? Why should it be any different for children when attending school?

In conclusion, bullying is not acceptable and it is not a rite of passage. In our schools, some children are committing criminal acts. If it takes litigation to stop this behaviour, then so be it.

**The information contained in this column should not be treated by readers as legal advice and should not be relied on without detailed legal counsel being sought.

Originally posted on on January 10, 2012: Bullies, schools, and lawsuits.

Do severe punishments deter crime?

It is seemingly public opinion that severe and harsh sentences are required to prevent future crime. Almost every week, I hear someone say, “If penalties were harsh(er), people wouldn’t commit crimes.” This concept of affecting behaviour with punishment is referred to, in sentencing law, as ‘deterrence’ and has been a purpose in sentencing law for 100’s of years.

Within ‘deterrence’, there are two separate, but related, concepts:

  1. Specific deterrence:This is focused on the individual offender. The idea is that if an individual is punished (severely/sufficiently), then the consequences of that individual’s actions will be instilled and that individual will be discouraged from committing future criminal acts.
  2. General deterrence: This is focused on the general population. The idea is that if punishments are public and well-known, then the rate of crime will decrease, as other individuals, who see/hear about the punishments, will be deterred from committing crimes themselves.

Deterrence is based on the premise that humans are ‘rational’ and weigh the advantages and disadvantages of their actions. As a result, the pain of punishment must be equal to or more than the pleasure/benefits of crime in order to deter the public/individual from choosing to commit a crime.

However, does deterrence actually work? Short answer: no (with some shades of grey).

There is a growing acceptance that people commit crimes for reasons other than some rational decision-making process; people also commit crimes for psychological, social, or economic reasons. At least for me, I am sceptical (which is an understatement) that people think to themselves, “I choose to assault this person because the penalty does not currently outweigh the benefits of assaulting this person”. I am more inclined to believe that an assault would occur because of some psychological/social reason.

Also, if punishment actually deters people from re-offending, then the imposition of (arguably severe) penalties would prevent those same people from committing future crime. However, in 1999, there was an analysis of over 50 studies (involving over 336,000 offenders), which showed that prison sentences do not decrease recidivism (rate of re-offending); if anything, prison sentences actually produce an increase in recidivism; discrediting the idea of specific deterrence.

How about the deterrent effect on the general population? Does punishment of other offenders really deter the public from committing crimes themselves? Well, there isn’t a clear answer. There have been studies done on this issue, but there is no convincing evidence, either way, on overall (general) deterrent effect.

So, what do we know? What has actually been shown to be effective? Well, it has been found that the deterrent effect exists more with the certainty of punishment (probability of being caught) than the severity of punishment. So, if we want to reduce crime, measures should be taken to ensure that more offenders are caught (and subsequently prosecuted), rather than making amendments to the Criminal Code, creating harsher sentences. Besides, how many people have actually read the Criminal Code and know the penalties? Probably not many.

**The information contained in this column should not be treated by readers as legal advice and should not be relied on without detailed legal counsel being sought. 

Originally posted on on December 20, 2011: Do severe punishments deter crime?

Genetic discrimination on the horizon

Most everyone can say that they have been discriminated against at some point in their lives, whether it was based on skin colour, a physical attribute, religion, culture, or sexual orientation. But how many people can say that they have been discriminated against based on their genetics? Probably not many – at least, not yet. In the context of insurance, genetic discrimination is on the horizon.

In today’s world, individuals are less able to rely on families or other social support networks to help shoulder loss—the loss of a home to a fire, or any loss resulting from sudden sickness, injury, or death. As a result, the insurance industry developed to provide some ‘cushioning’, compensating people if they suffered some loss. To provide that cushioning, insurance companies require that each applicant susceptive to risk (of some kind of loss) contribute to a common ‘pool’ by paying premiums, which, of course, spreads out that risk. When deciding who to insure, insurance companies make calculations about how likely the risk will materialize for each applicant because, of course, some people are thought to carry a lot more risk than others. Those people who represent a higher risk, based on personal characteristics, will pay a larger premium into the pool or, if they represent too high of a risk, they may be denied coverage entirely. As you can see, discrimination is fundamental to the insurance industry.

In the past, insurance companies have generally discriminated against applicants, particularly for life and health insurance, based on lifestyle choices and medical records. In the future, insurance companies may (and will likely try to) discriminate against applicants based on genetic information.

At some point, in the not-to-distant future, imagine attending your doctor, after completing a ‘genetic test’, and being told that you are genetically predisposed to get cancer, diabetes, or multiple sclerosis; illnesses that, if they don’t lead to your death, will greatly impact your life. This type of technology isn’t that far off. This information would be immensely useful – you could make certain lifestyle choices, doing whatever you could to avoid that illness and, in some cases, cheat death. This information would not just be useful for you – it would be useful for insurance companies, too.

At present, some genetic information can be revealed by amniocentesis, or a urine test, or even by reviewing physical attributes or checking family history. Also, a lot of medical information can be considered genetic. A large number of illnesses or disabilities have genetic components. So, it is not surprising that it is often argued (by you know who) that genetic information does not deserve special treatment. But, I think it deserves special treatment – and I do not think I am alone.

Granted, I am not a doctor; but, the practice of genetic discrimination seems, at least to me, to be unfair as genetic information is merely a precursor to disability/illness and is not reliable. Some gene mutations have ‘incomplete penetrance’, meaning the mutation will be asymptomatic, resulting in no physical disabilities or illnesses. Of course, as time passes, reliability will likely improve. But, aside from that, the mere idea that insurance companies can discriminate against an applicant because they are genetically predisposed to some disability/illness is dehumanizing. The idea of it reminds me of Gattaca, a 1997 science-fiction movie, in which humans are sorted into classes according to the ‘desirability’ of their genetic make-up. Is this the sort of world in which we wish to live?

For a glimpse of what may come, consider Audet v. Industrielle-Alliance, Cie d’Assurance Sur la Vie, [1990] R.R.A. 500-502 (C.S.). In this Quebec case, the insured individual failed to disclose that he carried a genetic mutation associated with myotonic dystrophy, a degenerative disease, which is not always disabling. The insurance company argued, and was successful in arguing, that the genetic information should have been disclosed. In the end, the life-insurance contract was annulled, even though the cause of the insured’s death, an automobile accident, was unrelated to the genetic mutation. In effect, the insurance company was permitted to make distinctions based on genetic information.

So, what is being done about this? Well, the concern for insurance companies using genetic data has been addressed in France, Belgium, Israel, South Korea, Germany, Ireland, and the United Kingdom. In these countries, laws have been made, restricting or preventing the use of genetic information by insurance companies. At present, Canada is lagging behind. But, despite that, strong efforts are being made: various Canadian advisory groups, researchers in law and medicine, and even some insurers are recommending clearer laws on the use of genetic information. Whatever happens, it will be interesting to watch. After all, there have been movies made about this – but let us try to keep this on the big screen, not in our ‘real’ lives.

**The information contained in this column should not be treated by readers as legal advice and should not be relied on without detailed legal counsel being sought. 

Originally posted on on November 21, 2011: Genetic discrimination on the horizon.