In Bowman v Martineau, Stockwoods’ lawyers Paul Le Vay and Stephen Aylward were successful in persuading the Court of Appeal for Ontario to reverse the trial judge’s decision on damages. The case involved negligence on the part of a real estate agent that caused a purchaser to acquire a residential property while unaware of significant mould and water damage. At trial, the purchaser was awarded damages based upon the cost to repair the home, even though that cost was almost twice the purchase price. The Court of Appeal found that the proper measure of damages in the circumstances was the diminution in value to the property caused by the hidden defects. Clarifying prior case law, the Court held that there is no general rule that cost of repair is the default measure of damages in residential real estate cases Rather, it emphasized the importance of causation to the selection of measure of damages in professional negligence cases. This will be highly significant to real estate agents and other professionals, because in most cases this factor will favour the diminution in value approach.
