Recently, in Bentley Aviation Ltd. v. Homelife Benchmark Realty Corp., 2017 BCSC 1332, the Supreme Court of B.C. considered a novel argument traversing issues in real property law, professional negligence and defamation.

Upon an application to strike a Notice of Civil Claim, the Court considered a claim in slander of title – or injurious falsehood – by the plaintiff minority stakeholder in land, against two realtors and their respective brokerages. The facts below were assumed to be true by the Court for the purposes of the application to strike.

The plaintiff corporation owned 25% of a large tract of land together with two other parties, Fraser Valley Aggregates Ltd. (“Fraser Valley”) and First Effort Investment Ltd. (“First Effort”), which held 65% and 10% respectively.

The three owners entered into a written joint venture agreement to develop the land into a sub-division. Under the agreement, any decision to dispose of the land required the approval of 75% of the ownership interests.

At the instructions of Fraser Valley, Anderson, a real estate agent, began to market the property. Anderson was approached by Evans, a real estate agent for Pacific Bay Properties Ltd. (“Pacific Bay”), who wanted acquire the property. The two agents drafted a contract of purchase and sale for the property with a purchase price of $22.86 million. The contract, which identified the vendor as “Station Road Terraces J.V.” even though no such legal entity existed, was signed by Fraser Valley on behalf of the purported vendor.

The contract was entered into unbeknownst to the plaintiff, without its consent, and without the authority to sign on its behalf or on the behalf of First Effort.

Subsequently, the plaintiff received an unsolicited offer from A&G Investments Ltd. (“A&G”) to purchase the property for $25.5 million. When the plaintiff notified Fraser Valley and First Effort of the offer, the plaintiff and First Effort were informed of the contract with Pacific Bay. The plaintiff objected to the contract, but was informed that Pacific Bay considered the contract binding and further, that Pacific Bay had assigned its interest in the property to others.

The plaintiff alleged it was likely that Pacific Bay, the assignees, or both would have brought legal action to enforce the contract had the plaintiff objected. The plaintiff was wary of a certificate of pending litigation being registered against the property, as that would have put the plaintiff in a precarious financial situation.

Lacking legal resources and confidence in its position, and in an effort to mitigate its damages, the plaintiff sold its 25% interest in the property to Fraser Valley for $1,522,750. The plaintiff would have received approximately $4 million more had the parties subdivided the property and sold the lots, and would have received approximately $1 million more had A&G purchased the property.

The plaintiff alleged that the real estate agents, Anderson and Evans, owed the plaintiff a duty to ensure that the person purporting to sell the property was authorized to do so.

The plaintiff argued that the actions of the real estate agents also constituted injurious falsehood or slander of title.

In order to be successful in a claim of injurious falsehood or slander of title, a plaintiff must prove:

  1. a false statement disparaging a plaintiff’s business, goods or property;
  2. published to a third person;
  3. maliciously and without just cause or excuse; and
  4. resulting in special damages in the form of pecuniary loss.

The plaintiff argued that the test was met as:

  • through the contract, the defendant real estate agents published a statement to Pacific Bay that misrepresented the identity of the owner of the property;
  • this statement disparaged the plaintiff’s title to its property, was false and made recklessly such as to amount to malice; and
  • as a result, the plaintiff suffered an actual pecuniary loss.

The defendant agents argued that in order to claim injurious falsehood, the disparaging statement must be made to the intended purchaser, which then causes the intended purchaser to balk. In this case, the allegation is that the disparaging statement was made to Pacific Bay. While this may have led to the loss of the sale to A&G or the opportunity to develop and subdivide, it was not alleged that the disparaging statement was published to A&G. In other words, the disparaging statement did not directly cause the loss, as the disparaging statement was only made to Pacific Bay, who bought the property.

The Court held that it is not apparent from the requisite elements of the tort that there must be a direct link between the party to whom the disparaging statement is published and the pecuniary loss. All that is required is that a pecuniary loss was caused by the wrongful publication. As such, the Court held that it is not plain and obvious that the plaintiff has no reasonable prospect of success on the claim for injurious falsehood, and the novel claim was allowed to proceed.

This is an intriguing finding as it may open up a new avenue for lost opportunity claims where a disparaging statement made to any third party results in the actual loss of a specific opportunity.

The Court was clear that a claim for injurious falsehood cannot be sustained where it is alleged generally that the value of the plaintiff’s property depreciated or that the plaintiff lost the opportunity to sell the property. In this case, the claim was allowed to proceed because the plaintiff was able to allege a specific pecuniary loss.

We will be watching closely to see whether the plaintiff’s claim for injurious falsehood or slander of title is ultimately successful.