Court Awards $280,000 to Seller: Deakin v. Chu, 2025 ONSC
Background
In Deakin v. Chu (2025 ONSC), the Ontario Superior Court considered a failed real estate transaction in Ilderton, near London, Ontario.
The plaintiff, Andrea Deakin, agreed to sell her home to Albert and Ava Chu for $993,000. The Agreement of Purchase and Sale (“APS”) was unconditional, there were no inspection, financing, or warranty clauses. The buyers’ son viewed the property on their behalf, but the buyers themselves never attended.
The deal was scheduled to close on June 30, 2022, following an extension from the original date.
The Problem
Two weeks before closing, the buyers’ lawyer notified the seller that they would not be closing because the property was “heavily saturated with cigarette smoke”, a condition they said had not been disclosed.
The seller treated this as an anticipatory breach and re-listed the property. After weeks on the market, it sold for $740,000, resulting in a $253,000 loss from the original deal. The seller also incurred additional expenses for carrying costs, insurance, taxes, and bridge financing to complete her own purchase.
Her total claim for damages amounted to $280,612.08.
The Buyers’ Argument
The Chus argued that sellers have a duty to disclose the presence of cigarette smoke because it poses potential health risks. They compared their situation to other cases involving latent defects, such as undisclosed toxic waste, dangerous neighbours, or crime-related risks.
They also claimed that the smoke rendered the home uninhabitable due to their health sensitivities.
However, they presented no evidence to support these claims:
- No inspection report;
- No photographs;
- No affidavits from their realtor or their son (who had viewed the property);
- No expert evidence to show a health hazard or loss in value.
The Seller’s Position
The seller denied that the home was filled with smoke. She testified that she did not smoke and only occasionally allowed her brother to smoke outside or in the garage with the door open.
She also emphasized that the buyers:
- Waived any inspection,
- Made no representations or conditions about smoking, and
- Signed an unconditional APS.
The Court’s Decision
Justice E. ten Cate granted summary judgment ( a Motion not a Trial) in favour of the seller.
The Court held that:
- There was no evidence the home was “heavily saturated with smoke”;
- There was no misrepresentation or failure to disclose any material defect; and
- There was no legal obligation for sellers in Ontario to disclose the presence of smoke.
The judge specifically rejected the argument that silence about smoke could amount to fraud or misrepresentation, noting that such a rule would be impractical and overly broad:
“How would a homeowner know if a family member or guest had smoked surreptitiously? How much smoke is acceptable? Any such regulation is best left to legislation.”
Because there was no genuine issue requiring a trial, the Court granted summary judgment and awarded the seller full damages.
Judgment Awarded
- Loss in sale price: $253,000
- Carrying costs and expenses: $10,218.60
- Bridge financing interest: $17,393.48
- Total damages: $280,612.08
- Deposit of $100,000 released to the seller (in partial satisfaction of claim)
- Prejudgment interest payable under the Courts of Justice Act
Considerations for Real Estate Agents
- There is no general duty to disclose cigarette smoke or other non-dangerous, subjective property conditions.
- Buyers who waive inspection and sign unconditional offers assume the risks associated with the property’s condition.
- Self-serving or hearsay evidence is not enough to defeat a summary judgment motion.
- Sellers can rely on summary judgment when buyers refuse to close without legal justification.
Conclusion
The Court confirmed that cigarette smoke, unlike structural defects or safety hazards, does not create a legal duty of disclosure for sellers. The buyers’ failure to close on an unconditional agreement resulted in substantial damages.
Once again, this case illustrates the importance of due diligence before waiving inspection clauses and the serious consequences of walking away from a binding real estate contract.
Comment
This property was purchased at the height of the market which then declined substantially. In all likelihood, the Buyers didn’t qualify for a mortgage at the time of closing. The appraisal would have been based 4 months later. In fact, the market has now dropped about 20% since the market peak. No issues along these lines were raised. The Buyers were likely desperate to with their case, hence the side issue of smoking, which likely had little to nothing to do with this transaction.
So, a Buyer who is “vulnerable” and asks all the right questions can still protect themselves.
Brian Madigan LL.B., Broker