"Under-the-Table" Deal Costs Customer a $70,000 Cottage

The plaintiffs in this action were a German couple, looking to immigrate to Canada. To that end, they entered into an agreement of purchase and sale of a lakefront property in British Columbia with Jones, the defendant. The plaintiffs contended that the agreement with Jones was to include the construction of a log cabin on the property. It was from that point that the dispute arose.

The parties entered into a written contract for the purchase of the property at a price of $100,000. Before this contract was signed and satisfied, the plaintiffs advanced almost $70,000 extra to Jones, for a total of $170,000. The plaintiffs claim that this additional $70,000 was for the construction of the log cabin. The plaintiffs remained in Germany until after the contract was executed, and all the funds were paid. They claim that they spoke with Jones in the meantime, and were assured that construction of the cabin was progressing. However, when they finally arrived in Canada, they were shocked to find that no such cabin had been built, or even started.

At trial, Jones claimed that there was never any agreement for a cabin, and that the actual purchase price of the property was $170,000, with $100,000 changing hands pursuant to the written agreement, and the other $70,000 being exchanged "under the table" so that Jones could avoid paying capital gains tax. Both sides presented conflicting evidence. The judge noted that in order to prove fraud, as the plaintiffs alleged, it is necessary to meet a high standard of proof. The judge felt that the plaintiffs were unable to do this, as they lacked independent corroborating evidence (such as a written agreement). As such, the plaintiff's claim was dismissed, they did not have their $70,000 returned and they did not get their log cabin.

British Columbia Supreme Court
[1987] B.C.J. No. 2402