In December 2003, Paul and Judith Riley signed an agreement to buy a home in Tavistock from John and Kimberley Langfield.
Prior to signing the offer, the sellers completed and delivered to the buyers an SPIS on a standard real estate board form.
The form, in wide use throughout parts of Ontario, asks questions about the condition of the home. It states that the answers are being provided for information purposes only and are not warranties. It also warns that sellers are responsible for the accuracy of all answers.
In the Tavistock transaction, the sellers stated in the SPIS that there were no defects in any included appliances or equipment, that the fireplace was in working order, and that the sellers were not aware of any problems with the swimming pool or any moisture or water problems in the basement.
After the closing in April 2004, the purchasers discovered a "flood" in the basement and some of their possessions were destroyed or damaged by the water. They also found that the swimming pool filter and pump were not working.
That summer, a public health inspector visiting a house under construction next door discovered a pipe coming from the Riley property containing raw sewage. He also discovered an abandoned well.