Can a vendor be held responsible to the purchaser for the consequences of a latent defect known to the vendor prior to the sale of a house?

In Jenkins v. Foley, 2002 NFCA 46; (2002) 215 Nfld. & P.E.I.R. 257 (Nfld. & Labrador S.C.C.A) the court was concerned with an inquiry as to the circumstances, if any, in which a vendor could be held responsible to the purchaser for the consequences of a latent defect known to the vendor prior to the sale. The facts in that case were simply these. The purchaser told his real estate agent he did not want to purchase a house with potential water problems. The agent showed him the vendor’s house. The vendor was present and there were no discussions about water problems. The purchaser inspected the house again without the vendor present and an agreement of purchase and sale was entered into. A further final inspection was made and the purchaser noticed water on the floor in the basement. For several months after purchasing the house, an increasing amount of water seeped into the basement during heavy rains. Subsequently the purchaser discovered concrete damage throughout the basement. Four years later he brought an action for rescission or damages. The trial judge determined that the vendor knew or ought to have known of the water leakage, and that while his failure to disclose was not a fraudulent misrepresentation, it made him liable for some damages. The purchaser argued that the trial judge erred in finding that there was no fraudulent misrepresentation, and in his assessment of damages. The vendor cross-appealed arguing that the trial judge erred in finding that he knew there was a water problem and that he had an obligation to disclose the problem.