When Feng Yun Shao agreed to pay $6.1 million for a sprawling mansion, in Vancouver's upscale Shaughnessy neighbourhood, she had no idea an alleged Chinese triad leader had lived there before he was gunned down at the front gate.

Shao backed out of the 2009 deal when she learned the house's history, and last week, a B.C. Supreme Court judge agreed Shao had been misled and was not in breach of her contract when she reneged.

Justice Paul Pearlman wrote Friday that the home's previous owner, Mei Zhen Wang, had relied on "fraudulent representation" to sell the house, and ordered her to return Shao's $300,000 deposit — plus interest.

The 9,018-square-foot mansion at 3883 Cartier St. was once the home of Wang's daughter, Gui Ying (Winnie) Yuan, and son-in-law, Raymond Huang, according to court documents.

Before Huang's 2007 death in an apparent targeted hit outside the home, he was alleged to be a leader of the notorious Big Circle Boys, a gang with roots in China.

Two years after Huang's death, Wang put the house on the market. She had decided to permanently return home to China, court heard.

But the rest of the family had another reason to leave the neighbourhood.

Media reports about Huang had prompted West Point Grey Academy to kick out his young daughter, according to last week's decision. As a result, the family bought a new condo in West Vancouver, where the girl had been accepted into another private school.

But when Shao visited the property as a prospective buyer and asked why the current owners were selling, she wasn't told anything about the killing. All she learned was that a member of the family was switching schools to improve her English, according to the decision.

"That representation, while true on its face, was incomplete," the judge wrote. "It concealed the fact that Ms. Yuan's daughter changed schools as a result of Mr. Huang's death, and that the death was a factor in the plaintiff's decision to sell the property."

House's history revealed

Five days after Shao paid the deposit in full and the conditions were removed from the contract, she heard rumours of what had happened at her new house, according to the decision. Her husband Googled the address and discovered the full details.

Shao told her lawyer she was pulling out of the sale, and her lawyer wrote a letter accusing Wang of failing to disclose a hidden defect of the home.

"The fact that the deceased was allegedly a leader of one of Vancouver's notorious gangs and the murderer had not been apprehended clearly puts any occupant of the Property at risk," the letter read.

The six-bedroom, 10-bathroom home sold in late 2009 to a buyer who was fully informed about the killing. The purchase price was $5.5 million — about 10 per cent less than what Shao would have paid.

Wang filed suit against Shao for breach of contract, arguing she should be allowed to keep the deposit and be awarded another $338,000 in damages for the difference between the two sale prices.

In his decision, Pearlman wrote that Wang was not legally obliged to include the killing in the property disclosure statement, since the history could have been discovered by anyone asking reasonable questions about the property.

But Shao had asked reasonable questions.

"Ms. Shao was entitled to an accurate answer, rather than one calculated to conceal Mr. Huang's death as a reason for the plaintiff's decision to sell the property," Pearlman wrote.

Now, Wang will have to relinquish the down payment and pay Shao about $4,000 in damages. Costs in the case have yet to be determined.

Meanwhile, in the years since the botched sale, Wang's daughter Yuan was convicted of money laundering in Hong Kong. She spent four years in prison there, according to the judge's decision.