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Torts - Negligent Misrepresentation - Damages

Orr v. Metropolitan Toronto Condominium Corporation No. 1056 (Ont CA, 2014)

In this condominum lawsuit the court commented as follows on the elements of the tort of negligent misrepresentation:
[42]Ms. Rainville’s claim against Brookfield and MTCC 1056 sounds in negligent misstatement or misrepresentation. The elements of that cause of action are set out in Queen v. Cognos Inc., 1993 CanLII 146 (SCC), [1993] 1 S.C.R. 87:
(1) there must be a duty of care based on a "special relationship" between the representor and the representee; (2) the representation in question must be untrue, inaccurate, or misleading; (3) the representor must have acted negligently in making said misrepresentation; (4) the representee must have relied, in a reasonable manner, on said negligent misrepresentation; and (5) the reliance must have been detrimental to the representee in the sense that damages resulted. (Para. 33, p. 110)

[54] The standard of care applicable to negligent misstatement is that of an ordinary, reasonable and prudent person in the position of the representor, in the circumstances (Queen v. Cognos Inc., at p. 121, para. 56; Ryan v. Victoria (City), 1999 CanLII 706 (SCC), [1999] 1 S.C.R. 201, at para. 28). In other words, the representor must exercise such reasonable care as the circumstances require to ensure that the representation is accurate and not misleading (Queen v. Cognos, at p. 121, para. 56). What is reasonable must be determined on an objective basis with consideration for the context of the particular case, such as the likelihood of a foreseeable harm, the gravity of the harm, and the cost of avoiding the harm (Ryan, at para. 28). The court may consider “external indicators” of what is reasonable, such as custom, trade practice, and statutory or regulatory standards (Ryan, at para. 28).
In particular on the issue of the measure of damages for negligent misrepresentation, the court stated:
[109] The remedy for negligent misstatement is ordinarily to award damages to return the plaintiff to the position he or she would have been in had the misrepresentation not occurred (BG Checo International Ltd. v. British Columbia Hydro & Power Authority, 1993 CanLII 145 (SCC), [1993] 1 S.C.R. 12, at p. 37, para.46).


[114] In my view, the Supreme Court’s approach to damages for negligent misstatement adopted in V.K. Mason Construction Ltd. is appropriate for this appeal. The Court adopted a measure of damages for negligent misrepresentation which recognized that a plaintiff can recover the value of its lost opportunity. In that case, a contractor claimed against a bank for negligent misrepresentation stemming from the bank’s advice that a property developer was adequately financed. The Court concluded that but for the bank’s misrepresentation, the contractor would have undertaken a different project on which it would have earned a profit. In other words, the bank’s misrepresentation caused the contractor to lose an opportunity to profit. The measure of damages was fixed as the anticipated profit the contractor lost as a result of the misrepresentation – in other words, its expectation damages.

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