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Fraudulent Misrepresentation

. Outaouais Synergest Inc. v. Lang Michener LLP

In Outaouais Synergest Inc. v. Lang Michener LLP (Ont CA, 2013) the Court of Appeal considered a botched real estate conveyance from the perspectives of fraudulent misrepresentation:
[77] This Court and the Manitoba Court of Appeal have both confirmed that silence and half-truths can amount to fraudulent misrepresentation and that, where a vendor, who has no duty to speak, decides to break that silence, the doctrine of caveat emptor falls away as a defence mechanism and the vendor must speak truthfully and completely about the matters raised: see Krawchuk v. Scherbak, 2011 ONCA 352, 106 O.R. (3d) 598, at para. 77, citing Kaufmann v. Gibson (2007), 59 R.P.R. (4th) 293 (Ont. S.C.); Alevizos v. Nirula, 2003 MBCA 148, 180 Man. R. (2d) 186, at paras. 18-25. These cases involved situations where vendors completed voluntary vendor disclosure statements in residential real estate transactions.

....

[88] For these reasons [SS: ambiguity in what the vendor did say], I would not give effect to the argument that Harold Keenan, having decided to break silence and give notice of the cost recovery clause – if that is what he did – was in violation of an obligation to disclose it in a more forthright fashion. While he may have been nibbling at the edges of the “honest fair-dealing” concept referred to by the trial judge, Keenan’s conduct – having regard to all of the circumstances outlined above – did not rise to the level where it would be “unconscientious for [him] to avail himself of the advantage obtained”: Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19, 1 S.C.R. 678, at para. 39, citing McMaster University v. Wilchar Construction Ltd. (1971), 1971 CanLII 594 (ON SC), 22 D.L.R. (3d) 9 (Ont. H.C.), at p. 19.
. Midland Resources Holding Limited v. Shtaif

In Midland Resources Holding Limited v. Shtaif (Ont CA, 2017) the Court of Appeal commented on the elements of the tort of fraudulent misrepresentation, particularly in the face of silence by the defendant:
[162] Fraudulent misrepresentation is established where there are the following five elements: (i) a false representation of fact by the defendant to the plaintiff; (ii) knowledge the representation was false, absence of belief in its truth, or recklessness as to its truth; (iii) an intention the plaintiff act in reliance on the representation; (iv) the plaintiff acts on the representation; and (v) the plaintiff suffers a loss in doing so: Amertek Inc. v. Canadian Commercial Corp. (2005), 2005 CanLII 23220 (ON CA), 76 O.R. (3d) 241 (C.A.), at para. 63, leave to appeal refused, [2005] S.C.C.A. No. 439.

[163] A misrepresentation can involve not only an overt statement of fact, but also certain kinds of silence: the half-truth or representation that is practically false, not because of what is said, but because of what is left unsaid; or where the circumstances raise a duty on the representor to state certain matters, if they exist, and where the representee is entitled, as against the representor, to infer their non-existence from the representor’s silence as to them: Robert van Kessel & Paul Rand, The Law of Fraud in Canada (Toronto: LexisNexis Canada Inc., 2013), at §2.69 and 2.72.

[164] The significance of silence always falls to be considered in the context in which it occurs: Demagogue Pty. Ltd. v. Ramensky (1992), 39 F.C.R. 31 (Austral. F.C.), at p. 32. As explained by Professor Waddams: “Almost always something is said to induce the transaction and it is open to the court to hold that the concealment of the material facts can, when taken with general statements, true in themselves but incomplete, turn those statements into misrepresentations”: S.M. Waddams, The Law of Contracts, 6th ed. (Toronto: Canada Law Book Inc., 2010), at para. 439.
. Canadian Imperial Bank of Commerce v. Deloitte & Touche

In Canadian Imperial Bank of Commerce v. Deloitte & Touche" (Ont CA, 2016) the Court of Appeal restated the elements of the tort of fraudulent misrepresentation, particularly in it's 'reckless misrepresentation' form:
[42] Reckless misrepresentation is a kind of fraudulent misrepresentation: Redican v. Nesbitt, 1923 CanLII 10 (SCC), [1924] S.C.R. 135, at p. 154. In the law of torts, a fraudulent misrepresentation that causes loss to the recipient grounds an action in “deceit” or “civil fraud”: Bruce MacDougall, Misrepresentation (Toronto: LexisNexis Canada, 2016), at para. 5.8. Recently, the Supreme Court held that a claim for “civil fraud” requires proof of the following facts: (1) a false representation made by the defendant; (2) some level of knowledge of the falsehood of the representation on the part of the defendant (whether through knowledge or recklessness); (3) the false representation caused the plaintiff to act; and (4) the plaintiff’s actions resulted in a loss”: Combined Air Mechanical Services Inc. v. Flesch, 2014 SCC 8 (CanLII), [2014] 1 S.C.R. 126, at para. 21. [Emphasis added.]

[43] The third element of civil fraud summarized in Combined Air entails considering inducement and reliance. As the Divisional Court noted in respect of the lenders’ claims in Canadian Imperial Bank of Commerce v. Deloitte & Touche (2003), 2003 CanLII 38170 (ON SCDC), 172 O.A.C. 59, at para. 24, “The claims of negligent and reckless misrepresentation both require the plaintiffs to prove at trial that there have been representations of fact by each of the defendants upon which they relied.”
. PP v DD

In PP v DD (Ont CA, 2017) the Court of Appeal states the elements of the tort of negligent misrepresentation succinctly as follows:
[41] To succeed on a civil claim for fraudulent misrepresentation, the appellant must establish the following: (1) the representation was made by the respondent; (2) the respondent knew that the representation was false or was recklessly indifferent to its truth or falsity; (3) the false statement was material and by it the appellant was induced to act; and (4) the appellant suffered damages: Bruno Appliance and Furniture, Inc. v. Hryniak, 2014 SCC 8 (CanLII), [2014] 1 S.C.R. 126, at para. 21; see also Parna v. G&S Properties Ltd. (1970), 1970 CanLII 25 (SCC), 15 D.L.R. (3d) 336 (S.C.C.) at p. 344.[1] The Supreme Court of Canada has consistently recognized that “fraud without damage gives . . . no cause of action”: Hryniak at para. 20.




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