DATE: 20051215

DOCKET: C38703 (M31293)

COURT OF APPEAL FOR ONTARIO

RE:

GOWANBRAE REALTY DEVELOPMENTS LIMITED and ST. MARYS GOLF AND COUNTRY CLUB LIMITED (Plaintiffs (Appellants)) – and – McLEAN-PEISTER LTD. and CITADEL GENERAL ASSURANCE COMPANY (formerly CHATEAU INSURANCE COMPANY) (Defendants (Respondents)) – and – R.F. MOOTE & ASSOCIATES LTD. (Third Party)

BEFORE:

McMURTRY C.J.O., ROSENBERG and CRONK JJ.A.

COUNSEL:

L. Scott Smith and T. P. Bates

for the appellants and moving parties

Ross F. Earnshaw and Jacqueline Armstrong-Gates

for the respondents

HEARD & RELEASED ORALLY:

December 13, 2005

On appeal from the judgment of Justice William A. Jenkins of the Superior Court of Justice dated July 15, 2002.

E N D O R S E M E N T

[1] This appeal arises from an action commenced by the appellants for damages for breach of contract or for negligent performance of work under a contract for the construction of an expansion of a golf course with an irrigation system that included a water reservoir.

[2] The trial judge dismissed the action, holding that the respondents complied with the terms of the agreement between the parties, as amended; that the agreement, as amended, made no provision for an average depth of the constructed reservoir on the golf course; and, in any event, that the appellants were precluded from seeking relief against the respondents by virtue of a settlement agreement entered into by the parties in November 1994.

[3] The appellants challenge this judgment on several grounds. In particular, they argue that the trial judge committed reversible error by failing to address trial evidence that established the legal requirements for negligent misrepresentation. However, it is acknowledged that the appellants did not plead negligent misrepresentation against the respondents; nor did they seek to amend their pleading at trial to add a claim based on this cause of action.

[4] Before this court, the appellants now move to amend their statement of claim to add this new cause of action. They argue that, on the particular facts of this case, the respondents would suffer no non-compensable prejudice as a result of the requested amendment. We disagree.

[5] Although the Rules of Civil Procedure permit pleadings amendments at any stage of an action, an amendment to introduce a new cause of action, especially after trial, may only be permitted where an absence of non-compensable prejudice to the responding party is clearly made out. This essential requirement is not satisfied in this case.

[6] In our view, as argued by the respondents, had this cause of action formed part of the case against them at trial or if the suggestion of negligent misrepresentation had been a live issue at any point prior to judgment, the respondents’ conduct of the case may well have been significantly different. In particular, the evidence-in-chief of the respondents’ witnesses and the cross-examination of the appellants’ architect, Mr. Moote, may well have focused on the assertion of misrepresentation and the alleged reliance of Mr. Moote and the appellants on inaccurate information provided by the respondents’ representative to Mr. Moote concerning the depth of the reservoir.

[7] For these reasons, the appellants’ motion to amend their pleading is dismissed.

[8] With respect to the merits of the appeal itself, we conclude that it, too, must be dismissed. We say this for the following reasons.

[9] First, as we have said, negligent misrepresentation was neither pleaded nor raised by the appellants at trial. In these circumstances, there was no obligation on the trial judge to consider this cause of action.

[10] Second, in any event, we are not persuaded that this record supports a finding of actual misrepresentation and reliance. This is fatal to this part of the appellants’ appeal.

[11] Third, we find no error in the trial judge’s finding that the respondents complied with the terms of the amended agreement concerning construction of the reservoir and his additional key factual finding that the agreement, as amended, did not include any obligation to construct the reservoir to a stipulated average depth.

[12] For the reasons given, the appeal is dismissed. The respondents are entitled to their costs fixed, as agreed by the parties, in the amount of $16,000 for the motion to amend and $21,000 for the appeal, in each case inclusive of disbursements and Goods and Services Tax.

“Roy McMurtry C.J.O.”

“M. Rosenberg J.A.”

“E.A. Cronk J.A.”