COURT OF APPEAL FOR ONTARIO

DATE: 20000413

DOCKET: C28681

RE: ARNALDO GRECO and ELSA GRECO (Plaintiffs/Respondents
and Appellants by Cross-Appeal) – and – JOHN SOWANY
and JOHN SOWANY, in his capacity as Administrator of
the Estate of Winnifred Sowany, deceased (Defendants/
Appellants and Respondents in Cross-Appeal), CHRIS
MEDCALF and MEDCALF REALTY LIMITED (Defendants/
Respondents and Appellants by Cross-Appeal)

BEFORE: LABROSSE, WEILER and SHARPE JJ.A.

COUNSEL: Norman J. Emblem, for the Appellants/Respondents by
Cross-Appeal John Sowany and John Sowany, in his
capacity as Administrator of the Estate of Winnifred
Sowany, deceased Richard Horodyski, for the Respondents/
Appellants by Cross-Appeal Chris Medcalf and Medcalf
Realty Limited
Robert P. Armstrong, Q.C. and Crawford G. Smith, for the
Respondents and Appellants in Cross-Appeal Arnaldo and
Elsa Greco

HEARD: March 31, 2000

On appeal from the judgment of Mr. Justice David Marshall dated
October 17, 1997.

E N D O R S E M E N T

[1] This is an appeal from the decision of Marshall J.
rescinding an agreement of purchase and sale respecting 1.6 acres
of vacant land situated in Stoney Creek. The property was
subject to the authority of the Niagara Escarpment Commission
and, at the time it was sold, the Sowanys, as vendors, were aware
that no building permits were available for the property and that
the possibility of obtaining one was a “maybe at best”. With a
permit, the lot was worth approximately $180,000. Without a
building permit, it was worth about $5,000. The property was
listed for $215,000.

[2] The appellants’ first submission is that the trial judge
erred in his appreciation of the facts. We do not agree.

[3] In coming to his conclusion that the Grecos, as purchasers,
were entitled to rescission, the trial judge reviewed the
evidence and made a number of findings of fact. Some of them
are:

• The admission by the real estate agent, Medcalf, that he
was the Sowanys’ agent and that he marketed and
represented the property exactly as instructed. The
listing agreement which formed the basis for Mr. Medcalf’s
instructions described the property as a residential lot
and a beautiful future building lot on which to build your
dream home.

• The uncontradicted evidence of Mr. Greco, that he relied
on the representations of the Sowanys that the property
was a building lot and that obtaining a permit would not
be a problem.

• The evidence of Ms. Kolich, another prospective purchaser,
that she was also told there would be no problem in
getting a building permit.

[4] The trial judge did not err in his appreciation of the facts
or in his conclusion that the Grecos relied on the appellants’
misrepresentations.

[5] The trial judge also referred to the decision in Hedley
Byrne & Co. Ltd. v. Heller and Partners Ltd., [1963] 2 All E.R.
575 (H.L.) and noted that the reliance of the person to whom a
misrepresentation is made must be reasonable and foreseeable.
The trial judge was aware of the law. The trial judge
acknowledged certain aspects of the evidence that would support
Medcalf Realty’s position with respect to lack of foreseeability,
but, on a review of all the evidence, he concluded otherwise.
There is nothing in the trial judge’s reasons to suggest that he
misapplied the law to the evidence on this point. Furthermore,
in our opinion, there was no evidence of any act by the Grecos
that would constitute an affirmation of the contract.

[6] The appellants further submit that the misrepresentations
were not misrepresentations of fact but with respect to a future
event. Assuming, without deciding, that only representations as
to existing facts are actionable, the representation made did not
relate to a future event. The property was represented and
marketed as though the lot was a building lot on which a
beautiful home could be built. That is a matter of existing
fact. See The Queen v. Cognos, 1993 CanLII 146 (SCC), [1993] 1 S.C.R. 87 at 129. It
was implicit in that representation that a building permit would
be available for the asking. As the trial judge found, such was
not the case.

[7] It was also submitted that John Sowany is not personally
liable as he did not own the property. The issue was not raised
until after the trial judge had rendered his reasons. During the
discussion with counsel that followed, however, the trial judge
commented that there was evidence that Mr. Sowany was a part of
the negotiations in which the misrepresentations had been made.
He also signed the agreement of purchase and sale. The trial
judge declined to dismiss the action against Mr. Sowany in his
personal capacity and we would not interfere with that decision.
We note that, in any event, the trial judge could have awarded
damages against Mr. Sowany personally for the loss suffered by
the plaintiffs and the result would have been virtually the same.

[8] Accordingly the appeal is dismissed with costs.

[9] The Grecos seek leave to appeal costs and, if leave is
granted, submit that the trial judge erred in awarding them costs
on a party-and-party basis. They submit that costs should have
been awarded on a solicitor-and-client basis in view of the
existence of their offer to settle under rule 49.10. The trial
judge made his award on the basis that misrepresentation had been
proved. He found that fraud had not been made out. The trial
judge declined to award costs on a solicitor-and-client scale on
the basis that the action was a complex one. We agree that the
complexity of a case is not a basis on which to decline to make
an award under rule 49.10. The awarding of costs is a matter of
discretion for the trial judge. To the extent that the trial
judge erred with respect to the basis for exercising his
discretion, we still think that there was a proper basis on which
to award party-and-party costs. The trial judge’s reference to
the conduct of the action recognized that fraud had been alleged
but not proven. While leave to appeal costs is granted, the
appeal as to costs is dismissed.

Signed: “J.M. Labrosse J.A.”
“K.M. Weiler J.A.”
“Robert J. Sharpe J.A.”