DATE: 20020304
DOCKET: C34645

COURT OF APPEAL FOR ONTARIO

CHARRON, GOUDGE AND BORINS JJ.A.

B E T W E E N:

MARVIN A. HAGGITH

Kirk F. Stevens for the appellant

(Plaintiff/Respondent)

• and -

33 PARLIAMENT STREET INC., ROTHBERG KILBRIDE LIMITED, MICHAEL L. KILBRIDE, NORMAN A. ROTHBERG AND HOLLACE WONG

Ronald E. Carr for the respondent

(Defendants/Appellants)

Heard: February 21, 2002
Released Orally: February 21, 2002

On appeal from the judgment of Justice W. Brian Trafford dated June 15, 2000.

BY THE COURT:

[1] The appellants persuaded the respondent to participate with them in a real estate venture involving the purchase of lands. When the venture failed the respondent successfully sued them for negligence. The appeal from that judgment presents three issues.

[2] First, the duty of care issue. In our view, the trial judge erred in confining his analysis of proximity to a consideration of whether the harm that occurred could be said to be a reasonably foreseeable consequence of the appellants’ acts. As in any negligence case alleging economic loss, he was required to go on even at the first stage of the Anns test to examine the relationship between the appellants and the respondent including the factors of expectations, representations if any and reliance. See Cooper v. Hobart, (S.C.C. November 16, 2001).

[3] Upon examining the relationship between the parties, there is no basis on which to conclude the existence of the duty of care advanced by the respondent, namely the duty to obtain legal advice in connection with the agreement of purchase and sale to address the risk of soil contamination, or alternatively, the duty to advise potential investors that they had not done so. All the representations the appellants did make, including the speculative nature of this venture, were true. The appellants never undertook to provide legal advice relating to these transactions; to the contrary, they told potential investors to get their own legal advice.

[4] In our view, in these circumstances, there was no basis upon which the respondent could have reasonably expected the appellants to be responsible for the legal advice required by the respondent to protect his investment. Hence, the proximity necessary for a duty of care to arise simply does not exist here.

[5] Second, the causation issue. The trial judge found that the appellants’ failure to obtain legal advice, or to disclose this fact to the respondent, deprived him of material information and thereby contributed to his decision to invest.

[6] With respect, we find no support on the record for this finding. The fact that this information might be said to be material is not enough if it cannot be said that its absence caused the investment and subsequent loss. There was simply no evidentiary basis for the latter conclusion. Put another way, there was no evidence that had the respondent known he would not have invested. Indeed, all the available evidence suggests the opposite, namely that he would have been entirely uninfluenced by this knowledge. Hence, if the appellants’ failure to obtain legal advice on the purchase or to advise the respondent of this was a breach of duty, it simply cannot be said that it caused the respondent to participate in the investment.

[7] Third, the limitations issue. If it could be said that the appellants breached their duty of care to the respondent and that this caused a loss in the sense of a reduction in his investment (as opposed to its complete loss) then it is clear that the respondent was aware of all the elements of his cause of action by December 1989, at the latest. By then he knew of the absence of appropriate terms in the contract of purchase and sale, there having been no legal advice obtained. He also knew there would be some cleanup costs which would reduce the value of his investment. This is sufficient to trigger the six-year limitation period which expired before this claim was issued. Hence the trial judge erred in failing to find this claim to be time barred.

[8] In the result the appeal is allowed, the judgment below is set aside and the action is dismissed.

[9] Given the factors to be considered (particularly the amount in dispute) and our concern with the overall costs of appellate litigation, we fix the costs of the appeal at $10,000. Costs of the trial are to the appellant on a partial indemnity basis, to be assessed.

Released: March 4, 2002 “LC”

“Louise Charron J.A.”

“S.T. Goudge J.A.”

“S. Borins J.A.”