Court File and Parties

Citation: Lucien Groulx & Son Planing & Saw Mill Ltd. v. Nipissing Forest Resource Management Inc., 2007 ONCA 801

Date: 2007-11-26

Docket: C45514

Court of Appeal for Ontario

Before: O’Connor A.C.J.O., Gillese and Watt JJ.A.

Between:

Lucien Groulx & Son Planing & Saw Mill Ltd. Plaintiff (Appellant)

and

Nipissing Forest Resource Management Inc. Defendant (Respondent)

Counsel: Thomas McRae for the appellant Victor L. Freidin, Q.C. for the respondent

Heard: November 20, 2007

On appeal from the judgment of Justice Norman M.J. Karam of the Superior Court of Justice dated May 15, 2006.

Endorsement

[1] The appellant argues that the trial judge erred by failing to find the respondent liable for damages for negligent misrepresentation and intentional interference with economic relations. As well, the appellant raises for the first time the argument that the respondent is liable for breaches of fiduciary duty. Each of these three causes of action is discussed below.

Breach of Fiduciary Duty

[2] The appellant did not include a claim for breach of fiduciary duty in the statement of claim, seek leave to file an amended statement of claim, or otherwise advance this claim at trial. In the result, the evidentiary record remains incomplete on both sides of the issue. We are not persuaded that this is a case in which we should depart from the usual rule not to entertain submissions with respect to a cause of action raised for the first time on appeal.

Negligent Misrepresentation

[3] A representor is liable for damages on negligent misrepresentation where: (1) there exists a duty of care based on a “special relationship” between the representor and the representee; (2) the representation in question is untrue, inaccurate or misleading; (3) the representor acted negligently in making the representation; (4) the representee relied, in a reasonable manner, on the negligent misrepresentation; and (5) the reliance was detrimental to the representee in the sense that damages resulted. See Queen v. Cognos Inc., [1993] 1 S.C.R. 87 at 110.

[4] The requirements set out in Cognos are cumulative, meaning that a party must establish each of them to succeed in a claim of negligent misrepresentation. We find it necessary to deal only with the fourth requirement in order to dispose of this appeal.

[5] The appellant argues that the trial judge erred in finding the appellant had not established the requirement of reasonable reliance on the alleged misrepresentations. Specifically, the appellant argues that it would not have entered into either the 1996 Memorandum of Agreement (the “MOA”), the first Overlapping Licence Agreement, or the second Overlapping Licence Agreement for the period of 1999-2004 (the “Agreement”) without the representations made by the respondent. These representations include certain oral statements as well as statements found in Mr. Cutter’s letter of August 14, 1995, in the respondent’s business proposal in support of its application for a Sustainable Forest Licence, and in the Sustainable Forest Licence issued by the Minister of Natural Resources to the respondent.

[6] In general terms, the alleged representations were to the effect that the appellant would have access to its traditional lands for harvesting wood and would also receive sufficient allocations to continue its operations. The appellant contends that without the MOA, the respondent would not have been granted the Sustainable Forest Licence.

[7] Contrary to these representations, the appellant argues that it was not allocated a fair share of the timber resources under its Overlapping Licence Agreement for the 1999-2004 period.

[8] The Agreement allocated the appellant a fixed percentage of the total allocation of the harvest for the entire management area. The Agreement did not give the appellant assurances that it could harvest in traditional areas, nor that it would receive allocations in excess of those fixed in the Agreement to continue operations. The appellant does not argue that the respondent has breached the Agreement.

[9] The appellant accepts that the trial judge made a finding that the appellant did not rely upon the respondent’s representations. However, the appellant argues that this finding was confined to the oral statements and that the trial judge did not make a finding of no reliance with respect to the other statements referred to above.

[10] We disagree. The trial judge did make a finding of no reliance with respect to the oral statements. As well, later in his reasons, after reviewing other evidence, including the respondent’s business proposal, the trial judge concluded that the appellant did not rely on the other statements. Specifically, at para. 19, the trial judge held:

In the end, I am not satisfied that there is any evidence that the defendant or its lawful representatives did anything to mislead the plaintiff or to induce it to enter into the agreement or that the representatives of the plaintiffs were in fact misled. [Emphasis added.]

[11] In this passage, the trial judge speaks of inducement rather than reliance. Leaving aside whether there is any material difference in the words in the context of this fact situation, it is clear that, when read as a whole, the trial judge’s reasons show that he found that the respondent did not make representations upon which the appellant reasonably relied when it entered into the Agreement.

[12] In our view, there was ample evidence to support the trial judge’s conclusion. To start, the appellant’s representative did not testify that the appellant would not have entered into the Agreement except for the alleged misrepresentations. Moreover, the appellant did not seek to have the respondent’s “assurances” included in the Agreement, despite the fact the appellant now argues that it relied upon these assurances when signing the Agreement. On the contrary, it entered into the Agreement which contained an entire agreement clause.

[13] If the alleged assurances were sufficiently important for the appellant to rely on them in deciding to enter into the Agreement, it would have been reasonable for it to have raised them in negotiations and ask that they be included in the Agreement or otherwise addressed. The appellant did not do that.

[14] The appellant also did not explain how the statements could be misrepresentations with respect to the Agreement when the appellant had already operated under a previous Overlapping Licence Agreement for the 1996-1999 period. As the trial judge states at para. 17:

In order to establish misrepresentation, this Court would have to believe that, after operating under the 1996 agreement for three years, the plaintiff was somehow misled when it entered into the second agreement in 1999.

[15] In 1999, when the appellant says it was told by the respondent that it must take the Agreement in the form presented or leave it, it did not seek to invoke the dispute resolution process set out in s. 38(2) of the Crown Forest Sustainability Act, 1994, S.O. 1994 c. 25. Again, if the alleged misrepresentations had the significance that the appellant now urges, it would have been reasonable for it to have sought the assistance of the Minister in addressing any concerns. Instead, the appellant signed the Agreement which did not include provisions about harvesting in traditional areas or receiving allocations above the percentage set out in the Agreement. Again, the appellant’s failure to take such steps is evidence supporting the trial judge’s conclusion of no reliance.

[16] As to the business proposal, the trial judge noted that this was “nothing but a proposal to be weighed by the Minister in determining whether to grant a Sustainable Forest license to the [respondent].” This characterization is fair.

[17] Finally, we note that Mr. Cutter’s letter of August 14, 1995 was not written by or on behalf of the respondent corporation. At that time, the author was acting on behalf of the independent operators, including the appellant. As such, that letter could not form the basis of a claim for negligent misrepresentation against the respondent.

Intentional Interference with Economic Relations

[18] Intentional interference with economic relations occurs where: (1) the defendant intends to injure the plaintiff; (2) the defendant interferes with the plaintiff’s business by illegal or unlawful means; and (3) as a result of the interference, the plaintiff suffers economic loss. See Reach M.D. Inc. v. Pharmaceutical Manufacturers of Canada (2003), 65 O.R. (3d) 30 (C.A.) at para. 44.

[19] The trial judge dismissed the appellant’s claim based on a failure to establish the first element set out in Reach. At para. 20, the trial judge said:

In order to establish such a claim the plaintiff is first required to prove an intention on the part of the defendant to so injure the plaintiff. Other than Mr. Groulx’s suspicions there is simply no evidence to support such a claim.

[20] In support of his conclusion, the trial judge specifically accepted Mr. Street’s evidence (the representative of the respondent) that the respondent attempted to be fair in allocating timber rights to the appellant. The trial judge correctly pointed out that there was evidence showing that efforts had been made to involve the appellant’s representatives in the planning process over a period of two-and-a-half years and there was also evidence that the respondent, on several occasions, attempted to find timber for the appellant when it had used up its allocation.

[21] In our view, it was open to the trial judge to accept Mr. Street’s evidence. On that evidence, he found that the appellant had failed to show that the respondent had an intention to interfere with the appellant’s economic relations. That failure was fatal to the appellant’s claim.

[22] In the result, we dismiss the appeal. If the parties are not able to agree to costs with respect to the appeal, they should do the following. The respondent shall submit its bill of costs and brief submissions to the court in writing within ten days of the release of this decision. The appellant shall have seven days to respond.

“D. O’Connor A.C.J.O.”

“E.E. Gillese J.A.”

“David Watt J.A.”