COURT OF APPEAL FOR ONTARIO
CITATION: Oberoi v. Newtek Automotive Inc., 2012 ONCA 179
DATE: 20120321
DOCKET: C52564
O’Connor A.C.J.O., Simmons J.A. and Perell J. (ad hoc)
BETWEEN
Jay S. Oberoi and Jay-Kem Enterprises Inc.
Plaintiffs (Respondents and Cross-Appellants)
and
Newtek Automotive Inc., Quing Zheng, also known as Qing Zheng, and Jane Wu, also known as Shizhen Wu
Defendants (Appellants and Respondents to Cross-Appeal)
AND BETWEEN:
Newtek Automotive Inc., Quing Zheng, also known as Qing Zheng, and Newtek International Inc.
Plaintiffs by Counterclaim (Appellants and Respondents to Cross-Appeal)
and
Jay S. Oberoi, Jay-Kem Enterprises Inc. and Partsmart Auto Parts Inc.
Defendants to Counterclaim (Respondents and Cross-Appellants)
AND BETWEEN:
Jay-Kem Enterprises Inc.
Plaintiff (Respondents and Cross-Appellants)
and
Newtek Automotive Inc., Newtek International Inc., Quing Zheng, also known as Qing Zheng, Jane Wu, also known as Shizhen Wu, and Advanced Brake Products Ltd.
Defendants (Appellants and Respondents to Cross-Appeal)
Counsel:
Alan S. Cofman and Marc D. Isaacs, for the cross-appellants, Oberoi et al.
Don Jack and Ryan Treleaven, for the respondent, Zheng
Heard and released orally: March 15, 2012
On appeal from the judgment of Justice Arthur Gans of the Superior Court of Justice, dated July 23, 2010.
ENDORSEMENT
[1] The respondents (collectively Zheng) purchased the business of the appellants (collectively Oberoi). The trial judge found that Oberoi negligently misrepresented the value of the inventory of the business and awarded damages to Zheng. The trial judge found that Zheng was contributorily negligent and reduced the award by 20 percent.
[2] Oberoi does not challenge the trial judge’s finding with regard to the first three elements of the tort of negligent misrepresentation: see Queen v. Cognos Inc., 1993 CanLII 146 (SCC), [1993] 1 S.C.R. 87. He argues, however, that the trial judge erred in finding that Zheng reasonably relied on the misrepresented value of the inventory (element 4) and that Zheng suffered a detriment as a result of such reliance (element 5).
[3] We do not accept these arguments. The trial judge heard evidence over the course of 14 days. He concluded that the misrepresented value formed part of the equation in the overall sale process. By this, he meant that the misrepresented amount was relied upon by Zheng in deciding to proceed with the contract as it had been negotiated. Oberoi had asserted the value of the inventory on a number of occasions. The trial judge’s finding of reliance was supported by the evidence.
[4] Zheng argues that the trial judge’s finding of contributory negligence is inconsistent with his finding that Zheng’s reliance was reasonable. We do not agree.
[5] A finding of contributory negligence is not necessarily inconsistent with a finding of reasonable reliance that is an element of the tort of negligent misrepresentation: Avco Financial Services Realty Ltd. v. Norman (2003), 2003 CanLII 47436 (ON CA), 64 O.R. (3d) 239 (C.A.). Whether or not there is an inconsistency, will depend on the facts of a particular case.
[6] There were two bases for the trial judge’s finding of contributory negligence in this case: Zheng knew or ought to have known that Oberoi’s books of accounts were wanting in accuracy and he opted to rely on Oberoi’s October inventory which did not include valuations.
[7] In our view, these findings were not inconsistent with the trial judge’s finding of reasonable reliance. As became apparent at the trial, it was not possible to ascertain the value of the inventory from Oberoi’s books of account. Moreover, in the face of Oberoi’s repeated representations as to the value of the inventory, it would have been unreasonable to expect Zheng to do the valuation of the inventory that Oberoi had failed to do in the course of his October taking of inventory. In other words, based on the evidentiary record, the findings of a negligent misrepresentation by Oberoi, which caused Zheng to act to his detriment, and contributory negligence by Zheng, who failed to act prudently in the circumstances, can co-exist.
[8] Thus, on these facts, we are not persuaded that the trial judge’s finding of contributory negligence was inconsistent with his finding of reasonable reliance.
[9] Next, Oberoi argues that Zheng did not suffer any detriment from his reliance on the misrepresentation because he would have closed the purchase in any event. While that is correct, a fair reading of the trial judge’s reasons as a whole shows that the trial judge drew the inference that had Zheng been told the truth about the value of the inventory, he would have made a better deal. As the trial judge put it, Zheng was not in the business to only break even. The trial judge drew a similar type of inference to that drawn by the British Columbia Court of Appeal in BG Checo International Ltd. v. British Columbia Hydro and Power Authority, 1993 CanLII 145 (SCC), [1993] 1 S.C.R. 12 (S.C.C.), varying (1990), 1990 CanLII 819 (BC CA), 44 B.C.L.R. (2d) 145 (B.C.C.A.).
[10] In our view, this inference of detriment flowing from Zheng’s reliance on the misrepresentation was open to the trial judge and we see no basis to interfere.
[11] In the result, the appeal is dismissed with costs fixed in the amount of $15,000, plus disbursements of $1,511.31.
“D. O’Connor A.C.J.O.”
“Janet Simmons J.A.”
“Perell J. (ad hoc)”