COURT OF APPEAL FOR ONTARIO
CITATION: Hanisch v. McKean, 2014 ONCA 698
DATE: 20141014
DOCKET: C57191
MacPherson, Simmons and Gillese JJ.A.
BETWEEN
Carla Hanisch
Plaintiff (Respondent)
and
Thomas William McKean and Jane Marie Rita Lesaux
Defendants (Appellant)
F. Scott Turton, for the appellant
Gabrielle K. Kramer, for the respondent
Heard: June 10, 2014
On appeal from the judgment of Justice Guy P. Di Tomaso of the Superior Court of Justice, dated August 1, 2013, with reasons reported at 2013 ONSC 2727.
Simmons J.A.:
[1] The issues on appeal arise out of the respondent’s 1998 purchase of a 97-acre hobby farm from the appellant.
[2] Following the respondent’s purchase, the appellant and his wife retained a three-acre property adjacent to the farm. They built a retirement home on the adjacent property and have lived there full-time since 2008.
[3] At the time of the respondent’s purchase, the appellant did not disclose to the respondent that an underground waterline originating from a spring on the farm supplied water to the farm as well as to the properties of some other neighbours. Further, the appellant did not disclose to the respondent that he believed that both he and the other neighbours supplied by the underground waterline were entitled to continue to receive water from the underground waterline.
[4] Instead of disclosing the underground waterline and his expectations to the respondent, on the closing date of the sale of the farm property the appellant delivered a statutory declaration to the respondent in which the appellant made statements indicating, among other things, that he was “not aware of any person or persons … having any claim or interest in the said lands or any part thereof adverse to or inconsistent with [his] title and that [he was] positive that none such exists.”
[5] The respondent learned about the underground waterline in June 2007 when one of the neighbours supplied by the underground waterline (the “neighbour”) reported receiving contaminated water. On receiving this information, the respondent immediately cancelled an order for 1000 turkey poults scheduled to be delivered to the farm within a couple of days. She subsequently interrupted her farming operation in other ways.
[6] Soon after the neighbour’s report to the respondent, the respondent’s lawyer wrote to the neighbouring users of the underground waterline and requested that they stop using the water supplied by the underground waterline. In response to that request, the appellant immediately asserted a right to use the water.
[7] In a proceeding involving the appellant, the respondent and the neighbour, the trial judge declared that the appellant and the neighbour do not have a prescriptive easement for the use of the water supply from the respondent’s land[^1] and that the neighbour is not entitled to an injunction preventing the respondent from taking steps to interfere with the quality or quantity of the water supply.
[8] However, the trial judge also concluded that “the shared waterline from [the appellant’s property] to the [neighbour’s property] is a latent defect.” Further, after finding that the appellant was not liable for fraudulent misrepresentation, the trial judge held that the appellant was liable for negligent misrepresentation. He awarded damages to the respondent in the amount of $25,500 together with costs against the appellant of $114,918.75. The parties included the findings concerning latent defect and fraudulent misrepresentation in the formal judgment.
[9] Given that the damages award was premised on the finding of negligent misrepresentation, the main issues on appeal concern whether the trial judge made errors in that finding and in his damages award.
[10] Before turning to those issues, I will deal with a preliminary issue raised by the respondent concerning this court’s jurisdiction to entertain this appeal.
A. The Jurisdiction Issue
(1) The respondent’s argument
[11] The respondent contends that this court lacks jurisdiction to entertain this appeal because the appeal relates solely to the damages awarded to her in the judgment in the amount of $25,500; the appeal does not relate to the non-monetary relief awarded in the judgment, namely, the declarations concerning the use of the water supply.
[12] Under s. 19(1.2) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”), the Divisional Court has jurisdiction to entertain an appeal from a final order of a Superior Court judge for “a single payment of not more than $50,000, exclusive of costs”. Thus, the damages award forming the subject matter of this appeal falls squarely within the monetary jurisdiction of the Divisional Court.
[13] The respondent does not dispute that the Divisional Court would have no jurisdiction over an appeal from the non-monetary aspects of the judgment. However, neither the appellant nor the neighbour appealed those aspects of the judgment. Accordingly, the respondent submits that this court has no jurisdiction over this appeal. I disagree.
(2) Relevant provisions of the CJA
[14] As the jurisdiction issue raises a question of statutory interpretation, I will begin this portion of my reasons by setting out the relevant provisions of the CJA, which define the jurisdiction of both the Court of Appeal and the Divisional Court.
[15] Section 6(1)(b) of the CJA gives the Court of Appeal jurisdiction over all appeals from a final order of a judge of the Superior Court of Justice, except an order referred to in s. 19(1)(a) of the CJA or an order from which an appeal lies to the Divisional Court under another Act:
- (1) An appeal lies to the Court of Appeal from,
(b) a final order of a judge of the Superior Court of Justice, except an order referred to in clause 19(1)(a) or an order from which an appeal lies to the Divisional Court under another Act.
[16] Sections 19(1)(a) and (1.2) of the CJA describe the classes of Superior Court final orders from which an appeal lies to the Divisional Court under the CJA, where the notice of appeal was filed on or after October 1, 2007:[^2]
- (1) an appeal lies to the Divisional Court from,
(a) a final order of a judge of the Superior Court of Justice, as described in the subsections (1.1) and (1.2).
(1.2) If the notice of appeal is filed on or after October 1, 2007, clause (1)(a) applies in respect of a final order,
(a) for a single payment of not more than $50,000, exclusive of costs;
(b) for periodic payments that amount to not more than $50,000, exclusive of costs, in the 12 months commencing on the date the first payment is due under the order;
(c) dismissing a claim for an amount that is not more than the amount set out in clause (a) or (b); or
(d) dismissing a claim for an amount that is more than the amount set out in clause (a) or (b) and in respect of which the judge or jury indicates that if the claim had been allowed the amount awarded would have been not more than the amount set out in clause (a) or (b).
[17] Other relevant provisions of the CJA include s. 6(2), which provides that the Court of Appeal has jurisdiction to hear appeals that lie to other courts when an appeal in the same proceeding lies and is taken to the Court of Appeal:
- (2) The Court of Appeal has jurisdiction to hear and determine an appeal that lies to the Divisional Court or the Superior Court of Justice if an appeal in the same proceeding lies to and is taken to the Court of Appeal.
[18] Rule 61.07(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, may also be relevant to the overall statutory scheme in that it provides that a cross-appeal may be commenced to set aside or vary the order appealed from, or, if the appeal is allowed in whole or in part, to seek other relief or a different disposition than the order appealed from. I will say more later about the relevance of this provision.
(3) Discussion
[19] The specific question raised by the respondent concerns the meaning of “final order” as it appears in ss. 6 and 19 of the CJA. If “final order” can properly be read as referring to the particular term(s) of a final order that is/are under appeal, then the respondent is correct and this appeal lies to the Divisional Court.
[20] However, if “final order” must be read as meaning the entire final order, irrespective of what portions of the final order are under appeal, then the respondent is incorrect and this court has jurisdiction to entertain this appeal.
[21] I note at the outset that, when determining this court’s jurisdiction over orders having both final and interlocutory aspects, this court has generally distinguished between the final and interlocutory aspects of the order: see, for example, Albert v. Spiegel (1993), 17 C.P.C. (3d) 90; Cole v. Hamilton (City) (2002), 2002 CanLII 49359 (ON CA), 60 O.R. (3d) 284. However, this distinction is required by s. 6(1)(b) of the CJA, which limits the appellate jurisdiction of the Court of Appeal to final orders.
[22] In my view, two factors point strongly to the conclusion that “final order,” as it appears in ss. 6 and 19 of the CJA, must be read as meaning the entire final order, irrespective of what portions of the final order are under appeal.
[23] First, in Sepe v. Monteleone (2006), 2006 CanLII 1173 (ON CA), 78 O.R. (3d) 676, at para. 6, this court described the purpose of section 19(1)(a) of the CJA as being “to define an easily applied cut-off line for litigants to determine the proper appeal route in any particular case.” Examining the overall scheme of ss. 6 and 19 of the CJA in the light of this purpose of s. 19, interpreting “final order” as meaning anything other the whole of the final order would not make sense.
[24] When ss. 6(1), 6(2) and 19 are read in combination, it is apparent that the scheme of these sections is to give the Court of Appeal default jurisdiction over appeals from final orders of the Superior Court of Justice – subject only to the exceptions created by s. 19 of the CJA and other specific statutory provisions. Section 6(2) underlines the intention to give the Court of Appeal default jurisdiction by providing that, where more than one court has jurisdiction over appeals in the same proceeding, the Court of Appeal may assume jurisdiction over all appeals.
[25] Considered in the context of this statutory scheme, it would not make sense to interpret “final order” as meaning anything other than the whole of the final order.
[26] For example, in the context of an order made in matrimonial proceedings, if “final order” were interpreted as including the particular term(s) of an order that is/are under appeal, one spouse could be required to appeal the support award to the Divisional Court, whereas the other spouse could be required to appeal the equalization payment made under the same order to the Court of Appeal. While it is true that under s. 6(2) of the CJA, the Court of Appeal would have jurisdiction to entertain both appeals once the appeal of the equalization payment was filed, it is unlikely that the legislature intended that appeals would have to be transferred or truncated depending on which party was the first to deliver its notice of appeal.
[27] When read in light of the purpose of s. 19, which is to provide an easily applied cut-off line for litigants to determine the proper appeal route in any particular case, it is my view that “final order” as it appears in ss. 6 and 19 can only sensibly be interpreted as meaning the whole of the final order. Otherwise, the proper appeal route from an order could change, depending on the terms of the order and the grounds of the appeal or cross-appeal.
[28] Second, in applying the four subparagraphs in each of ss. 19(1.1) and (1.2) of the CJA to determine which court has jurisdiction, this court has generally focused on the final order as a whole and not simply the aspect of the order under appeal or the amount claimed on appeal by individual parties. In doing so, this court has made it clear that each of the subparagraphs in ss. 19(1.1) and (1.2) are disjunctive and therefore must be considered separately.[^3] However, although claims and counterclaims are not to be combined,[^4] when applying each subparagraph, all of the claims (or counterclaims) are to be added together, even if claimed by more than one party,[^5] in order to determine which court has jurisdiction. Such an interpretation puts the emphasis on the entire final order and not simply on the aspect of the final order under appeal.
[29] So, for example, in McManus v. Feldman Investments Ltd., [2003] O.J. No. 5762, this court determined that it had jurisdiction over an appeal where the appeal related solely to punitive damages quantified at $16,750, but the total amount of the judgment was $148,143.
[30] Similarly, in Mohammed (Personal Representative of) v. Tucci, 2009 ONCA 554, 97 O.R. (3d) 145, this court held that for the purpose of applying ss. 19(1)(a) and 19(1.1)(c) or (d), the value of all the plaintiffs’ claims that were dismissed must be added together to determine the total amount of the dismissed claim. In that case, the plaintiffs sued for damages arising from the death of their infant son, alleging medical malpractice. The trial judge dismissed the action, but assessed the damages for each parent in an amount that fell within the jurisdiction of the Divisional Court. However, when those sums were added together, the total exceeded the jurisdiction of the Divisional Court, giving this court jurisdiction.
[31] Based on the foregoing reasons, I am satisfied that “final order” as it appears in ss. 6 and 19 of the CJA refers to the whole of the final order and I would not give effect to the respondent’s preliminary objection concerning jurisdiction.
B. The Negligent Misrepresentation Issue
(1) The trial judge’s findings
[32] The trial judge rejected the respondent’s claim for fraudulent misrepresentation because he was not satisfied that the appellant “fraudulently intended to deceive [the respondent].” However, although the trial judge “had reservations” about the respondent’s claim for fraudulent misrepresentation, he had “no reservations that [the appellant was] liable to [the respondent] for negligent misrepresentation.”
[33] The trial judge’s conclusion that the appellant was liable for negligent misrepresentation rests largely on the following findings:
• on the closing date of the sale of the farm, in response to a requisition letter from the respondent’s solicitor, the appellant delivered to the respondent a statutory declaration in which the appellant made statements indicating, among other things, that he was “not aware of any person or persons … having any claim or interest in the said lands or any part thereof adverse to or inconsistent with [his] title and that [he was] positive that none such exists.” As the appellant was at all times aware that other users claimed a right to use that waterline, the appellant was “careless and reckless” as to whether his statutory declaration was true. Furthermore:
o the statutory declaration was broadly worded – it was intended to protect not just against actual easements but also against the risk of persons with “any claim or interest” in the farm;
o when the appellant delivered the statutory declaration, he was aware that both he and other users claimed an interest in ongoing use of the water supply from the farm;
o the appellant’s knowledge about the waterline was inconsistent with his statement in the statutory declaration that he was unaware of any persons having any claim inconsistent with his title, and this made the statutory declaration false;
o although the appellant read every clause in the statutory declaration with his long-time lawyer, the appellant did not inform his lawyer about the shared waterline;
o all of the evidence supports not some “misunderstanding” on the part of the appellant, but rather the making of a statutory declaration when he knew it was untrue.
• the statutory declaration was delivered as part of the closing documents for the farm purchase, was intended to be relied upon and was relied upon;
• the respondent’s reliance on the statutory declaration was reasonable – she was unaware of the existence of the waterline and the appellant had delivered the statutory declaration to her with the intention that she rely upon it;
• the respondent’s reliance on the statutory declaration was both intended and reasonable, and this was sufficient, in the circumstances of this transaction, to give rise to a duty of care;
• in the face of his knowledge about his own claim and the claims of other users to ongoing use of the water supply from the farm, the appellant was “careless and reckless” in making the statutory declaration; and
• the respondent’s reliance on the statutory declaration was detrimental to her and resulted in damage.
[34] The appellant submits that the trial judge made several errors in making these findings.
[35] First, the appellant submits that the trial judge erred in relying on a tortious duty of care distinct from the contract when the contract contained an entire agreement clause specifying that there was “no representation, warranty, collateral agreement or condition, which [affected the] Agreement other than as expressed [therein].”[^6]
[36] Second, relying on Central Trust Co. v. Rafuse, 1986 CanLII 29 (SCC), [1986] 2 S.C.R. 147, the appellant argues that it was not open to the trial judge to make a finding of negligent misrepresentation when the parties’ relationship was premised on a contract (the agreement of purchase and sale for the farm) and their duties and obligations to each other flowed from that contract.
[37] In this regard, the appellant notes that the agreement of purchase and sale for the farm contained a specific warranty indicating that the water system for the farm had operated satisfactorily during the appellant’s occupancy. The agreement also included as a schedule the most recent water report, which was completed in 1993.
[38] According to the appellant, having bargained for specific terms relating to the water system in the agreement of purchase and sale, it was not open to the respondent to rely on something not provided for by the terms of the contract and seek a remedy in tort.
[39] Moreover, the appellant’s contractual obligation was to deliver good title. As determined by the trial judge, he did so – neither the appellant nor the neighbour is entitled to a prescriptive easement or other relief entitling them to shared use of the waterline from the farm. Further, even assuming that the shared underground waterline was a right or interest in land, the respondent was a bona fide purchaser for value without notice, and such a purchaser takes title free of unregistered claims. According to the appellant, even if he had disclosed the existence of his claim to the shared waterline – and that of his neighbours – the potential claims were the respondent’s problem, not his. That is because the claims were ultimately found to be invalid and, as such, did not diminish the appellant’s title to the farm.
[40] Third, the appellant argues that there was no basis for the trial judge’s findings that the respondent relied on the statutory declaration or that her reliance was reasonable.
[41] I would not accept these arguments. In Mariani v. Lemstra (2004), 2004 CanLII 50592 (ON CA), 246 D.L.R. (4th) 489, the plaintiff relied on an allegedly false representation contained in a listing agreement, a pre-contractual document that was not incorporated into the agreement of purchase and sale. Thus, the representation was external to the agreement of purchase and sale – and the very type of representation for which an entire agreement clause is intended to exclude liability.
[42] In this case, the false statement was contained in a statutory declaration delivered as part of closing documents and in response to a requisition from the respondent. Such requisitions – and responses to them – were clearly contemplated by the agreement of purchase and sale.
[43] In these circumstances, I fail to see how “a separate Hedley Byrne duty of care in tort” in relation to the false statement would be excluded by the entire agreement clause contained in the agreement of purchase and sale. The false statement was contained in a solemn declaration executed under oath and was delivered as part of a process contemplated by the agreement of purchase and sale.
[44] Further, as found by the trial judge, the appellant’s duty of care arose specifically from the respondent’s foreseeable and reasonable reliance on the appellant’s representations contained in the statutory declaration. Since the appellant’s duty of care was not precluded by any specific term of the contract, Central Trust does not exclude concurrent liability in tort.
[45] Concerning the appellant’s arguments about contractual terms and the fact that his contractual obligation was to deliver good title, I note that, as found by the trial judge, the statutory declaration was broadly worded. As the trial judge said, the statutory declaration was intended to protect the respondent against not only existing interests inconsistent with her title to the farm but also against the risk that there were persons with a “claim” against her title.
[46] The appellant was just such a person – and he knew it. He knew he relied on the shared waterline originating at the farm and he knew he was claiming the right to continue to use it. In the face of this knowledge, he knew or ought to have known that his claimed right to use water from the farm property was a “claim … in the said lands or any part thereof … inconsistent with [his] title.”
[47] The appellant therefore knew, or, at the very least, ought to have known, that his representation to the contrary, in a statutory declaration executed under oath, was false. In swearing the statutory declaration in the face of the knowledge, and in failing to consult with his long-time lawyer about the shared waterline, the appellant failed to exercise the reasonable care that the circumstances demanded. The trial judge was entitled to so find.
[48] I am also skeptical of the correctness of the appellant’s submission that the respondent would have had no remedy in contract had the appellant disclosed the existence of the ultimately unsuccessful claims to a shared water supply in his statutory declaration.
[49] In any event, that is not this case. The appellant acted negligently in delivering a false statutory declaration on closing. Moreover, he delivered the false statutory declaration in response to a requisition from the respondent – a requisition that was contemplated by the agreement of purchase and sale. Even if the appellant was entitled, under the terms of the agreement of purchase and sale, to delete the statement in the statutory declaration on which the appellant now relies, that is not what he did. Rather, he executed a solemn declaration under oath when he knew or ought to have known it was false and delivered it to the purchaser intending that it be relied upon. In these circumstances, I fail to understand the basis for the appellant’s claim that he cannot be held liable in tort.
[50] Moreover, the respondent’s case is not a claim in contract founded on a gratuitous promise; rather, as determined by the trial judge, it is a claim in tort founded on negligent misrepresentation.
[51] Finally, I reject the appellant’s submission that there was no basis for the trial judge’s findings of reasonable reliance by the respondent on the statutory declaration.
[52] As the trial judge noted, the statutory declaration was delivered as part of the closing documents for the farm purchase. The respondent testified that she relied on the statutory declaration in completing the transaction. In my view, there was ample evidence in the record to indicate that the appellant had a direct financial interest in the transaction, that he had special knowledge of the underground shared water supply, that he made the representation in the statutory declaration deliberately, and that he provided the statutory declaration in response to a specific request from the respondent. As such, I would agree with the trial judge – in the circumstances, the respondent’s reliance on the statutory declaration was reasonable.
C. the damages issue
[53] At trial, the respondent claimed business interruption losses in excess of $300,000 as damages caused by the appellant’s negligent misrepresentation. The trial judge rejected the approach to damages adopted by the respondent and her expert and instead performed his own calculation of damages. The appellant submits that the trial judge erred in law by effectively acting as his own damage expert.
[54] I would not accept this submission. Based on his review of the evidence, the trial judge calculated the respondent’s damages arising from the appellant’s misrepresentation by estimating that the respondent lost revenue from the sale of five turkey flocks between 2007 and 2009. The trial judge used the appellant’s 2006 revenues to calculate the approximate loss of revenue. He arrived at a figure for expenses by examining the respondent’s 2009 to 2011 income statements. In addition, after examining the exhibits, the trial judge estimated losses of $1000 per year to the respondent’s processed food business.
[55] In my view, the trial judge adopted an entirely reasonable – and perhaps somewhat conservative – approach to assessing the respondent’s damages arising from the appellant’s negligent misrepresentation. So long as there was evidence capable of supporting his calculation, which there was, it was open to him to do so: McLean v. Shedden, 2012 ONCA 860.
D. DISPOSITION
[56] Based on the foregoing reasons, the appeal is dismissed with costs to the respondent fixed at $22,000 inclusive of disbursements and applicable taxes.
Released:
“OCT 14 2014” “Janet Simmons J.A.”
“JS” “I agree J.C. MacPherson J.A.”
“I agree E.E. Gillese J.A.”
[^1]: The appellant drilled his own well on the adjacent property in the fall of 2007. Shortly before trial, he consented to the declaration that he was not entitled to a prescriptive easement.
[^2]: Section (19)(1.1) addresses the situation where the notice of appeal was filed prior to October 1, 2007. The notice of appeal in this case is dated June 7, 2013.
[^3]: Sepe v. Monteleone (2006), 2006 CanLII 1173 (ON CA), 78 O.R. (3d) 676 (C.A.), at paras. 7-8.
[^4]: Sepe, at para. 9.
[^5]: Mohammed (Personal Representative of) v. Tucci, 2009 ONCA 554, 97 O.R. (3d) 145, at paras. 16 and 23.
[^6]: In Mariani v. Lemstra (2004), 2004 CanLII 50592 (ON CA), 246 D.L.R. (4th) 489, at para. 20, this court observed:
The relationship between the [Vendor] and [Purchaser] was governed by a standard agreement of purchase and sale for real estate that explicitly excluded reliance upon any representations. Consequently, it is difficult to see why a separate Hedley Byrne duty of care in tort would not be excluded as well.