COURT OF APPEAL FOR ONTARIO

CITATION: Santos v. Sangwan, 2015 ONCA 822

DATE: 20151127

DOCKET: C60541

BEFORE: Laskin, Pardu and Roberts JJ.A.

BETWEEN

John Louis Santos

Applicant (Appellant)

and

Paramjit Sangwan and Print 911 Inc.

Respondents (Respondents)

COUNSEL:

Evan Moore, for the appellant

Harinder Dhaliwal and Harpreet Makkar, for the respondents

Heard and released orally: November 23, 2015

On appeal from the order of Justice David Price of the Superior Court of Justice, dated April 29, 2015.

ENDORSEMENT

[1] The appellant Santos appeals the dismissal of his application. Santos sold his print services business to the respondent Sangwan for $250,000. The purchase price was payable over time and secured by a promissory note. Sangwan made some of the payments but then refused to pay the balance owing of $94,600. Santos then brought an application under rule 14.05 for judgment on the promissory note. Both parties filed affidavits. Neither was cross-examined.

[2] The documents filed on the application show that in an email Santos had misstated the value of the equipment he owned. The email said the equipment was worth $100,000. The $100,000 figure assumed Santos owned a particular Xerox machine, said in a separate document to be worth $25,000. The machine was actually owned by Xerox.

[3] During the hearing of the application, the application judge commented that whether Santos had fraudulently misrepresented the value of the equipment was a "live issue". Counsel for Santos then urged the application judge to hear evidence on whether there had been a fraudulent misrepresentation. The application judge declined to do so. Instead he found:

I find that Mr. Santos made a fraudulent misrepresentation regarding the value of the equipment owned by the business and that this misrepresentation was material to Mr. Sangwan's entering into the share purchase agreement.

[4] On appeal Santos submits that the application judge misapplied the test for fraudulent misrepresentation and made palpable and overriding errors of fact that tainted his analysis. We generally agree with Santos' submissions. Accepting that Santos misstated the value of the equipment, the evidence falls short of showing that the misstatement was made recklessly or that it induced Sangwan to enter into the agreement. Notably, the email containing the alleged fraudulent misrepresentation was sent a week after the parties agreed on a $250,000 purchase price.

[5] For these reasons we think that the application judge erred in dismissing the application. On the other hand, it would be unfair simply to grant Santos judgment on his promissory note. In our view, the fair and just remedy is to make an order under rule 38.10 that the application proceed to trial. Santos should deliver a statement of claim and Sangwan may deliver a statement of defence and counterclaim.

[6] For these brief reasons the appeal is allowed and a trial is ordered. In our view, this is a case for no costs either of the application or of the appeal. This was a matter that called out for a trial in the light of the numerous factual disputes between the parties.

"John Laskin J.A."

"G. Pardu J.A."

"L.B. Roberts J.A."