Court of Appeal for Ontario

Date: 2018-05-17 Docket: C64137

Judges: Pepall, Trotter and Paciocco JJ.A.

Parties

Between

Correct Building Corporation and Correct Group Inc. Plaintiffs (Appellants/Respondents by way of cross-appeal)

and

Jeffrey Lehman, Jon Babulic, Richard Forward, Janet Foster, Charles Magwood, Edward Archer, Ingrid Peters, Deborah McKinnon, Jennifer Robinson, Metrolinx, Robert Stewart, Indicom Appraisal Associates Ltd., Alex Nuttal, Jerry Moore, Michael Prowse and The Corporation of the City of Barrie

Defendants (Respondents/Appellants by way of cross-appeal)

Counsel

Roman Krupnyk, for the appellants/respondents by way of cross-appeal

Roger J. Horst and Rafal Szymanski, for the respondents/appellants by way of cross-appeal Robert Stewart and Indicom Appraisal Associates Ltd.

Albert Formosa and Faren Bogach, for Jeffrey Lehman, Jon Babulic, Richard Forward, Janet Foster, Charles Magwood, Edward Archer, Deborah McKinnon, Jennifer Robinson, Alex Nuttal, Jerry Moore, and Michael Prowse

Heard: April 30, 2018

On appeal from: the order of Justice Michael G. Emery of the Superior Court of Justice, dated June 23, 2017.

Reasons for Decision

Overview

[1] The appellant developer, Correct Group Inc. ("CGI"), appeals from a summary judgment (i) dismissing its claims for conspiracy and negligent and fraudulent misrepresentation against the respondent appraisers, Robert Stewart and his company, Indicom Appraisal Associates Inc. (collectively, the "respondents"); and (ii) ordering a mini-trial on its claims of negligence, inducing breach of contract, and intentional interference with economic relations. The respondents seek leave to appeal the order for a mini-trial.

Factual Background

[2] In May 2009, the City of Barrie, the appellant, and the YMCA executed a document entitled "Preliminary Agreement" that addressed the development of property related to an old Allandale train station. This document provided that the finalization of an agreement of purchase and sale would be on terms to be negotiated. On September 17, 2009, the City requested a quotation from Indicom for an appraisal to assist the City in negotiations for the potential sale of the Allandale property.

[3] In January 2010, the YMCA withdrew from the development. The appellant modified its proposal such that the acreage of the site for development would be reduced.

[4] As a result of the changed proposal, the City's appraisal requirements changed. It asked the respondents to prepare an appraisal analysis based on assumptions related to the appellant's proposal. The respondents provided the appraisal to the City on August 20, 2010. The appraisal warned that a change in assumptions might change the stated value. The appraisal also contained limitations on use and certain limiting conditions. The respondents noted that no environmental factors affecting the property had been considered. The respondents cautioned that if placing reliance on the report, an expert qualified in environmental issues should be retained. In addition, the respondents noted in the report that an archeological survey had not been completed.

[5] The appraisal was for a value that was higher than the amount the appellant wished to offer, and the appellant took the position that the property was overvalued. Without the respondents' knowledge or permission, the City discussed the appraisal with CGI. The City also gave a copy of the appraisal to William Moore who, based on the appellant's amended statement of claim, was the appellant's financial consultant.

[6] On August 26, 2010, the principal of the appellant wrote to the City complaining about the appraisal. He admitted that by that date he was concerned about the accuracy of the appraisal and knew it contained a major flaw. Some months later, on November 12, 2010, Moore communicated CGI's offer to purchase the property for an amount less than the appraisal amount. The City rejected the offer.

[7] The appellant then sued the City, members of City Council, the respondents, and others on December 16, 2013. The appellant took the position before this court that it continued pointless negotiations with the City in reliance on an appraisal, which was based on assumptions that misrepresented the value of the property because it failed to consider environmental, archeological, and planning issues. They assert that the respondents knew or should have known important factors when completing the appraisal, such as, that the property was potentially environmentally contaminated and also was located on a First Nations' burial site. The appellant also brought separate proceedings in Orangeville against the City. In the Orangeville proceedings, Healey J. concluded that there was no agreement on essential terms between the City and the appellant after the signing of the Preliminary Agreement. The appeal of her order by the appellant was unsuccessful.

Motion Judge's Decision

[8] The respondents brought a motion for summary judgment asking that the appellant's claims be dismissed in their entirety. The motion was partially successful.

[9] The motion judge dismissed the claims for negligent and fraudulent misrepresentation and conspiracy. He reasoned that the claim for misrepresentation should be dismissed because the elements that anchor a claim in misrepresentation were absent – most notably, reasonable reliance. He concluded that there was no evidence to support the appellant's conspiracy claim, and in any event, it was statute-barred because the appellant knew of its claim as of August 26, 2010 and the action was commenced more than two years later. The appellant takes issue with these findings.

Court of Appeal Analysis

Misrepresentation Claims

[10] The motion judge made no error in finding that there was no reasonable reliance on the appraisal by the appellant. The respondents were retained by the City. By the appraisal's terms, there was no expectation that anyone other than the City would rely on it. More importantly, the evidence was clear that the appellant did not rely on the appraisal. The motion judge was correct in dismissing the claims for misrepresentation.

Conspiracy Claim

[11] The motion judge also correctly concluded that there was no evidence of any conspiracy between the respondents and the City. Indeed, the record before the motion judge was devoid of a shred of evidence that could reasonably support such a finding. The conspiracy claim was properly dismissed on that basis.

Mini-Trial Order

[12] The appellant also takes issue with the motion judge's determination that there is to be a mini-trial. The appellant submits that the order for a mini-trial should be set aside and the remaining causes of action should proceed to trial.

[13] We agree that the order for a mini-trial should be set aside but not for the reasons advanced by the appellant.

[14] The motion judge concluded that a mini-trial was necessary to ascertain (i) whether Moore was an agent of the appellant with knowledge that was deemed to be that of the appellant; (ii) whether the Preliminary Agreement was enforceable given YMCA's withdrawal; and (iii) whether the limitation period for the claims of negligence, inducing breach of contract, and wrongful interference with economic relations had expired.

[15] We see no reason for a mini-trial. On its face, the appraisal revealed its basis and limitations. Also, the limitation period would have commenced on August 26, 2010, when the appellant wrote to the City complaining about the appraisal.

Negligence Claim

[16] The essence of the negligence claim as pleaded is that the respondents negligently prepared an appraisal that attributed an unjustified value to the property thereby causing the City to resile from the Preliminary Agreement and to reject the appellant's further proposal for the purchase of the property. For the purposes of the appeal, it is unnecessary to determine whether Moore's knowledge in 2010 should be attributed to the appellants. Given the allegations in the Statement of Claim, the evidence before the motion judge, and the appellant's knowledge, the limitation period would begin to run in August 2010 when the appellant wrote complaining of the appraisal. Thus, the claim for negligence cannot succeed.

Inducing Breach of Contract and Wrongful Interference Claims

[17] Furthermore, the motion judge found that there was no reliance, no evidence of any purpose or intention to injure the appellant, and no evidence of any unlawful conduct by the respondents. Given the evidence, the motion judge's conclusions on reasonable reliance and his finding that there was no evidence that "Indicom was acting in combination with the City to produce its appraisal with the predominant purpose, or for that matter any purpose to cause injury to CGI, or that its conduct was unlawful" – the claims for inducing breach of contract and wrongful interference with economic relations have no possibility of success.

[18] Moreover, in the Orangeville proceeding between the City and the appellant, Healey J. determined that the Preliminary Agreement and any subsequent agreements were unenforceable. Before us, the appellant was unable to identify the particulars of any contract that the respondents could have conceivably breached. Furthermore, there is no evidence that the respondents had knowledge of the Preliminary Agreement. In fact, the evidence is to the contrary.

[19] In addition, the issues identified for the mini-trial would have changed nothing. Although, based on the pleading, it is difficult to imagine that Moore was not acting as the appellant's agent when he received the appraisal, nothing turns on this, since the remaining claims cannot succeed.

Disposition

[20] For these reasons, the appeal of the dismissal of the conspiracy and misrepresentation claims is dismissed. The order for a mini-trial is set aside, and the remaining claims are dismissed as well. See Chidley-Hill v. Daw, 2010 ONCA 835, 271 O.A.C. 135. This includes any breach of confidence claim against the respondents that the appellant claims to have pleaded. The respondents moved for dismissal of the appellant's entire claim against them, and there is no evidence to support a breach of confidence claim against them.

[21] Given our disposition of the appeal, there is no need to address the jurisdictional issue relating to the cross-appeal or the cross-appeal itself as those issues are subsumed by the main appeal and hence moot.

Costs

[22] The appellant shall pay the respondents' costs of the appeal on a partial indemnity scale, fixed in the amount of $50,000 inclusive of disbursements and applicable taxes. There shall be no separate costs award for the cross-appeal. The Barrie personal defendants shall bear their own costs of the appeal and cross-appeal. The costs below are referred back to the motion judge for determination.

S.E. Pepall J.A.

G. Trotter J.A.

David M. Paciocco J.A.

Footnote

[1] Correct Building Corporation ("CBC"), the sole shareholder of CGI, also appealed from the judgment. However, before the motion judge, counsel advised that CBC was no longer a plaintiff. No order dismissing CBC's action against the respondents was brought to the motion judge's attention and for greater certainty, he dismissed CBC's action against them. Both CBC and CGI were included as appellants in the amended, amended notice of appeal but only CGI was advanced as an appellant on the appeal itself and in the factum filed.