COURT OF APPEAL FOR ONTARIO
CITATION: Wen v. Gu, 2021 ONCA 259
DATE: 20210426
DOCKET: C67743
Benotto, Miller and Trotter JJ.A.
BETWEEN
Hao Wen
Plaintiff (Appellant)
and
Shi Gu, Robert Choi and Robins Appleby LLP
Defendants (Respondent)
Yixin Wang and J. Gardner Hodder, for the appellant
Jerome H. Stanleigh, for the respondent
Heard: April 20, 2021 by video conference
On appeal from the judgment of Justice William S. Chalmers of the Superior Court of Justice, dated November 4, 2019, with reasons reported at 2019 ONSC 7456.
REASONS FOR DECISION
Background
[1] In August 2016 the appellant, Hao Wen, purchased a restaurant from the respondent. The purchase price of $425,000 included a transfer of the lease, licences, and equipment. The closing was supposed to be October 25. However, the appellant alleged that the respondent had made misrepresentations entitling her to terminate the agreement. She alleged that during the negotiations, the respondent represented that the weekday sales revenues in the busiest month were $3,000 and the weekend revenues were $8,000. In fact, the revenues averaged to $1,000 and $4,000 respectively.
[2] The appellant commenced an action alleging fraudulent misrepresentation and frustration. The respondent counterclaimed for breach of contract.
[3] The appellant sought to establish that the representations as to revenue had been admitted. She filed a Request to Admit the following fact:
During the meeting of August 29, 2016 [the respondent] told [the appellant] that in the best month, the daily revenue for the Restaurant business was on average $3,000.00 on weekdays and approximately $8,000.00 on weekends.
In the context of paragraph 9 [sic] herein, “the best month” means the months of either May, June or July.
[4] In his Reply to Request to Admit, the respondent neither admitted nor denied paragraph 8 but admitted paragraph 9.
[5] During the respondent’s examination in chief at trial, his counsel referred to the Request to Admit:
Q. During the meeting of August 29, you told the [appellant] that the best month of daily revenue for the restaurant business was on average $3,000 on weekdays and approximately $8,000 on weekends.
A. Yes.
Decision below
[6] The trial judge found that the respondent did not make any misrepresentations which induced the appellant into signing the contract. His statements about the revenue and profits of the restaurant were accurate. She had been shown sales receipts for May 7 to July 31, 2016 which showed approximately $1,000 of revenue for weekdays and $4,000 for weekends. The trial judge added that even if the estimate of revenue had been inaccurate, “[the respondent] provided the actual sales receipts” to the appellant who had them before the agreement and she asked no questions. He added that, if the appellant relied on the respondent’s totals when the actual sales records had been provided, it was not reasonable for her to do so.
[7] The trial judge found that the appellant breached the contract and awarded the respondent the difference between the purchase price of $425,000 and the amount he eventually sold the restaurant for, rent for the two-month period after the closing date, and the sales commission he was required to pay for the new sale.
Issues
[8] The appellant submits that the trial judge erred by ignoring the factual admissions when he found there were no misrepresentations. She also argues that he erred in assigning responsibility to the appellant for not verifying the sales receipts given to her.
[9] The respondent submits that this is a case of buyer’s remorse. The appellant was not misled, and the trial judge made no palpable and overriding error in concluding that the sales receipts given to her were accurate.
Analysis
[10] We have concluded that the trial judge erred in two ways.
[11] First, the trial judge failed to refer to the admitted facts when he concluded that there was no misrepresentation. The estimates given by the respondent – that the average daily revenue in the restaurant’s best month was $3,000 on weekdays and $8,000 on weekends – could not be reconciled with the actual sales. These facts were admitted pursuant to r. 51.03 (Effect of Request to Admit) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, and the testimony of the respondent. The trial judge did not consider the effect of these admissions. Consequently, it is not possible to reconcile his finding that there was no misrepresentation with the admitted facts.
[12] Second, the trial judge erred by assigning responsibility to the appellant. He should not have relied upon the appellant’s lack of due diligence to find that there was no fraudulent misrepresentation: Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19, [2002] 1 S.C.R. 678, at paras. 67-69; Man Financial Canada Co. v. Keuroghlian, 2008 ONCA 592, at para. 45.
[13] The combined effect of these errors requires a new trial.
[14] The appeal is allowed, and a new trial is ordered.
[15] The costs ordered by the trial judge are set aside. In accordance with the parties’ agreement, costs of the trial below and the new trial will be determined by the next trial judge.
[16] Cost of the appeal are to be paid to the appellant fixed in the agreed upon amount of $20,000.00 all inclusive.
“M.L. Benotto J.A.”
“B.W. Miller J.A.”
“Gary Trotter J.A. ”