Sunday, 11 December 2011

Fraudulent Misrepresentation - Presumption of Reliance

Also in Roy v. 1216393 Ontario Inc., 2011 BCCA 500, which is discussed in the previous post, the court briefly considered what is necessary to prove a fraudulent misrepresentation claim.  The trial judge dismissed the claim finding that although the plaintiffs proved a misrepresentation made with the intent to deceive them, "the evidence does not establish, on the balance of probabilities, the false statement materially induced the plaintiffs to act to their detriment”.

The court allowed the plaintiffs' appeal and sent the matter for a new trial, finding that the law in British Columbia is that "intention, materiality and causation of loss are proven, the burden of proving non-reliance shifts to the defendant":

[38]           However, it appears that in reaching his conclusion, the judge was not satisfied that the plaintiffs discharged the burden of proof because he stated that the evidence did not establish “on the balance of probabilities” that the plaintiffs were induced to act to their detriment.  The judge’s attention was not drawn to the decision of this Court in Sidhu Estate v. Bains1996 CanLII 3332 (BC CA), [1996] 10 W.W.R. 590, 25 B.C.L.R. (3d) 41 (C.A.), where, after reviewing the two lines of competing authority, Mr. Justice Finch (as he then was), on behalf of the Court, concluded:
[42]      I think the preferred view of the law in Canada is that once intention, materiality and causation of loss are proven, the burden of proving non-reliance shifts to the defendant.
[39]           Hence, the onus had shifted to Mr. Kretschmer to prove that the plaintiffs did not rely on his false statement to their detriment.  On my reading of his reasons, I am not persuaded that the judge would necessarily have reached the same conclusion if he had appreciated that the onus was on Mr. Kretschmer.
[40]           I would allow the cross appeal and direct that the new trial deal with the issue of Mr. Kretschmer’s liability as well as the Vendor’s liability.