Fraudulent Misrepresentation

Fraudulent Misrepresentation

Jasmur Holdings Ltd v Taynton Developments Inc. 2016 BCSC 1902 reviewed inter alia the tort of fraudulent misrepresentation.

116.       The tort of fraudulent misrepresentation has four elements. They were recently summarized by the Supreme Court of Canada in Combined Air Mechanical Services Inc. v. Flesch 2014 SCC 8 (S.C.C.), at paragraph 21:

[21] From this jurisprudential history, I summarize the following four elements of the tort of civil fraud:

(1) a false representation made by the defendant;

(2) some level of knowledge of the falsehood of the representation on the part of the defendant (whether through knowledge or recklessness);

(3) the false representation caused the plaintiff to act;

and (4) the plaintiff’s actions resulted in a loss.

117      With respect to negligent misrepresentation, the elements were described in Queen v. Cognos Inc. [1993] 1 S.C.R. 87 (S.C.C.) at 110:

. . . (1) there must be a duty of care based on a “special relationship” between the representor and the representee; (2) the representation in question must be untrue, inaccurate, or misleading; (3) the representor must have acted negligently in making said misrepresentation; (4) the representee must have relied, in a reasonable manner, on said negligent misrepresentation; and (5) the reliance must have been detrimental to the representee in the sense that damages resulted. . . .

118      As Kirkpatrick J. said in PD Management Ltd. v. Chemposite Inc. 2006 BCCA 489 (B.C. C.A.), at paragraph 14:

[14] It is settled law that an alleged misrepresentation must pertain to a matter of fact. In MacMillan v. Kaiser Equipment Ltd., 2003 BCSC 672, aff’d 2004 BCCA 470, this Court dismissed the claims for damages for misrepresentation because “it is clear that each of the alleged representations relate to a future occurrence, and not to an existing state of events. A future offer . . . is not an actionable representation” (para. 85). 

137      The plaintiffs rely on D. Debenham, The Law of Fraud and the Forensic Investigator, 3rd ed. (Toronto: Carswell, 2012) at page 14 with respect to their claim of constructive fraud:

Constructive fraud does not require a proof of design to mislead or deceive another, but of some failure to perform an obligation in good faith, or in accordance with the intention of the parties, often out of self-interest. It is not simply bad judgment or negligence, but it is more – a failure to properly respect the rights of one who is vulnerable to the power of another. That vulnerability may be as a result of a preceding contractual obligation which has left one person at the mercy of another, or it may be as a result of the facts and circumstances of the particular case. Constructive fraud does not imply fault, in the sense of intentional misconduct, like actual fraud does. The standard for constructive fraud is objective, while actual fraud (also known as “fraud at law”) requires a subjective dishonest intention. Thus, in cases like Boardman v. Fhips and Regal (Hastings) Ltd. v. Gulliver, the courts have found constructive fraud where the defendants thought they were acting entirely properly, because the court found that their conduct did not comport the legal standard required of someone who had power over the affairs of another.

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