Simon's Megalomaniacal Legal Resources

Torts - Negligent Misrepresentation

Negligent misreprentation is a mix of conventional negligence - with it's focus on 'duty of care', 'standard of care' and such - and misrepresentation, with it's unique features as an activity.

. Jakab v. Clean Harbors Canada, Inc.

In Jakab v. Clean Harbors Canada, Inc. (Ont CA, 2023) the Court of Appeal considers the test for negligent misrepresentation:

[28] In my view, the trial judge erred in law in dismissing the negligent misrepresentation claim. Although they have been variously stated, there are essentially five elements that must be shown to establish a negligent misrepresentation claim. Those five elements are stated as follows by the Supreme Court of Canada, in Queen v. Cognos Inc., 1993 CanLII 146 (SCC), [1993] 1 S.C.R. 87, at para. 34, and by this court in Mahendran v. 9660143 Canada Inc., 2022 ONCA 676, at para. 9:

(1) There is a “special relationship” between the person making the statement and the person hearing it;

(2) it is reasonable for the person hearing the statement to rely on it;

(3) the statement is untrue;

(4) the person was careless in making the statement; and

(5) the person who reasonably relied on the statement suffered damages.

. Mahendran v. 9660143 Canada Inc.

In Mahendran v. 9660143 Canada Inc. (Ont CA, 2022) the Court of Appeal considered elements of a claim for negligent misrepresentation, here whether a 'special relationship' existed to satisfy the proximity element of a duty of care:

[9] The motion judge also identified the correct legal test for negligent misrepresentation, which requires a plaintiff to show that (1) there is a “special relationship” between the person making the statement and the person hearing it; (2) it is reasonable for the person hearing the statement to rely on it; (3) the statement is untrue; (4) the person was careless in making the statement; and (5) the person who reasonably relied on the statement suffered damages: Queen v Cognos Inc., 1993 CanLII 146 (SCC), [1993] 1 S.C.R. 87, at para. 34.

[10] The issue of whether Nationwide owes the appellants a duty of care turns on whether they are in a special relationship of proximity. In Deloitte & Touche v. Livent Inc. (Receiver of), 2017 SCC 63, [2017] 2 S.C.R. 855, at para. 30, the Supreme Court confirmed that in cases of pure economic loss arising from negligent misrepresentation or performance of a service, the two determinative factors for establishing a special relationship are:

... the defendant’s undertaking and the plaintiff’s reliance. Where the defendant undertakes to provide a representation or service in circumstances that invite the plaintiff’s reasonable reliance, the defendant becomes obligated to take reasonable care. And, the plaintiff has a right to rely on the defendant’s undertaking to do so. [Emphasis added.]

. Madison Homes Cornell Rouge Limited v. Jiang

In Madison Homes Cornell Rouge Limited v. Jiang (Ont CA, 2022) the Court of Appeal considered an issue of misrepresentation:

[8] The misrepresentation alleged by the appellant is that the respondent’s sales representative told him that the prices for the homes would increase in the next phase of the development. However, as it turned out, they did not. The motion judge rejected the misrepresentation argument on a number of grounds. Among those grounds, he found that the alleged misrepresentation was not actionable because it was not a statement of fact, but rather a prediction and thus not information on which it would be reasonable to rely: Hembruff v. Ontario Municipal Employees Retirement Board (2005), 2005 CanLII 39859 (ON CA), 78 O.R. (3d) 561 (C.A.), at para. 76, leave to appeal refused, [2005] S.C.C.A. No. 549 and [2006] S.C.C.A. No. 3. He also found that there was no evidence that the statement, if made, did not reflect a belief that was honestly held by the sales representative who made it. He further found that there was no evidence the statement was negligently made.

. Wright v. Horizons ETFS Management (Canada) Inc.

In Wright v. Horizons ETFS Management (Canada) Inc. (Ont CA, 2020) the Court of Appeal sets out the elements of negligent misrepresentation:

[134] Both sections enhance the remedies available to investors under the common law. The common law tort of negligent misrepresentation requirements are as follows:

a. There must be a duty of care based on a “special relationship” between the representor and the representee;

b. The representation must be untrue, inaccurate, or misleading;

c. The representor must have acted negligently in making the representation;

d. The representee must have relied, in a reasonable manner, on the negligent misrepresentation; and

e. The reliance must have been detrimental to the representee in the sense that damages resulted.

Queen v. Cognos Inc., 1993 CanLII 146 (SCC), [1993] 1 S.C.R. 87, at p. 110.

[135] While at common law plaintiffs must demonstrate reasonable reliance, plaintiffs who proceed with a claim for statutory misrepresentation are not required to demonstrate reliance in order to recover damages: Securities Act, ss. 130(1), 138.3(1).

. Orr v. Metropolitan Toronto Condominium Corporation No. 1056

In Orr v. Metropolitan Toronto Condominium Corporation No. 1056 (Ont CA, 2014), a condominium lawsuit, the court commented as follows on the elements of the tort of negligent misrepresentation:

[42]Ms. Rainville’s claim against Brookfield and MTCC 1056 sounds in negligent misstatement or misrepresentation. The elements of that cause of action are set out in Queen v. Cognos Inc., 1993 CanLII 146 (SCC), [1993] 1 S.C.R. 87:

(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. (Para. 33, p. 110)

.....

[54] The standard of care applicable to negligent misstatement is that of an ordinary, reasonable and prudent person in the position of the representor, in the circumstances (Queen v. Cognos Inc., at p. 121, para. 56; Ryan v. Victoria (City), 1999 CanLII 706 (SCC), [1999] 1 S.C.R. 201, at para. 28). In other words, the representor must exercise such reasonable care as the circumstances require to ensure that the representation is accurate and not misleading (Queen v. Cognos, at p. 121, para. 56). What is reasonable must be determined on an objective basis with consideration for the context of the particular case, such as the likelihood of a foreseeable harm, the gravity of the harm, and the cost of avoiding the harm (Ryan, at para. 28). The court may consider “external indicators” of what is reasonable, such as custom, trade practice, and statutory or regulatory standards (Ryan, at para. 28).

In particular on the issue of the measure of damages for negligent misrepresentation, the court stated:

[109] The remedy for negligent misstatement is ordinarily to award damages to return the plaintiff to the position he or she would have been in had the misrepresentation not occurred (BG Checo International Ltd. v. British Columbia Hydro & Power Authority, 1993 CanLII 145 (SCC), [1993] 1 S.C.R. 12, at p. 37, para.46).

.....

[114] In my view, the Supreme Court’s approach to damages for negligent misstatement adopted in V.K. Mason Construction Ltd. is appropriate for this appeal. The Court adopted a measure of damages for negligent misrepresentation which recognized that a plaintiff can recover the value of its lost opportunity. In that case, a contractor claimed against a bank for negligent misrepresentation stemming from the bank’s advice that a property developer was adequately financed. The Court concluded that but for the bank’s misrepresentation, the contractor would have undertaken a different project on which it would have earned a profit. In other words, the bank’s misrepresentation caused the contractor to lose an opportunity to profit. The measure of damages was fixed as the anticipated profit the contractor lost as a result of the misrepresentation – in other words, its expectation damages.

. Singh v. Trump

In Singh v Trump (Ont CA, 2014) the Court of Appeal commented as follows on the elements of the tort of negligent misrepresentation:

[81] The motions judge was satisfied the plaintiffs had established four out of the five elements required to prove a claim of negligent misrepresentation, as set out in Queen v. Cognos, 1993 CanLII 146 (SCC), [1993] 1 S.C.R. 87: (1) the defendants owed them a duty of care; (2) the defendants made an untrue, inaccurate or misleading representation; (3) the defendants did so negligently; and (4) the plaintiffs suffered damage as a result. It was in this context that the motions judge described the Estimates as “deceptive documents” that were “replete with misrepresentations of commission, of omission, and of half-truth”. He explained, at para. 215: “Mr. Levitan had no training, experience, or justification from actual research to make any projections about the revenue streams for the new hotel in Toronto. What actually happened shows how inaccurate Mr. Levitan’s guesswork was.”

[82] Despite these strong words, the motions judge held that the plaintiffs failed to establish the fifth required element: that they reasonably relied on the misrepresentation.