



COURT OF APPEAL FOR ONTARIO

CITATION: Correct Building Corporation v. Lehman, 2018 ONCA
    462

DATE: 20180517

DOCKET: C64137

Pepall, Trotter and Paciocco JJ.A.

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
)

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

[1]

The appellant developer, Correct Group Inc.
    (CGI), appeals
[1]
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.

[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 Citys
    appraisal requirements changed.  It asked the respondents to prepare an
    appraisal analysis based on assumptions related to the appellants 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 appellants amended statement
    of claim, was the appellants 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 CGIs
    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.

[8]

The respondents brought a motion for summary
    judgment asking that the appellants 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 appellants
    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.

[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 appraisals 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.

[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.

[12]

The appellant also takes issue with the motion
    judges 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 YMCAs 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.

[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 appellants further proposal for the
    purchase of the property.  For the purposes of the appeal, it is unnecessary to
    determine whether Moores 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 appellants 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.

[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 judges 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 appellants agent when he
    received the appraisal, nothing turns on this, since the remaining claims cannot
    succeed.

[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 appellants 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.

[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.





[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 CBCs
    action against the respondents was brought to the motion judges attention and
    for greater certainty, he dismissed CBCs 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.


