



COURT OF APPEAL FOR ONTARIO

CITATION: Oberoi v. Newtek
    Automotive Inc., 2012 ONCA 179

DATE:  20120321

DOCKET: C52564

OConnor A.C.J.O., Simmons J.A. and Perell J. (
ad
    hoc
)

BETWEEN

Jay S. Oberoi and Jay-Kem Enterprises Inc.

Plaintiffs (Respondents and Cross-Appellants)

and

Newtek Automotive Inc., Quing Zheng, also known
    as Qing Zheng, and Jane Wu, also known as Shizhen Wu

Defendants (Appellants and Respondents to Cross-Appeal)

AND BETWEEN:

Newtek Automotive Inc.,
    Quing Zheng, also known as Qing Zheng, and Newtek International Inc.

Plaintiffs by Counterclaim (Appellants and Respondents to
    Cross-Appeal)

and

Jay S. Oberoi, Jay-Kem
    Enterprises Inc. and Partsmart Auto Parts Inc.

Defendants to Counterclaim (Respondents and Cross-Appellants)

AND BETWEEN:

Jay-Kem Enterprises Inc.

Plaintiff (Respondents and Cross-Appellants)

and

Newtek Automotive Inc.,
    Newtek International Inc., Quing Zheng, also known as Qing Zheng, Jane Wu, also
    known as Shizhen Wu, and Advanced Brake Products Ltd.

Defendants (Appellants and Respondents to Cross-Appeal)

Alan S. Cofman and Marc D. Isaacs, for the
    cross-appellants, Oberoi
et al.

Don Jack and Ryan Treleaven, for the respondent, Zheng

Heard and released orally:  March 15, 2012

On appeal from the judgment of Justice Arthur Gans of the
    Superior Court of Justice, dated July 23, 2010.

ENDORSEMENT

[1]

The respondents (collectively Zheng) purchased the business of the appellants
    (collectively Oberoi).  The trial judge found that Oberoi negligently
    misrepresented the value of the inventory of the business and awarded damages
    to Zheng.  The trial judge found that Zheng was contributorily negligent and
    reduced the award by 20 percent.

[2]

Oberoi does not challenge the trial judges finding with regard to the
    first three elements of the tort of negligent misrepresentation: see
Queen
    v. Cognos Inc.
, [1993] 1 S.C.R. 87
. 
    He argues, however, that the trial judge erred in finding that Zheng reasonably
    relied on the misrepresented value of the inventory (element 4) and that Zheng
    suffered a detriment as a result of such reliance (element 5).

[3]

We do not accept these arguments.  The trial judge heard evidence over
    the course of 14 days.  He concluded that the misrepresented value formed part
    of the equation in the overall sale process.  By this, he meant that the
    misrepresented amount was relied upon by Zheng in deciding to proceed with the
    contract as it had been negotiated.  Oberoi had asserted the value of the
    inventory on a number of occasions.  The trial judges finding of reliance was
    supported by the evidence.

[4]

Zheng argues that the trial judges finding of contributory negligence
    is inconsistent with his finding that Zhengs reliance was reasonable.  We do
    not agree.

[5]

A finding of contributory negligence is not necessarily inconsistent
    with a finding of reasonable reliance that is an element of the tort of
    negligent misrepresentation:
Avco Financial Services Realty Ltd. v. Norman
(2003), 64 O.R. (3d) 239 (C.A.).

Whether or not there is an
    inconsistency, will depend on the facts of a particular case.

[6]

There were two bases for the trial judges finding of contributory
    negligence in this case:  Zheng knew or ought to have known that Oberois books
    of accounts were wanting in accuracy and he opted to rely on Oberois October
    inventory which did not include valuations.

[7]

In our view, these findings were not inconsistent with the trial judges
    finding of reasonable reliance.  As became apparent at the trial, it was not
    possible to ascertain the value of the inventory from Oberois books of
    account.  Moreover, in the face of Oberois repeated representations as to the
    value of the inventory, it would have been unreasonable to expect Zheng to do
    the valuation of the inventory that Oberoi had failed to do in the course of
    his October taking of inventory. In other words, based on the evidentiary
    record, the findings of a negligent misrepresentation by Oberoi, which caused
    Zheng to act to his detriment, and contributory negligence by Zheng, who failed
    to act prudently in the circumstances, can co-exist.

[8]

Thus, on these facts, we are not persuaded that the trial judges
    finding of contributory negligence was inconsistent with his finding of
    reasonable reliance.

[9]

Next, Oberoi argues that Zheng did not suffer any detriment from his
    reliance on the misrepresentation because he would have closed the purchase in
    any event.  While that is correct, a fair reading of the trial judges reasons
    as a whole shows that the trial judge drew the inference that had Zheng been
    told the truth about the value of the inventory, he would have made a better
    deal.  As the trial judge put it, Zheng was not in the business to only break
    even.  The trial judge drew a similar type of inference to that drawn by the
    British Columbia Court of Appeal in
BG Checo International Ltd. v. British
    Columbia Hydro and Power Authority
, [1993] 1 S.C.R. 12 (S.C.C.), varying
(1990), 44
    B.C.L.R. (2d) 145
(B.C.C.A.).

[10]

In
    our view, this inference of detriment flowing from Zhengs reliance on the
    misrepresentation was open to the trial judge and we see no basis to
    interfere.

[11]

In
    the result, the appeal is dismissed with costs fixed in the amount of $15,000, plus disbursements of $1,511.31.

D. OConnor A.C.J.O.

Janet Simmons J.A.

Perell J. (
ad hoc
)


