



COURT OF APPEAL FOR ONTARIO

CITATION: Wen v. Gu, 2021 ONCA 259

DATE: 20210426

DOCKET: C67743

Benotto, Miller and Trotter JJ.A.

BETWEEN

Hao Wen

Plaintiff (Appellant)

and

Shi Gu
, Robert Choi and Robins Appleby LLP

Defendants (
Respondent
)

Yixin Wang and J. Gardner Hodder, for
    the appellant

Jerome H. Stanleigh, for the respondent

Heard: April 20, 2021 by video conference

On
    appeal from the judgment of Justice William S. Chalmers of the Superior Court
    of Justice, dated November 4, 2019, with reasons reported at 2019 ONSC 7456.

REASONS FOR DECISION

Background

[1]

In August 2016 the appellant, Hao Wen, purchased
    a restaurant from the respondent. The purchase price of $425,000 included a
    transfer of the lease, licences, and equipment. The closing was supposed to be
    October 25. However, the appellant alleged that the respondent had made
    misrepresentations entitling her to terminate the agreement. She alleged that
    during the negotiations, the respondent represented that the weekday sales
    revenues in the busiest month were $3,000 and the weekend revenues were $8,000.
    In fact, the revenues averaged to $1,000 and $4,000 respectively.

[2]

The appellant commenced an action alleging
    fraudulent misrepresentation and frustration. The respondent counterclaimed for
    breach of contract.

[3]

The appellant sought to establish that the
    representations as to revenue had been admitted. She filed a Request to Admit
    the following fact:

8.       During the
    meeting of August 29, 2016 [the respondent] told [the appellant] that in the
    best month, the daily revenue for the Restaurant business was on average
    $3,000.00 on weekdays and approximately $8,000.00 on weekends.

9.       In
    the context of paragraph 9 [sic] herein, the best month means the months of
    either May, June or July.

[4]

In his Reply to Request to Admit, the respondent
    neither admitted nor denied paragraph 8 but admitted paragraph 9.

[5]

During the respondents examination in chief at
    trial, his counsel referred to the Request to Admit:

Q.      During the
    meeting of August 29, you told the [appellant] that the best month of daily
    revenue for the restaurant business was on average $3,000 on weekdays and
    approximately $8,000 on weekends.

A.      Yes.

Decision below

[6]

The trial judge found that the respondent did
    not make any misrepresentations which induced the appellant into signing the
    contract. His statements about the revenue and profits of the restaurant were
    accurate. She had been shown sales receipts for May 7 to July 31, 2016 which
    showed approximately $1,000 of revenue for weekdays and $4,000 for weekends.
    The trial judge added that even if the estimate of revenue had been inaccurate,
    [the respondent] provided the actual sales receipts to the appellant who had
    them before the agreement and she asked no questions. He added that, if the
    appellant relied on the respondents totals when the actual sales records had
    been provided, it was not reasonable for her to do so.

[7]

The trial judge found that the appellant breached
    the contract and awarded the respondent the difference between the purchase
    price of $425,000 and the amount he eventually sold the restaurant for, rent
    for the two-month period after the closing date, and the sales commission he
    was required to pay for the new sale.

Issues

[8]

The appellant submits that the trial judge erred
    by ignoring the factual admissions when he found there were no
    misrepresentations. She also argues that he erred in assigning responsibility
    to the appellant for not verifying the sales receipts given to her.

[9]

The respondent submits that this is a case of
    buyers remorse. The appellant was not misled, and the trial judge made no
    palpable and overriding error in concluding that the sales receipts given to
    her were accurate.

Analysis

[10]

We have concluded that the trial judge erred in
    two ways.

[11]

First, the trial judge failed to refer to the
    admitted facts when he concluded that there was no misrepresentation. The
    estimates given by the respondent  that the average daily revenue in the
    restaurants best month was $3,000 on weekdays and $8,000 on weekends  could
    not be reconciled with the actual sales. These facts were admitted pursuant to
    r. 51.03 (Effect of Request to Admit) of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194, and the testimony of the respondent. The trial judge did
    not consider the effect of these admissions. Consequently, it is not possible
    to reconcile his finding that there was no misrepresentation with the admitted
    facts.

[12]

Second, the trial judge erred by assigning
    responsibility to the appellant. He should not have relied upon the appellants
    lack of due diligence to find that there was no fraudulent misrepresentation:
Performance
    Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd.
, 2002 SCC 19,
    [2002] 1 S.C.R. 678, at paras. 67-69;
Man Financial Canada Co. v.
    Keuroghlian
, 2008 ONCA 592, at para. 45.

[13]

The combined effect of these errors requires a
    new trial.

[14]

The appeal is allowed, and a new trial is
    ordered.

[15]

The costs ordered by the trial judge are set
    aside. In accordance with the parties agreement, costs of the trial below and
    the new trial will be determined by the next trial judge.

[16]

Cost of the appeal are to be paid to the
    appellant fixed in the agreed upon amount of $20,000.00 all inclusive.

M.L.
    Benotto J.A.

B.W.
    Miller J.A.

Gary
    Trotter J.A. 


