



COURT OF APPEAL FOR ONTARIO

CITATION: Hanisch v. McKean, 2014 ONCA 698

DATE: 20141014

DOCKET: C57191

MacPherson, Simmons and Gillese JJ.A.

BETWEEN

Carla Hanisch

Plaintiff (Respondent)

and

Thomas William McKean
and Jane Marie Rita Lesaux

Defendants (
Appellant
)

F. Scott Turton, for the appellant

Gabrielle K. Kramer, for the respondent

Heard: June 10, 2014

On appeal from the judgment of Justice Guy P. Di Tomaso of
    the Superior Court of Justice, dated August 1, 2013, with reasons reported at
    2013 ONSC 2727.

Simmons J.A.:

[1]

The issues on appeal arise out of the respondents 1998 purchase of a
    97-acre hobby farm from the appellant.

[2]

Following the respondents purchase, the appellant and his wife retained
    a three-acre property adjacent to the farm. They built a retirement home on the
    adjacent property and have lived there full-time since 2008.

[3]

At the time of the respondents purchase, the appellant did not disclose
    to the respondent that an underground waterline originating from a spring on
    the farm supplied water to the farm as well as to the properties of some other
    neighbours. Further, the appellant did not disclose to the respondent that he
    believed that both he and the other neighbours supplied by the underground
    waterline were entitled to continue to receive water from the underground
    waterline.

[4]

Instead of disclosing the underground waterline and his expectations to
    the respondent, on the closing date of the sale of the farm property the
    appellant delivered a statutory declaration to the respondent in which the
    appellant made statements indicating, among other things, that he was not
    aware of any person or persons  having any claim or interest in the said lands
    or any part thereof adverse to or inconsistent with [his] title and that [he
    was] positive that none such exists.

[5]

The respondent learned about the underground waterline in June 2007 when
    one of the neighbours supplied by the underground waterline (the neighbour)
    reported receiving contaminated water. On receiving this information, the
    respondent immediately cancelled an order for 1000 turkey poults scheduled to
    be delivered to the farm within a couple of days. She subsequently interrupted
    her farming operation in other ways.

[6]

Soon after the neighbours report to the respondent, the respondents
    lawyer wrote to the neighbouring users of the underground waterline and
    requested that they stop using the water supplied by the underground waterline.
    In response to that request, the appellant immediately asserted a right to use
    the water.

[7]

In a proceeding involving the appellant, the respondent and the
    neighbour, the trial judge declared that the appellant and the neighbour do not
    have a prescriptive easement for the use of the water supply from the
    respondents land
[1]
and that the neighbour is not
    entitled to an injunction preventing the respondent from taking steps to
    interfere with the quality or quantity of the water supply.

[8]

However, the trial judge also concluded that the shared waterline from
    [the appellants property] to the [neighbours property] is a latent defect.
    Further, after finding that the appellant was not liable for fraudulent
    misrepresentation, the trial judge held that the appellant was liable for negligent
    misrepresentation. He awarded damages to the respondent in the amount of
    $25,500 together with costs against the appellant of $114,918.75. The parties
    included the findings concerning latent defect and fraudulent misrepresentation
    in the formal judgment.

[9]

Given that the damages award was premised on the finding of negligent
    misrepresentation, the main issues on appeal concern whether the trial judge
    made errors in that finding and in his damages award.

[10]

Before
    turning to those issues, I will deal with a preliminary issue raised by the
    respondent concerning this courts jurisdiction to entertain this appeal.

A.

The Jurisdiction Issue

(1)

The respondents argument

[11]

The
    respondent contends that this court lacks jurisdiction to entertain this appeal
    because the appeal relates solely to the damages awarded to her in the judgment
    in the amount of $25,500; the appeal does not relate to the non-monetary relief
    awarded in the judgment, namely, the declarations concerning
the use of the water supply
.

[12]

Under
    s. 19(1.2) of the
Courts of Justice Act
, R.S.O. 1990, c. C.43 (CJA),
    the Divisional Court has jurisdiction to entertain an appeal from a final order
    of a Superior Court judge for a single payment of not more than $50,000,
    exclusive of costs. Thus, the damages award forming the subject matter of this
    appeal falls squarely within the monetary jurisdiction of the Divisional Court.

[13]

The
    respondent does not dispute that the Divisional Court would have no
    jurisdiction over an appeal from the non-monetary aspects of the judgment
.
However, neither the appellant
    nor the neighbour appealed those aspects of the judgment. Accordingly, the
    respondent submits that this court has no jurisdiction over this appeal. I
    disagree.

(2)

Relevant provisions of the CJA

[14]

As
    the jurisdiction issue raises a question of statutory interpretation, I will
    begin this portion of my reasons by setting out the relevant provisions of the
    CJA, which define the jurisdiction of both the Court of Appeal and the
    Divisional Court.

[15]

Section
    6(1)(b) of the CJA gives the Court of Appeal jurisdiction over all appeals from
    a final order of a judge of the Superior Court of Justice, except an order
    referred to in s. 19(1)(a) of the CJA or an order from which an appeal lies to
    the Divisional Court under another Act:

6. (1) An appeal lies to the Court of Appeal from,



(b) a final order of a judge of the
    Superior Court of Justice, except an order referred to in clause 19(1)(a) or an
    order from which an appeal lies to the Divisional Court under another Act.

[16]

Sections
    19(1)(a) and 19(1.2) of the CJA describe the classes of Superior Court final
    orders from which an appeal lies to the Divisional Court under the CJA, where
    the notice of appeal was filed on or after October 1, 2007:
[2]

19. (1) an appeal lies to the Divisional Court from,

(a) a final order of a judge of the
    Superior Court of Justice, as described in the subsections (1.1) and (1.2).



(1.2) If the notice of appeal is filed on or after October 1,
    2007, clause (1)(a) applies in respect of a final order,

(a) for a single payment of not
    more than $50,000, exclusive of costs;

(b) for periodic payments that
    amount to not more than $50,000, exclusive of costs, in the 12 months
    commencing on the date the first payment is due under the order;

(c) dismissing a claim for an
    amount that is not more than the amount set out in clause (a) or (b); or

(d) dismissing a claim for an
    amount that is more than the amount set out in clause (a) or (b) and in respect
    of which the judge or jury indicates that if the claim had been allowed the
    amount awarded would have been not more than the amount set out in clause (a)
    or (b).

[17]

Other
    relevant provisions of the CJA include s. 6(2), which provides that the Court
    of Appeal has jurisdiction to hear appeals that lie to other courts when an
    appeal in the same proceeding lies and is taken to the Court of Appeal:

6. (2) The Court of Appeal has jurisdiction to hear and
    determine an appeal that lies to the Divisional Court or the Superior Court of
    Justice if an appeal in the same proceeding lies to and is taken to the Court
    of Appeal.

[18]

Rule
    61.07(1) of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194, may
    also be relevant to the overall statutory scheme in that it provides that a
    cross-appeal may be commenced to set aside or vary the order appealed from, or,
    if the appeal is allowed in whole or in part, to seek other relief or a
    different disposition than the order appealed from. I will say more later about
    the relevance of this provision.

(3)

Discussion

[19]

The
    specific question raised by the respondent concerns the meaning of final order
    as it appears in ss. 6 and 19 of the CJA. If final order can properly be read
    as referring to the particular term(s) of a final order that is/are under
    appeal, then the respondent is correct and this appeal lies to the Divisional
    Court.

[20]

However,
    if final order must be read as meaning the entire final order, irrespective
    of what portions of the final order are under appeal, then the respondent is
    incorrect and this court has jurisdiction to entertain this appeal.

[21]

I
    note at the outset that, when determining this courts jurisdiction over orders
    having both final and interlocutory aspects, this court has generally
    distinguished between the final and interlocutory aspects of the order: see,
    for example,
Albert v. Spiegel
(1993), 17 C.P.C. (3d) 90;
Cole v.
    Hamilton (City)
(2002), 60 O.R. (3d) 284. However, this distinction is
    required by s. 6(1)(b) of the CJA, which limits the appellate jurisdiction of
    the Court of Appeal to final orders.

[22]

In
    my view, two factors point strongly to the conclusion that final order, as it
    appears in ss. 6 and 19 of the CJA, must be read as meaning the entire final
    order, irrespective of what portions of the final order are under appeal.

[23]

First,
    in
Sepe v. Monteleone
(2006), 78 O.R. (3d) 676, at para. 6, this court
    described the purpose of section 19(1)(a) of the CJA as being to define an
    easily applied cut-off line for litigants to determine the proper appeal route
    in any particular case. Examining the overall scheme of ss. 6 and 19 of the
    CJA in the light of this purpose of s. 19, interpreting final order as
    meaning anything other the whole of the final order would not make sense.

[24]

When
    ss. 6(1), 6(2) and 19 are read in combination, it is apparent that the scheme
    of these sections is to give the Court of Appeal default jurisdiction over
    appeals from final orders of the Superior Court of Justice  subject only to
    the exceptions created by s. 19 of the CJA and other specific statutory
    provisions. Section 6(2) underlines the intention to give the Court of Appeal
    default jurisdiction by providing that, where more than one court has jurisdiction
    over appeals in the same proceeding, the Court of Appeal may assume
    jurisdiction over all appeals.

[25]

Considered
    in the context of this statutory scheme, it would not make sense to interpret final
    order as meaning anything other than the whole of the final order.

[26]

For
    example, in the context of an order made in matrimonial proceedings, if final
    order were interpreted as including the particular term(s) of an order that
    is/are under appeal, one spouse could be required to appeal the support award to
    the Divisional Court, whereas the other spouse could be required to appeal the
    equalization payment made under the same order to the Court of Appeal. While it
    is true that under s. 6(2) of the CJA, the Court of Appeal would have
    jurisdiction to entertain both appeals once the appeal of the equalization
    payment was filed, it is unlikely that the legislature intended that appeals
    would have to be transferred or truncated depending on which party was the
    first to deliver its notice of appeal.

[27]

When
    read in light of the purpose of s. 19, which is to provide an easily applied
    cut-off line for litigants to determine the proper appeal route in any
    particular case, it is my view that final order as it appears in ss. 6 and 19
    can only sensibly be interpreted as meaning the whole of the final order.
    Otherwise, the proper appeal route from an order could change, depending on the
    terms of the order and the grounds of the appeal or cross-appeal.

[28]

Second,
    in applying the four subparagraphs in each of ss. 19(1.1) and (1.2) of the CJA
    to determine which court has jurisdiction, this court has generally focused on
    the final order as a whole and not simply the aspect of the order under appeal
    or the amount claimed on appeal by individual parties. In doing so, this court
    has made it clear that each of the subparagraphs in ss. 19(1.1) and (1.2) are
    disjunctive and therefore must be considered separately.
[3]
However, although claims and counterclaims are not to be combined,
[4]
when applying each subparagraph, all of the claims (or counterclaims) are to be
    added together, even if claimed by more than one party,
[5]
in order to determine which court has jurisdiction. Such an interpretation puts
    the emphasis on the entire final order and not simply on the aspect of the
    final order under appeal.

[29]

So,
    for example, in
McManus v. Feldman Investments Ltd.
, [2003] O.J. No.
    5762, this court determined that it had jurisdiction over an appeal where the
    appeal related solely to punitive damages quantified at $16,750, but the total
    amount of the judgment was $148,143.

[30]

Similarly,
    in
Mohammed (Personal Representative of) v. Tucci
, 2009 ONCA 554, 97
    O.R. (3d) 145, this court held that for the purpose of applying ss. 19(1)(a)
    and 19(1.1)(c) or (d), the value of all the plaintiffs claims that were
    dismissed must be added together to determine the total amount of the dismissed
    claim. In that case, the plaintiffs sued for damages arising from the death of
    their infant son, alleging medical malpractice. The trial judge dismissed the
    action, but assessed the damages for each parent in an amount that fell within
    the jurisdiction of the Divisional Court. However, when those sums were added
    together, the total exceeded the jurisdiction of the Divisional Court, giving
    this court jurisdiction.

[31]

Based
    on the foregoing reasons, I am satisfied that final order as it appears in
    ss. 6 and 19 of the CJA refers to the whole of the final order and I would not
    give effect to the respondents preliminary objection concerning jurisdiction.

B.

The Negligent Misrepresentation
    Issue

(1)

The trial judges findings

[32]

The
    trial judge rejected the respondents claim for fraudulent misrepresentation
    because he was not satisfied that the appellant fraudulently intended to
    deceive [the respondent]. However, although the trial judge had reservations
    about the respondents claim for fraudulent misrepresentation, he had no
    reservations that [the appellant was] liable to [the respondent] for negligent
    misrepresentation.

[33]

The
    trial judges conclusion that the appellant was liable for negligent
    misrepresentation rests largely on the following findings:

·

on the closing date of the sale of the
    farm, in response to a requisition letter from the respondents solicitor, the
    appellant delivered to the respondent a statutory declaration
in which
    the appellant made statements indicating, among other things, that he was not
    aware of any person or persons  having any claim or interest in the said lands
    or any part thereof adverse to or inconsistent with [his] title and that [he
    was] positive that none such exists.
As the
    appellant was at all times aware that other users claimed a right to use that
    waterline, the appellant was careless and reckless as to whether his
    statutory declaration was true. Furthermore:

o

the statutory declaration was broadly worded  it was
    intended to protect not just against actual easements but also against the risk
    of persons with any claim or interest in the farm;

o

when the appellant delivered the statutory declaration, he
    was aware that both he and other users claimed an interest in ongoing use of
    the water supply from the farm;

o

the appellants knowledge about the waterline was
    inconsistent with his statement in the statutory declaration that he was
    unaware of any persons having any claim inconsistent with his title, and this
    made the statutory declaration false;

o

although the appellant read every clause in the statutory
    declaration with his long-time lawyer, the appellant did not inform his lawyer
    about the shared waterline;

o

all of the evidence supports not some misunderstanding on
    the part of the appellant, but rather the making of a statutory declaration
    when he knew it was untrue.

·

the statutory declaration was delivered
    as part of the closing documents for the farm purchase, was intended to be
    relied upon and was relied upon;

·

the respondents reliance on the
    statutory declaration was reasonable  she was unaware of the existence of the
    waterline and the appellant had delivered the statutory declaration to her with
    the intention that she rely upon it;

·

the respondents reliance on the
    statutory declaration was both intended and reasonable, and this was
    sufficient, in the circumstances of this transaction, to give rise to a duty of
    care;

·

in the face of his knowledge about his
    own claim and the claims of other users to ongoing use of the water supply from
    the farm, the appellant was careless and reckless in making the statutory
    declaration; and

·

the respondents reliance on the
    statutory declaration was detrimental to her and resulted in damage.

[34]

The
    appellant submits that the trial judge made several errors in making these
    findings.

[35]

First,
    the appellant submits that the trial judge erred in relying on a tortious duty
    of care distinct from the contract when the contract contained an entire
    agreement clause specifying that there was no representation, warranty,
    collateral agreement or condition, which [affected the] Agreement other than as
    expressed [therein].
[6]


[36]

Second,
    relying on
Central Trust Co. v. Rafuse
, [1986] 2 S.C.R. 147, the
    appellant argues that it was not open to the trial judge to make a finding of
    negligent misrepresentation when the parties relationship was premised on a
    contract (the agreement of purchase and sale for the farm) and their duties and
    obligations to each other flowed from that contract.

[37]

In
    this regard, the appellant notes that the agreement of purchase and sale for
    the farm contained a specific warranty indicating that the water system for the
    farm had operated satisfactorily during the appellants occupancy. The
    agreement also included as a schedule the most recent water report, which was completed
    in 1993.

[38]

According
    to the appellant, having bargained for specific terms relating to the water
    system in the agreement of purchase and sale, it was not open to the respondent
    to rely on something not provided for by the terms of the contract and seek a
    remedy in tort.

[39]

Moreover,
    the appellants contractual obligation was to deliver good title. As determined
    by the trial judge, he did so  neither the appellant nor the neighbour is
    entitled to a prescriptive easement or other relief entitling them to shared
    use of the waterline from the farm. Further, even assuming that the shared
    underground waterline was a right or interest in land, the respondent was a
bona
    fide
purchaser for value without notice, and such a purchaser takes title
    free of unregistered claims. According to the appellant, even if he had
    disclosed the existence of his claim to the shared waterline  and that of his
    neighbours  the potential claims were the respondents problem, not his. That
    is because the claims were ultimately found to be invalid and, as such, did not
    diminish the appellants title to the farm.

[40]

Third,
    the appellant argues that there was no basis for the trial judges findings
    that the respondent relied on the statutory declaration or that her reliance
    was reasonable.

[41]

I
    would not accept these arguments. In
Mariani v. Lemstra
(2004), 246
    D.L.R. (4
th
) 489, the plaintiff relied on an allegedly false
    representation contained in a listing agreement, a pre-contractual document
    that was not incorporated into the agreement of purchase and sale. Thus, the
    representation was external to the agreement of purchase and sale  and the
    very type of representation for which an entire agreement clause is intended to
    exclude liability.

[42]

In
    this case, the false statement was contained in a statutory declaration
    delivered as part of closing documents and in response to a requisition from
    the respondent. Such requisitions  and responses to them  were clearly
    contemplated by the agreement of purchase and sale.

[43]

In
    these circumstances, I fail to see how a separate
Hedley Byrne
duty
    of care in tort in relation to the false statement would be excluded by the
    entire agreement clause contained in the agreement of purchase and sale. The
    false statement was contained in a solemn declaration executed under oath and
    was delivered as part of a process contemplated by the agreement of purchase
    and sale.

[44]

Further,
    as found by the trial judge, the appellants duty of care arose specifically
    from the respondents foreseeable and reasonable reliance on the appellants
    representations contained in the statutory declaration. Since the appellants
    duty of care was not precluded by any specific term of the contract,
Central
    Trust

does not exclude concurrent liability in tort.


[45]

Concerning
    the appellants arguments about contractual terms and the fact that his
    contractual obligation was to deliver good title, I note that, as found by the
    trial judge, the statutory declaration was broadly worded. As the trial judge
    said, the statutory declaration was intended to protect the respondent against
    not only existing interests inconsistent with her title to the farm but also
    against the risk that there were persons with a claim against her title.

[46]

The
    appellant was just such a person  and he knew it. He knew he relied on the
    shared waterline originating at the farm and he knew he was claiming the right
    to continue to use it. In the face of this knowledge, he knew or ought to have
    known that his claimed right to use water from the farm property was a claim 
    in the said lands or any part thereof  inconsistent with [his] title.

[47]

The
    appellant therefore knew, or, at the very least, ought to have known, that his
    representation to the contrary, in a statutory declaration executed under oath,
    was false. In swearing the statutory declaration in the face of the knowledge,
    and in failing to consult with his long-time lawyer about the shared waterline,
    the appellant failed to exercise the reasonable care that the circumstances
    demanded. The trial judge was entitled to so find.

[48]

I
    am also skeptical of the correctness of the appellants submission that the
    respondent would have had no remedy in contract had the appellant disclosed the
    existence of the ultimately unsuccessful claims to a shared water supply in his
    statutory declaration.

[49]

In
    any event, that is not this case. The appellant acted negligently in delivering
    a false statutory declaration on closing. Moreover, he delivered the false
    statutory declaration in response to a requisition from the respondent  a
    requisition that was contemplated by the agreement of purchase and sale. Even
    if the appellant was entitled, under the terms of the agreement of purchase and
    sale, to delete the statement in the statutory declaration on which the
    appellant now relies, that is not what he did. Rather, he executed a solemn
    declaration under oath when he knew or ought to have known it was false and
    delivered it to the purchaser intending that it be relied upon. In these
    circumstances, I fail to understand the basis for the appellants claim that he
    cannot be held liable in tort.

[50]

Moreover,
    the respondents case is not a claim in contract founded on a gratuitous
    promise; rather, as determined by the trial judge, it is a claim in tort founded
    on negligent misrepresentation.

[51]

Finally,
    I reject the appellants submission that there was no basis for the trial judges
    findings of reasonable reliance by the respondent on the statutory declaration.

[52]

As
    the trial judge noted, the statutory declaration was delivered as part of the
    closing documents for the farm purchase. The respondent testified that she
    relied on the statutory declaration in completing the transaction. In my view,
    there was ample evidence in the record to indicate that the appellant had a
    direct financial interest in the transaction, that he had special knowledge of
    the underground shared water supply, that he made the representation in the
    statutory declaration deliberately, and that he provided the statutory
    declaration in response to a specific request from the respondent. As such, I
    would agree with the trial judge  in the circumstances, the respondents
    reliance on the statutory declaration was reasonable.

C.

the damages issue

[53]

At
    trial, the respondent claimed business interruption losses in excess of
    $300,000 as damages caused by the appellants negligent misrepresentation. The
    trial judge rejected the approach to damages adopted by the respondent and her
    expert and instead performed his own calculation of damages. The appellant
    submits that the trial judge erred in law by effectively acting as his own
    damage expert.

[54]

I
    would not accept this submission. Based on his review of the evidence, the
    trial judge calculated the respondents damages arising from the appellants
    misrepresentation by estimating that the respondent lost revenue from the sale
    of five turkey flocks between 2007 and 2009. The trial judge used the appellants
    2006 revenues to calculate the approximate loss of revenue. He arrived at a
    figure for expenses by examining the respondents 2009 to 2011 income
    statements. In addition, after examining the exhibits, the trial judge
    estimated losses of $1000 per year to the respondents processed food
    business.

[55]

In
    my view, the trial judge adopted an entirely reasonable  and perhaps somewhat
    conservative  approach to assessing the respondents damages arising from the
    appellants negligent misrepresentation. So long as there was evidence capable
    of supporting his calculation, which there was, it was open to him to do so:
McLean
    v. Shedden
, 2012 ONCA 860.

D.

DISPOSITION

[56]

Based
    on the foregoing reasons, the appeal is dismissed with costs to the respondent
    fixed at $22,000 inclusive of disbursements and applicable taxes.

Released:

OCT 14 2014                                   Janet
    Simmons J.A.

JS                                                   I
    agree J.C. MacPherson J.A.

I
    agree E.E. Gillese J.A.





[1]
The appellant drilled his own well on the adjacent property in the
    fall of 2007. Shortly before trial, he consented to the declaration that he was
    not entitled to a prescriptive easement.



[2]
Section (19)(1.1) addresses the situation where the notice of
    appeal was filed prior to October 1, 2007. The notice of appeal in this case is
    dated June 7, 2013.



[3]

Sepe v. Monteleone
(2006), 78 O.R. (3d) 676 (C.A.),
    at paras. 7-8.



[4]

Sepe
, at para. 9.



[5]

Mohammed (Personal Representative of) v. Tucci
,
2009
    ONCA 554, 97 O.R. (3d) 145,
at paras. 16 and 23.



[6]

In

Mariani
    v. Lemstra
(2004), 246 D.L.R. (4th) 489, at para. 20,
this court observed:

The relationship
    between the [Vendor] and [Purchaser] was governed by a standard agreement of
    purchase and sale for real estate that explicitly excluded reliance upon any
    representations. Consequently, it is difficult to see why a separate
Hedley Byrne
duty of care in tort would not be excluded as well.


