



COURT OF APPEAL FOR ONTARIO

CITATION: 2249659 Ontario Ltd. v. Sparkasse Siegen, 2018 ONCA
    371

DATE: 20180416

DOCKET: C62197

Watt, Pepall and Miller JJ.A.

BETWEEN

2249659 Ontario Ltd. and Rohwedder Canada Inc.

Plaintiffs

(Appellants)

and

Sparkasse Siegen and Thomas Magnete GmbH

Defendants

(Respondents)

Jonathan Lisus and James Renihan, for the appellants

Evan Tingley, for the respondent Sparkasse Siegen

P.A. Neena Gupta, for the respondent Thomas Magnete GmbH

Heard: October 25, 2017

On appeal from the judgment of Justice S.F. Dunphy of the
    Superior Court of Justice, dated April 29, 2016, with reasons reported at 2016
    ONSC 2066.

Pepall J.A.:

[1]

This appeal arises from the ruins of the turbulent economic times that
    gripped the automotive industry in 2008.  The appellant, Rohwedder Canada Inc.
    (RCI), was a casualty of those times.  Relying on a claim of negligent
    misrepresentation, it looked to blame the respondents for losses suffered.  The
    trial judge dismissed the action.  For the reasons that follow, I would dismiss
    the appeal.

Background Facts

[2]

Chrysler awarded Getrag Transmission Manufacturing LLC (Getrag), a
    subsidiary of Getrag A.G., a German manufacturer and, at the time, the worlds
    largest transmission company, a major contract for more than $500 million to
    design and manufacture automobile transmissions.  Getrag subcontracted with the
    respondent, Thomas Magnete GmbH (TM Germany), to manufacture certain valves.  In
    turn, TM Germany issued a purchase order, dated September 7, 2007, to purchase
    three automated custom-designed assembly lines from the appellant, RCI, a
    subsidiary of a German public company, for CAD $6.75 million. RCI accepted the
    order on September 12, 2007.  Payment was to be based on a series of
    milestones, two of which were subject to RCI providing a bank guarantee to
    secure RCIs obligation to refund the payment if it failed to deliver as
    promised.  The first guarantee was provided to TM Germany on October 8, 2007,
    and TM Germany paid RCI the first installment of $715,500 on November 8, 2007.

[3]

Due to NAFTA regulations, the valves had to be manufactured in North
    America.  TM Germany established a wholly-owned subsidiary, Thomas Magnete
    Canada Inc. (TM Canada), to operate the manufacturing facility in Cambridge,
    Ontario.  TM Germanys bank, Sparkasse Siegen (Sparkasse), lent funds and
    administered a financing facility of EUR $10 million, subject to various
    conditions, to TM Canada to set up the plant.  The loan was guaranteed by TM
    Germany and other related companies.  Sparkasse was granted a lien on the full
    balance in TM Canadas account at Sparkasse and a lien on the three assembly
    lines.  Sparkasse reserved the right to terminate part of the loan facility on
    the basis of, among other things, a significant deterioration in the asset
    situation of the end borrower [TM Canada].

[4]

RCI did not demand any guarantees from TM Germany.  The greater credit
    risk was being assumed by the purchaser, who would potentially be paying up to
    80% of the total price before anything at all was delivered by RCI.

[5]

TM Germany sought to transfer its purchase order with RCI to TM Canada. 
    This issue was not viewed as controversial by either TM Germany or RCI.  TM
    Germany sent an email dated December 17, 2007, addressed to Silvio Osim, RCIs
    sales manager:

Please find attached our PO 18658 TM Canada, dated from
    [2]007-12-15.  This order will
replace
PO 18658 from 2007-09-07.  The
    original we will send by Fedex tomorrow.  Please send me a copy back, confirmed
    and original signed by Fedex too. [Emphasis added.]

[6]

Osim relayed the request to Andries Mellema, RCIs president, stating
    that TM Germany had moved the purchase order to TM Canada.  Mellema responded by
    email to Osim saying: We need a guarantee from thomas [
sic
] Germany.

[7]

Osim replied to TM Germany on December 19, 2007, stating:

Following our conversation today, I would just like [to]
    summarize the discussion:

Since we are transferring the PO from [TM Germany] to [TM
    Canada,] we would need a letter from [TM Germany] that, in case of illiquidity
    of [TM Canada], [TM Germany] would assume the project completion and any
    outstanding payments to [RCI].  This request came to me from our Controller who
    was informed about this requirement from our Bank.

[8]

At trial, Osim conceded that the last sentence of this email was
    untrue.  RCIs bank had not made such a request.

[9]

TM Germany forwarded Osims email to its bank, Sparkasse.  Ms. Mueller,
    the manager at Sparkasse responsible for the TM Canada file, explained at trial
    that she was familiar with the type of comfort letter requested by RCI.  She
    crafted a response based in part on an earlier letter confirming project
    financing that was sent to an unrelated general contractor.  She did not
    testify that she drafted the letter on the basis that it was intended for RCIs
    bank.  She understood RCI would rely on the letter but could not know whether
    it was the only thing it relied on.  TM Germany then forwarded her letter by
    email to RCI on December 24, 2007.  TM Germanys email enclosing Sparkasses
    letter, stated:

[E]nclosed youll find a confirmation of our bank.  I hope, it
    will help you and your Controller, to have a better feeling.

[10]

The
    enclosed letter from Sparkasse stated:

[T]he project of setting up a new production site by our client
    Thomas Magnete Group in Cambridge / Ontario is financially supported by [Sparkasse].

We hereby confirm, that  in line with the project plan  the
    necessary funds including expenses for the purchase of production lines and
    machinery are in place.

[TM Germany] provided a guarantee in our favour regarding the
    projects financing scheme, thus accepting financial liability for the project.

[11]

Osim
    responded immediately, thanked TM Germany very much, and offered to send the
    signed purchase order immediately.  He did not consult with Mellema beforehand.

[12]

On
    January 10, 2008, RCI signed a new purchase order with TM Canada. Mellema
    testified that he understood that the required monies to pay RCI for the lines
    were irrevocably in place and that there was no concern that Sparkasse would
    pay the funds as they were guaranteed by TM Germany.  Mellema testified that if
    TM Canada had asked them to do the job in the first place, RCI would never have
    done it without a guarantee.  The trial judge did not find Osim and Mellemas
    testimony on their impressions regarding the December 24, 2007 email to be
    reliable or useful.

[13]

Thereafter,
    RCI rendered its invoices to TM Canada and received payment from that company.

[14]

Getrags
    relationship with Chrysler fell apart, and on October 18, 2008, Getrag
    announced that the deal with Chrysler was dead.  On November 17, 2008, Getrag
    filed for bankruptcy protection.  Sparkasse allowed one further payment of just
    under CAD $2 million to be released to RCI, but ultimately, the bank withdrew
    its financing to TM Canada on February 19, 2009.  TM Canada closed, and its
    assets were subsequently sold at auction.  In total, RCI received approximately
    80% of the total contract price from TM Canada.

[15]

The
    appellant, 2249659 Ontario Ltd., an inactive company controlled by Mellema,
    purchased RCI including the cause of action against Sparkasse and TM Germany
    for one Euro on the insolvency of RCIs parent company.  RCI is also now an
    inactive company.

[16]

In
    October 2010, the appellants sued Sparkasse and TM Germany for negligent
    misrepresentation.  They alleged that the Sparkasse letter had been, among
    other things, untrue, inaccurate, and misleading and had failed to disclose
    that Sparkasses financing was contingent on the financial health of TM
    Canada.  It claimed the respondents owed RCI the outstanding amount of $1,489,617.

Trial Judges Decision

[17]

The
    trial judge analysed five issues that were raised in the action, but for the
    purposes of this appeal, I need only address the first issue: RCIs claim of
    negligent misrepresentation.

[18]

The
    trial judge commenced his analysis with his credibility findings.  He found that,
    by and large, the respondents witnesses were credible.  He did not find the
    evidence of the appellants three witnesses to be reliable.  He attached very
    little weight to most of their testimony.

[19]

He
    then outlined the test for the tort of negligent misrepresentation, described
    in
Queen v. Cognos Inc.
, [1993] 1 S.C.R. 87, as follows:

a.

there must be a
    duty of care based on a special relationship between the representor and the
    representee;

b.

the
    representation in question must be untrue, inaccurate, or misleading;

c.

the representor
    must have acted negligently in making said misrepresentation;

d.

the representee
    must have relied, in a reasonable manner, on said negligent misrepresentation;
    and

e.

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

He then applied the elements of the test to the facts
    of the case.

[20]

First,
    he concluded that the appellant had established the first element of the test. 
    The respondents owed RCI a duty of care based on a special relationship.

[21]

Second,
    he found that the appellant had failed to prove the second element of the test,
    namely, that the representation was untrue, inaccurate, or misleading.

[22]

The
    appellant did not seriously dispute that the response it received from the
    respondents was true and it was.  The project financing was in place and TM
    Germany had provided a guarantee to Sparkasse.  The question was whether the
    response was misleading because of what it did not say.

[23]

The
    trial judge proceeded to interpret the request and the response.  Dealing with
    the former, he noted that the clear implication was that RCI had already agreed
    to the transfer of the purchase order.  No request for a guarantee from TM
    Germany was in fact made.  Indeed, the word guarantee was not even used; the
    reference to illiquidity did not necessarily refer to solvency concerns; a
    response addressing the existence and adequacy of project financing appeared objectively
    quite reasonable and responsive; and lastly, the reference to RCIs bank
    implied to an objective reader that, while RCI had no qualms about transferring
    the purchase order, it needed a letter for its banker.

[24]

The
    trial judge then turned to the enclosed Sparkasse letter.  While he accepted
    that a misrepresentation may arise if there is a failure to disclose
    information that, in context, rendered the statements, though literally true,
    misleading, he rejected the appellants characterization of the evidence as
    such.  He observed that Mellema had admitted on discovery that banks impose
    terms and conditions on their financing and may have the right to terminate
    financing arrangements if certain events occur.  In addition, Mellema
    summarized his understanding of the Sparkasse letter as follows: the bank
    confirmed that financing was in place; the bank was for the project; and TM
    Germany had provided a guarantee for the financing of that project to the bank.
    None of this was untrue, inaccurate, or misleading in context.   Moreover,
    these were sophisticated parties.  He wrote:

I find that RCI knew and expected that TM Germanys financing
    had normal commercial conditions attached to it and could not reasonably have
    assumed that such conditions would have required Sparkasse to continue
    advancing even in the face of the complete cancellation of the underlying
    project by Getrag or the bankruptcy of Getrag.

[25]

He
    stated that his conclusion was all the more evident if one considered the
    guileful and misleading nature of Osims original request attributing the
    requirement for a letter to RCIs bank.  Furthermore, discovery admissions
    confirmed that RCI understood that TM Germanys guarantee was to Sparkasse
    alone.  The guarantee underscored TM Germanys commitment to the project.

[26]

The
    trial judge then turned to the third element of negligent misrepresentation and
    concluded that the letter and email could not be considered to have been
    negligently made.  It was not unreasonable to respond to RCIs correspondence
    by providing an assurance of full project financing at the level of TM Canada. 
    The respondents had accepted Osims false assertion that he was trying to satisfy
    RCIs bank and provided a responsive reply.  Adequate project financing would
    be needed.  Moreover, RCI had immediately accepted Sparkasses letter and did
    not treat it as unresponsive.  In addition, RCI understood it had received a
    letter from Sparkasse and not from TM Germany.

[27]

The
    trial judge reasoned that RCI could not satisfy the fourth element of
    reasonable reliance either.  In reaching this conclusion, he relied on four
    factors.  First, the only reasonable reliance would have been in the context of
    satisfying the non-existent requirement of RCIs bankers.  He was unaware of
    any case where actionable negligent misrepresentation had been found in the
    face of a deliberately misleading request.  Second, he rejected RCIs evidence
    that it would never have agreed to a transfer of the purchase order had it
    known the full details of TM Canadas loan conditions or TM Germanys
    guarantee.  Third, there was no disparity of bargaining power, and fourth, it
    could not be reasonable to have relied on alleged omissions when those
    omissions were known to RCI. It made no inquiries to confirm the conditions of
    Sparkasses financing.

[28]

The
    trial judge assessed RCIs damages in the event he had erred in his analysis of
    negligent misrepresentation.  As I have concluded that the appeal cannot
    succeed, there is no need to address the damages analysis.

Grounds of Appeal

[29]

The
    appellants appeal has two overlapping prongs: the first is based on alleged
    factual errors and the second on a denial of procedural fairness.  For the
    following reasons, I would dismiss the appeal.

(1)

No Palpable and Overriding Errors

[30]

The
    appellants submit that the trial judge drew three core inferences that were unavailable
    on the record and therefore fell into reversible and palpable and overriding
    error.

[31]

Appellate
    intervention is warranted where an inference of fact is not supported by any
    evidence and where an improper inference has a material effect on the outcome:
1250264
    Ontario Inc. v. Pet Valu Canada Inc.
, 2013 ONCA 279, 115 O.R. (3d) 653, at
    para. 69 citing
Housen v. Nikolaisen
, 2002 SCC 33, [2002] 2 S.C.R.
    235, at paras. 22-23.

[32]

The
    trial judges reasons were admittedly long and occasionally strayed into areas
    that were not demanding of any commentary.  That said, the trial judge had a
    firm grasp of the facts and applied the correct law in analysing the negligent
    misrepresentation claim.

[33]

First,
    the appellant asserts that the trial judge made a palpable and overriding error
    in finding that Sparkasse and TM Germany sent the December correspondence
    understanding that it would be relied upon by RCIs bank rather than RCI. The
    appellants submit that this was not an available inference.  They emphasize
    that Mueller, Sparkasses representative who had drafted the banks letter, did
    not testify that she thought she was writing for the benefit of RCIs bank.

[34]

This
    is an overstatement of the trial judges finding.  He described the wording of
    RCIs email request as odd and then proceeded to describe some of its
    features.  He did so from an objective perspective, stating that, when
    referring to RCIs banks requirement, the clear implication to an objective
    reader was that RCI needed something to show its banker.  This was a
    reasonable conclusion.

[35]

Furthermore,
    Muellers testimony was not determinative.  The test for whether the
    representation in question is untrue, inaccurate, or misleading is an objective
    one of the effect that the statement would have had on a reasonable person in
    the circumstances of the representee.
Toronto Dominion Bank v. Leigh
    Instruments Ltd. (Trustee of)
, 40 B.L.R. (2d) 1 (Ont. C.J.), at para.
    471.  Also, in determining whether the representor acted negligently in making
    the alleged misrepresentation:

The standard of care to be exercised by the representor is the
    same standard as is applied in other negligence cases, that of the reasonable
    person.  This standard of care is an objective one, namely, what a reasonable
    person would do in the circumstances.  The duty requires not only that the representor
    be honest and truthful, but that the representor exercise such reasonable care
    as the circumstances of the case dictate, to ensure that representations made
    are accurate and not misleading.

Leigh Instruments Ltd.
, at para. 472.  See
    also
Cognos Inc.
,

at
    pp. 121-122, 125.


[36]

Read
    objectively, the trial judge did not misconstrue the RCI letter or the response
    received.  Importantly, Osim advised TM Germany that the requirement for a
    guarantee came from RCIs bank, and in TM Germanys email to Osim enclosing
    Sparkasse's letter, it is clear that TM Germany was responding to the request
    chain that allegedly proceeded from RCIs bank to RCIs Controller to Osim.

[37]

Secondly,
    the appellants contend that the trial judge erred in finding that RCI
    deliberately omitted the word guarantee in its request.  It was open to the
    trial judge to infer that the omission was deliberate.  Osim had been
    instructed to obtain a guarantee but the letter requested did not refer to a
    guarantee.  There was no suggestion of any inadvertence or oversight in this
    regard.  In the circumstances, it was fair for the judge to infer that the
    omission was deliberate.

[38]

Thirdly,
    the appellants submit that the trial judge erred in finding that RCI was not
    concerned about transferring the purchase order to TM Canada because it knew
    that Getrag was contractually obliged to indemnify TM Canada for its payment
    obligations.  Although the trial judges reference to an indemnity was not
    grounded in the evidence, the contract between TM Canada and RCI was in the
    context of a mega-project for Chrysler and Getrag.  The commercial reality was
    that there was a food chain of contracts of which RCI would be one
    participant.  Moreover, TM Canadas 2008 correspondence to Getrag and internal
    Sparkasse correspondence would suggest that some reimbursement arrangement for
    upfront costs was in place with Getrag.  In any event, although the trial
    judges reference to an indemnity appears to be in error, it was not palpable
    and overriding.  At most, it would relate to only one of the elements necessary
    to prove a claim in negligent misrepresentation.

[39]

In
    their factum, the appellants raised numerous other errors that were not pressed
    in oral submissions.  In particular, they allege that the trial judge erred in
    finding RCI knew that Sparkasse had imposed conditions on its financing and
    that RCI had agreed to move the purchase order to TM Canada before accepting
    the letter from Sparkasse.

[40]

I
    would not give effect to these submissions.  Mellema admitted on discovery that
    he knew that banks impose terms and conditions on their financing and that a
    bank may have the right to terminate its financing arrangements if certain
    events occur. He also admitted that he understood the Sparkasse letter to mean
    first of all, that the bank confirms that the financing is in place and
    secondly, that theyre for the project and  that [TM Germany] has provided a
    guarantee for the financing of that project to the bank.

[41]

The
    trial judge went on to find that RCI knew or ought to have known that TM
    Canadas financing was subject to conditions and made no inquiries about them.
    It was not reasonable to assume that there were no conditions simply because
    none were specifically identified. These were sophisticated parties. They knew
    or ought to have known that commercial project financing was subject to
    commercial lending conditions just as they knew that RCIs own financing was
    subject to conditions. The trial judges findings on this point were reasonable
    and available to him on the record.

[42]

As
    for the appellants complaint that there was no basis for the trial judge to
    determine that RCI had agreed to move the purchase order to TM Canada before it
    received the Sparkasse letter, the trial judge did not make this finding. He
    found that both parties understood that the transfer was something that was
    always intended and a matter of routine. This statement had ample evidentiary
    support.  Osim testified that during initial discussions, he acknowledged that
    the transfer of the purchase order to TM Canada was acceptable in principle. 
    He also wrote to Mellema on December 17, 2007, stating that TM Germany has
    moved the PO from [TM Germany] to TM Canada Inc.  Are there any clerical issues
    since we have invoiced them already 10 percent?  The trial judge interpreted
    Osims December 19, 2007 email  that starts with the statement, Since we are
    transferring the PO from [TM Germany] to [TM Canada]  as reflecting a lack of
    concern with TM Canadas status.   It did not reflect a temporal finding that
    RCI had already agreed to move the purchase order, as the appellants assert. 
    The trial judge found that RCI expected that the request to transfer the
    purchase order to TM Canada would be made and that RCI had given TM Germany no
    reason to believe it would be unfavourably received.  This proved to be the
    case.

[43]

Other
    alleged factual errors described in the factum were not pressed in oral
    submissions.  Suffice it to say that none rose to the level of palpable and
    overriding error.

(2)

No Denial of Procedural Fairness

[44]

The
    appellants complain that the trial judge made an atmospheric error.  They
    submit that the trial judge adopted a theory that RCI had guilefully tricked TM
    Germany and Sparkasse.  Instead of analysing the plain language of the
    correspondence and the principles in
Cognos Inc.
, the trial judge
    characterized Osim and his request as dishonest, guileful, and misleading  a
    narrative that was not advanced by the parties, was untethered from the
    evidence, and which improperly coloured his treatment of the correspondence and
    his analysis of the issues.

[45]

They
    particularly note the trial judges findings that: RCI deliberately omitted the
    word guarantee from the letter request; the respondents response was written
    for consumption by RCIs bank; Osim guilefully referred to its bank to extract
    a concession from TM Germany; and did so in circumstances where the concession
    was unnecessary since RCI had already agreed to transfer the purchase order
    based on its confidence in Getrags contractual obligation to indemnify TM
    Canada.  They emphasize that Mueller, Sparkasses representative who had
    drafted the banks letter, did not testify that she thought she was writing for
    the benefit of RCIs bank.

[46]

They
    submit that the appellants were caught by surprise by findings that reflected a
    theory of the case that was neither pleaded nor pursued at trial.

[47]

In
    rejecting these arguments, I make three observations.

[48]

First,
    the subject matter of the appellants complaints were addressed in the
    pleadings of the respondents and therefore gave the appellants notice of the
    respondents position in the action:

1)  RCI and its German parent were sophisticated international business
    entities.  Both knew at all material times that RCI had not obtained a
    guarantee or surety from the respondents of the debts and obligations of TM
    Canada.

2)    the appellants were attempting to draw unsustainable and
    unreasonable inferences from the December correspondence.

3)    no inquiry was made by the appellants for further details
    upon receipt by RCI of the December correspondence.

4)    the appellants knew or ought to have known that in modern
    commercial transactions between a lender and a borrower, there are inevitably
    terms and conditions which permit the lender to: (i) cancel the financing, (ii)
    refuse to advance funds, (iii) take and register security, (iv) require
    guarantees or other forms of written assurances, and (v) require priority as to
    the monies lent as against other creditors, such as trade creditors.

5)    RCI knew or ought to have known that Sparkasses
    relationship with TM Germany would be governed by terms and conditions.

6)    the December correspondence was requested by RCI simply
    to satisfy its bank and to the best of TM Germanys knowledge, the December
    correspondence did satisfy RCIs bank.  No further requests for information or
    documentation were made by the appellants.  The appellants were now seeking to
    construe a letter, drafted to meet the requirements of RCIs bank, in a manner
    in which it was never intended to be construed.

[49]

It
    is trite to say that the pleadings define the issues in the lawsuit.  Given the
    contents of the pleadings, there was no denial of procedural fairness.  The
    trial judges interpretation of the evidence was supported by the pleadings.

[50]

Secondly,
    counsels submissions at trial supported the theory pleaded and relied upon by
    the trial judge.

[51]

In
    submissions, counsel for TM Germany argued that the test for negligent
    misrepresentation is not what RCI understood the representation to be but what
    a reasonable person in all the circumstances of RCI would have understood. 
    Counsel for Sparkasse urged the trial judge to construe its letter in a manner
    responsive to Osims statement that the requirement emanated from RCIs bank. 
    TM Germany also advanced the argument that a sophisticated supplier in the
    position of the appellants would have known that there would be terms and
    conditions of financing or terms and conditions upon which a bank would revoke
    the financing.

[52]

I
    am unable to conclude that the trial judge constructed a new, unforeseen theory
    of the case.

[53]

Thirdly,
    and in any event, the appellants mischaracterize the trial judges statements. 
    On the issue of the omission of the guarantee from the letter, the trial judge
    wrote at paras. 58 and 162:

There may be any number of reasons why a guarantee was not
    requested.  Speculation can supply these and many other commercially reasonable
    explanations.  I am not required to decide why they did what they did.  I do
    conclude that the idea of asking for a guarantee came up internally and was not
    acted upon after a reflection period of two days.  While Mr. Mellema may have
    hoped that TM Germany would take the hint that Mr. Osim dropped and offer a
    guarantee, I find that he well knew that RCI had not in fact asked for one.



Secondly, despite Mr. Mellema having raised the subject of a
    guarantee from TM Germany with Mr. Osim internally two days earlier and
    despite the existence of requirements for
two
such guarantees from RCI
    in favour of TM Germany in the purchase order, no request for a guarantee from
    TM Germany was in fact made.  The parties all knew what a guarantee was  the
    words used were carefully chosen.  They may have been designed to hint that a
    guarantee might be offered, but none was actually requested.  The parties were
    discussing, however casually, the terms by which TM Germany would be released
    from the existing contract and TM Canada would assume it.  I attach
    considerable weight to the deliberate omission of the word guarantee from the
    communication sent by RCI and absolutely no weight to the testimony of RCIs
    witnesses suggesting that the request made amounted to the same thing.  It did
    not.

[54]

The
    trial judge did not find Mellema to be credible, attached little weight to his
    and Osims current recollections of discussions between the two men, and
    preferred the contemporary written record as being much more reliable.  RCI
    clearly did not request a guarantee. And Osim admitted that he did not use the
    word guarantee in the email.  It was a fair inference for the trial judge to
    conclude that this was a deliberate decision.  There was no denial of
    procedural fairness.

[55]

As
    for the trial judges statement describing the nature of Osims original
    request as guileful and misleading, the trial judge had already concluded that
    the respondents correspondence was not untrue, inaccurate, or misleading.  Indeed,
    the trial judge stated: 
This conclusion is all the more evident
if
    one considers the guileful and misleading nature of Mr. Osims original request
    attributing the requirement for a letter to RCIs bank (emphasis added). This
    characterization did not materially impact the trial judges conclusion. 
    Furthermore, Osims statement about RCIs bank was admitted to be false.  The
    trial judges finding, although superfluous, was nonetheless based on an
    inference that was available on the record.

[56]

The
    appellants other complaint relates to the trial judges reference to Getrags
    indemnity of TM Canada.

[57]

Mellema
    testified that Getrag was the largest company in the world producing
    transmissions for the automotive industry; and that for Getrag itself, it
    would be a large project, I understand that the Getrag project itself was more
    than $500 million.  He also testified that they had several customers that
    were involved with the project.  Although an indemnity was not pleaded and
    there was no express evidence on any indemnity from Getrag in favour of TM Canada,
    any finding in this regard would not have effected the ultimate dismissal of
    the negligent misrepresentation claim.

[58]

In
    my view, the appellant was not taken by surprise nor was there procedural
    unfairness that served to deny the appellants natural justice.

Conclusion

[59]

The
    fundamental issue in this case was whether there was a negligent
    misrepresentation arising out of an exchange of correspondence.  The trial
    judge concluded that the correspondence sent by the respondents was true and
    not misleading and he dismissed the appellants claim for negligent
    misrepresentation.  In my view, his analysis was properly grounded in the
    evidence, was responsive to the pleadings, and reflected no error in principle
    or any palpable and overriding error.

Disposition

[60]

For
    these reasons, the appeal is dismissed.

[61]

As
    agreed by the parties, the appellants shall pay TM Germany $15,000 and
    Sparkasse $10,000 in partial indemnity costs inclusive of disbursements and
    applicable taxes.

[62]

The
    appellants paid $72,776.57 into court as security for costs of the action and
    the appeal to the credit of Sparkasse and $165,302.98 to the credit of TM
    Germany.  These amounts reflect the June 20, 2016 costs award of the trial
    judge of $62,776.57 in favour of Sparkasse and $150,302.98 in favour of TM
    Germany plus the agreed upon appeal costs.  In light of the result, I would
    grant the respondents request that these funds be paid out of court as
    follows:

·

$72,776.57 plus accrued interest to Sparkasse; and

·

$165,302.98 plus accrued interest to TM Germany

Released:

DW                                                  S.E.
    Pepall J.A.

APR 16 2018                                    I agree
    David Watt J.A.

I
    agree B.W. Miller J.A.


