Granitile Inc. et al. v. Canada et al., (1998) 82 O.T.C. 84 (GD)

• Judge: Molloy, J.
• Court: Ontario Court of Justice General Division (Canada)
• Case Date: December 02, 1998
• Jurisdiction: Ontario
• Citations: (1998), 82 O.T.C. 84 (GD)

Granitile Inc. v. Can. (1998), 82 O.T.C. 84 (GD)

MLB headnote and full text

Temp. Cite: [1998] O.T.C. TBEd. DE.018

Granitile Inc., Granitile Limited Partnership, Nicholas Pirruccio and Stephano Sarazzi (plaintiffs) v. Her Majesty the Queen in Right of Canada, Her Majesty The Queen in Right of Nova Scotia, and the Attorney General for the Province of Nova Scotia (defendants)

(Court File No. 93-CQ-38679)

Indexed As: Granitile Inc. et al. v. Canada et al.

Ontario Court of Justice

General Division

Molloy, J.

December 2, 1998.

Summary:

The plaintiffs were Granitile Inc., Granitile Limited Partnership, and Pirruccio, the owner of the first two plaintiffs. The plaintiffs proposed to build a manufacturing plant in Cape Breton, Nova Scotia, with federal government financial support. Believing that the government assistance was secure, they began construction in 1988 and invested substantial personal funds in the project. In 1991, the government cancelled its commitment of support without ever having advanced any funding. This brought the project to an end before the plant ever got into production and the plaintiffs' investment was lost. The plaintiffs alleged government ineptitude and duplicity and claimed damages for breach of contract and misrepresentation as well as punitive damages. The plaintiffs did not claim any damages in respect of future profits, but only for their actual losses in terms of monies spent and liabilities incurred respecting the project.

The Ontario Court (General Division) allowed the plaintiffs' action in both contract and tort. The court awarded the following damages: to the plaintiffs, $1,810,681 plus interest; to Pirruccio, $284,750 plus interest; to Granitile, an amount equal to the sums due and owing for principal and interest to its creditors in respect of the project, to be determined by reference to a master; and to Pirruccio and Granitile Limited Partnership, jointly, $250,000 punitive damages.

Contracts - Topic 1324

Formation of contract - Implied acceptance - From silence - See paragraphs 117 to 118, 124.

Contracts - Topic 1484

Formation of contract - Collateral contracts - What constitutes a collateral contract - See paragraphs 124 to 129, 134.

Contracts - Topic 2253

Terms - Conditions and warranties - What constitutes a warranty - See paragraphs 124 to 129, 134.

Contracts - Topic 3502

Performance or breach - Obligation to perform - Good faith - Exercise of - See paragraphs 136 to 149.

Contracts - Topic 3516

Performance or breach - Obligation to perform - Discretion - Exercise of - See paragraphs 136 to 138.

Contracts - Topic 4005

Remedies for breach - Negligent breach - Availability of tort action - See paragraph 115.

Contracts - Topic 8406

Collateral agreements - General - What constitutes - See paragraphs 124 to 129, 134.

Crown - Topic 1241

Contracts with Crown - Breach by the Crown - General - See paragraphs 136 to 149.

Crown - Topic 1249

Contracts with Crown - Breach by the Crown - Damages - See paragraphs 192 to 206.

Damage Awards - Topic 766

Torts - Fraud and misrepresentation - Negligent misrepresentation - See paragraphs 192 to 206.

Damage Awards - Topic 1303

Contracts - Loan contracts - Unjustified withdrawal of loan offer - See paragraphs 192 to 206.

Damage Awards - Topic 2022

Exemplary or punitive damages - Crown - See paragraphs 198 to 206.

Damage Awards - Topic 2030.6

Exemplary or punitive damages - Breach of duty of good faith - See paragraphs 198 to 206.

Evidence - Topic 4702

Witnesses - Examination - Cross-examination - Adverse party - See paragraphs 22 to 23.

Evidence - Topic 4702.1

Witnesses - Examination - Cross-examination - Hostile witness - See paragraph 22.

Fraud and Misrepresentation - Topic 2508

Misrepresentation - General principles - Negligent misrepresentation - See paragraphs 153 to 191.

Practice - Topic 3679

Evidence - Affidavits - Use of - Admissibility - See paragraphs 25 to 26.

Torts - Topic 8988

Duty of care - Particular relationships - Negligent words - What constitutes negligent advice - See paragraphs 153 to 191.

Cases Noticed:

BG Checo International Ltd. v. British Columbia Hydro and Power Authority, [1993] 1 S.C.R. 12; 147 N.R. 81; 20 B.C.A.C. 241; 35 W.A.C. 241; 90 D.L.R.(4th) 577; [1993] 2 W.W.R. 321; 75 B.C.L.R.(2d) 145; 14 C.C.L.T.(2d) 233; 5 C.L.R.(2d) 173, refd to. [para. 115].

Grimsby Steel Furniture Co. v. Columbia Gramophone Co., [1922] O.W.N. 188 (H.C.), refd to. [para. 117].

Wiedman v. Walpole, [1891] 2 Q.B. 534, refd to. [para. 117].

Maple Leaf Portland Cement Co. v. Owen Sound Iron Works Co. (1913), 23 O.W.R. 907 (H.C.), affd. (1913), 24 O.W.R. 790 (C.A.), refd to. [para. 117].

Bentley (Dick) Productions Ltd. v. Smith (Harold)(Motors) Ltd., [1965] 1 W.L.R. 623 (C.A.), refd to. [para. 125].

Esso Petroleum v. Mardon, [1976] 1 Q.B. 801 (C.A.), refd to. [para. 125].

J.R.K. Car Wash Ltd. v. Gulf Canada Ltd. (1992), 46 C.P.R.(3d) 525 (Ont. Gen. Div.), refd to. [para. 125].

Queen (D.J.) v. Cognos Inc., [1993] 1 S.C.R. 87; 147 N.R. 169; 60 O.A.C. 1; 99 D.L.R.(4th) 626; 45 C.C.E.L. 153; 14 C.C.L.T.(2d) 113, appld. [para. 127].

LeMesurier v. Andrus (1986), 12 O.A.C. 299; 54 O.R.(2d) 1 (C.A.), refd to. [para. 140].

New Zealand Shipping Co. v. Société des Ateliers et Chantiers de France, [1919] A.C. 1 (H.L.), refd to. [para. 141].

Mason v. Freedman, [1958] S.C.R. 483, refd to. [para. 141].

Multi-Malls Inc. v. Tex-Mall Properties Ltd. (1980), 108 D.L.R.(3d) 399 (Ont. H.C.), refd to. [para. 141].

Gateway Realty Ltd. v. Arton Holdings Ltd. and LaHave Developments Ltd. (1991), 106 N.S.R.(2d) 180; 288 A.P.R. 180 (T.D.), affd. (1992), 112 N.S.R.(2d) 180; 307 A.P.R. 180 (C.A.), refd to. [para. 142].

Opron Construction Co. v. Alberta (1994), 151 A.R. 241 (Q.B.), refd to. [para. 143].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57; 61 D.L.R.(4th) 14; 35 E.T.R. 1; 44 B.L.R. 1, refd to. [para. 143].

Lister Ltd. (Ronald Elwyn) et al. v. Dunlop Canada Ltd., [1982] 1 S.C.R. 726; 42 N.R. 181; 41 C.B.R.(N.S.) 272; 135 D.L.R.(3d) 1; 18 B.L.R. 1; 65 C.P.R.(2d) 1, refd to. [para. 147].

Hedley Byrne & Co. v. Heller & Partners Ltd., [1963] 2 All E.R. 575; [1963] 3 W.L.R. 101; [1964] A.C. 465 (H.L.), refd to. [para. 151].

Anns v. Merton London Borough Council, [1978] A.C. 728; [1977] 2 W.L.R. 1024; [1977] 2 All E.R. 492 (H.L.), refd to. [para. 151].

Nielsen v. Kamloops (City) and Hughes, [1984] 2 S.C.R. 2; 54 N.R. 1; [1984] 5 W.W.R. 1; 29 C.C.L.T. 97; 8 C.L.R. 1; 10 D.L.R.(4th) 641, refd to. [para. 151].

Just v. British Columbia, [1989] 2 S.C.R. 1228; 103 N.R. 1; [1990] 1 W.W.R. 385; 41 B.C.L.R.(2d) 350; 18 M.V.R.(2d) 1; 64 D.L.R.(4th) 689, refd to. [para. 151].

Fletcher v. Manitoba Public Insurance Co., [1990] 3 S.C.R. 191; 116 N.R. 1; 71 Man.R.(2d) 81; 44 O.A.C. 81; 74 D.L.R.(4th) 636; 1 C.C.L.I.(2d) 1, refd to. [para. 153].

Spinks v. Canada (1996), 195 N.R. 184; 134 D.L.R.(4th) 223 (F.C.A.), refd to. [para. 153].

Ministry of Housing v. Sharp, [1970] 2 Q.B. 223 (C.A.), refd to. [para. 154].

Gadutsis v. Milne (1972), 34 D.L.R.(3d) 455 (Ont. H.C.), refd to. [para. 155].

H.L. & M. Shoppers Ltd., Moody, Moody, Stockman and Holmesdale v. Berwick (Town) and Sanford (1977), 28 N.S.R.(2d) 229; 43 A.P.R. 229; 82 D.L.R.(3d) 23 (T.D.), refd to. [para. 155].

Windsor Motors Ltd. v. Powell River (District) (1969), 4 D.L.R.(3d) 155 (B.C.C.A.), refd to. [para. 155].

Jung v. Burnaby (District) (1978), 91 D.L.R.(3d) 592 (B.C.S.C.), refd to. [para. 155].

Banque Financière de la Cité SA v. Westgate Insurance Co., [1989] 2 All E.R. 952 (C.A.), refd to. [para. 157].

Luo v. Canada (Attorney General) (1997), 33 O.R.(3d) 300 (Div. Ct.), refd to. [para. 158].

Longchamps v. Farm Credit Corp., [1990] 6 W.W.R. 536; 108 A.R. 115 (Q.B.), refd to. [para. 160].

Mason (V.K.) Construction Ltd. v. Bank of Nova Scotia and Courtot Investments Ltd., [1985] 1 S.C.R. 271; 58 N.R. 195; 8 O.A.C. 381, refd to. [para. 161].

Roberts (Patrick L.) Ltd. v. Sollinger Industries Ltd. and Ontario Development Corp. (1978), 84 D.L.R.(3d) 113 (Ont. C.A.), refd to. [para. 162].

Forbes et al. v. Saint John (City) et al. (1986), 73 N.B.R.(2d) 210; 184 A.P.R. 210; 33 B.L.R. 200 (T.D.), refd to. [para. 163].

Meates v. Attorney General, [1983] N.Z.L.R. 308 (C.A.), refd to. [para. 164].

Brown v. British Columbia (Minister of Transportation and Highways), [1994] 1 S.C.R. 420; 164 N.R. 161; 42 B.C.A.C. 1; 67 W.A.C. 1, refd to. [para. 167].

Swinamer v. Nova Scotia (Attorney General), [1994] 1 S.C.R. 445; 163 N.R. 291; 129 N.S.R.(2d) 321; 362 A.P.R. 321, refd to. [para. 167].

P.T.I. Holdings (1983), Ltd. v. Canada (1992), 51 F.T.R. 117 (T.D.), refd to. [para. 170].

Hill v. Church of Scientology of Toronto and Manning, [1995] 2 S.C.R. 1130; 184 N.R. 1; 84 O.A.C. 1; 126 D.L.R.(4th) 129, refd to. [para. 198].

Vorvis v. Insurance Corp. of British Columbia, [1989] 1 S.C.R. 1085; 94 N.R. 321; 58 D.L.R.(4th) 193; [1989] 4 W.W.R. 218; 36 B.C.L.R.(2d) 273; 90 C.L.L.C. 14,035; 25 C.C.E.L. 81, refd to. [para. 198].

Robitaille v. Vancouver Hockey Club Ltd. (1981), 124 D.L.R.(3d) 228 (B.C.C.A.), refd to. [para. 199].

Jackson v. Canadian Pacific Railway (1915), 24 D.L.R. 380 (Alta. C.A.), affd. (1915), 27 D.L.R. 86 (S.C.C.), refd to. [para. 199].

Brown v. Waterloo (City) Regional Commissioners of Police (1982), 136 D.L.R.(3d) 49 (H.C.), varied (1983), 150 D.L.R.(3d) 729; 43 O.R.(2d) 113 (C.A.), refd to. [para. 199].

Whiten v. Pilot Insurance Co. (1996), 132 D.L.R.(4th) 568 (Ont. Gen. Div.), refd to. [para. 199].

LaPointe et al. v. Canada (Minister of Fisheries and Oceans) et al. (1992), 51 F.T.R. 161; 4 Admin. L.R.(2d) 298 (T.D.), refd to. [para. 199].

Statutes Noticed:

Rules of Civil Procedure (Ont.), rule 53.07, rule 104(1), rule 104(2) [para. 23].

Authors and Works Noticed:

Belobaba, Edward, Good Faith in Canadian Contract Law, Special Lectures of the Law Society of Upper Canada (1985), p. 73 [para. 139].

Cheshire, Geoffrey Chevalier, and Fifoot, Cecil Herbert Stuart, The Law of Contract (13th Ed. 1996), p. 277 [para. 126].

O'Byrne, Shannon Kathleen, Good Faith in Contractual Performance: Recent Developments (1995), 74 Can. Bar Rev. 70, generally [para. 139].

Reiter, B.J., Good Faith in Contract (1983), 17 Valparaiso U.L. Rev. 705, generally [para. 139].

Schiff, Stanley A., Evidence in the Litigation Process (4th Ed. 1993), p. 267 [para. 22].

Waddams, Stephen M., The Law of Contracts (3rd Ed. 1993), p. 280 [para. 126].

Counsel:

Sam Laufer and Joe Laratta, for the plaintiffs;

Christopher Parke, for the defendant, Her Majesty the Queen in Right of Canada.

This action was heard on October 7-10, 16, 17, 20-24, 27-29, November 3-7, 10, 12, 13 and 17-19, 1997, by Molloy, J., of the Ontario Court (General Division), who released the following decision on December 2, 1998.