Soboczynski v. Beauchamp, 2015 ONCA 282

• Judge: Hoy, A.C.J.O., Epstein and Hourigan, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: Tuesday November 04, 2014
• Jurisdiction: Ontario
• Citations: 2015 ONCA 282;(2015), 333 O.A.C. 353 (CA)

Soboczynski v. Beauchamp (2015), 333 O.A.C. 353 (CA)

MLB headnote and full text

Temp. Cite: [2015] O.A.C. TBEd. AP.032

Adam Soboczynski and Olga Soboczynski (respondents) v. Don Beauchamp and Louise Beauchamp (appellants)

(C58106; 2015 ONCA 282)

Indexed As: Soboczynski v. Beauchamp

Ontario Court of Appeal

Hoy, A.C.J.O., Epstein and Hourigan, JJ.A.

April 23, 2015.

Summary:

The vendors and purchasers entered into the agreement of purchase and sale on November 21, 2007. Following the execution of the agreement, but before the transaction closed, the vendors, at the purchasers' request, completed and signed a Seller Property Information Statement (SPIS). In the SPIS, the vendors stated that the property was not subject to flooding. They also undertook to inform the purchasers of any "important changes" to the information contained in the SPIS based on events, if any, that took place prior to closing. On January 9, 2008, the basement of the house flooded, causing relatively minor damage. The vendors fixed the damage but did not disclose the incident to the purchasers. The transaction closed as scheduled on January 18, 2008. On February 6, 2008, the basement flooded again. After learning of the pre-closing flood, the purchasers sued the vendors for damages based on negligent misrepresentation, arguing that the SPIS required the vendors to disclose the January 9 flood to them.

The Ontario Superior Court, in a decision reported at [2011] O.T.C. Uned. 6791, dismissed the action. The purchasers appealed.

The Ontario Divisional Court, in a decision not reported in this series of reports, allowed the appeal. The vendors appealed.

The Ontario Court of Appeal allowed the appeal and restored the decision of the Superior Court.

Contracts - Topic 2116

Terms - Express terms - "Entire agreement" or "four corners" clause - The Ontario Court of Appeal discussed "entire agreement" clauses - See paragraphs 43 to 59.

Contracts - Topic 2116

Terms - Express terms - "Entire agreement" or "four corners" clause - The vendors and purchasers entered into the agreement of purchase and sale on November 21, 2007 - Following the execution of the agreement, but before the transaction closed, the vendors, at the purchasers' request, completed and signed a Seller Property Information Statement (SPIS) - In the SPIS, the vendors stated that the property was not subject to flooding - They also undertook to inform the purchasers of any "important changes" to the information contained in the SPIS based on events, if any, that took place prior to closing - On January 9, 2008, the basement of the house flooded, causing relatively minor damage - The vendors fixed the damage but did not disclose the incident to the purchasers - The transaction closed as scheduled on January 18, 2008 - On February 6, 2008, the basement flooded again - After learning of the pre-closing flood, the purchasers sued the vendors for damages based on negligent misrepresentation, arguing that the SPIS required the vendors to disclose the January 9 flood to them - The trial judge dismissed the action - The entire agreement clause in the agreement acted as a bar to the purchasers' action - The Divisional Court allowed the purchasers' appeal - The SPIS required the vendors to tell the purchasers about the pre-closing flood - They failed to do so - Further, the other elements of the tort of negligent misrepresentation had been made out - The vendors appealed - The Ontario Court of Appeal allowed the appeal and restored the decision of the trial judge - The entire agreement clause did not prevent the purchasers from advancing a claim in negligent misrepresentation - However, the claim still failed because they had not established the fourth element of negligent misrepresentation, i.e., reasonable reliance - See paragraphs 38 to 87.

Fraud and Misrepresentation - Topic 2508

Misrepresentation - General principles - Negligent misrepresentation - [See Contracts - Topic 2116].

Fraud and Misrepresentation - Topic 2535

Misrepresentation - Elements - Reliance - [See Contracts - Topic 2116].

Cases Noticed:

Krawchuk v. Scherbak et al. (2011), 279 O.A.C. 109; 106 O.R.(3d) 598; 2011 ONCA 352, leave to appeal refused (2011), 430 N.R. 396; 297 O.A.C. 395 (S.C.C.), refd to. [para. 20].

Dzourelov v. Bryk (T.B.) Management and Development Ltd. et al. (2004), 190 O.A.C. 321 (Div. Ct.), refd to. [para. 27].

Kaufmann v. Gibson et al., [2007] O.T.C. Uned. E35; 59 R.P.R.(4th) 293 (Sup. Ct.), refd to. [para. 28, footnote 2].

Usenik v. Sidorowicz et al., [2008] O.T.C. Uned. 613 (Sup. Ct.), refd to. [para. 28, footnote 2].

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, refd to. [para. 39].

Intrepreneur Pub Co. v. East Crown Ltd., [2000] 41 E.G. 209 (Ch.), refd to. [para. 44].

Shelanu Inc. v. Print Three Franchising Corp. (2003), 172 O.A.C. 78; 64 O.R.(3d) 533 (C.A.), refd to. [para. 48].

Shelanu Inc. v. Print Three Franchising Corp., [2006] O.A.C. Uned. 193; 19 B.L.R.(4th) 19 (C.A.), refd to. [para. 48].

Hedley Byrne & Co. v. Heller & Partners, [1964] A.C. 465 (H.L.), refd to. [para. 70].

Queen (D.J.) v. Cognos Inc., [1993] 1 S.C.R. 87; 147 N.R. 169; 60 O.A.C. 1, refd to. [para. 70].

Farmer v. H.H. Chambers Ltd., [1973] 1 O.R. 355 (C.A.), refd to. [para. 73].

Strand v. Emerging Equities Inc. et al. (2008), 425 A.R. 314; 418 W.A.C. 314; 37 B.L.R.(4th) 44; 2008 ABCA 23, refd to. [para. 73].

Rainbow Industrial Caterers Ltd. et al. v. Canadian National Railway Co. et al., [1991] 3 S.C.R. 3; 126 N.R. 354; 3 B.C.A.C. 1; 7 W.A.C. 1, refd to. [para. 84].

Authors and Works Noticed:

Fridman, Gerald Henry Louis, The Law of Contract in Canada (6th Ed. 2011), pp. 450 to 451 [para. 60].

Linden, Allen, and Feldthusen, Bruce, Canadian Tort Law (9th Ed. 2011), p. 473 [para. 72].

McCamus, John D., The Law of Contracts (2nd Ed. 2012), p. 733 [para. 45].

Ogilvie, M.H., Entire Agreement Clauses: Neither Riddle Nor Enigma (2009), 87 Can. Bar Rev. 642, generally [para. 47].

Perell, Paul M., A Riddle Inside an Enigma: The Entire Agreement Clause (1998), 20 Adv. Q. 287, pp. 290 to 291 [para. 46].

Swan, Angela, and Adamski, Jakub, Canadian Contract Law (3rd Ed. 2012), p. 600 [para. 45].

Counsel:

Benjamin G. Blay, for the appellants;

W. Scott Gallagher, for the respondents.

This appeal was heard on November 4, 2014, by Hoy, A.C.J.O., Epstein and Hourigan, JJ.A., of the Ontario Court of Appeal. The following judgment of the Court of Appeal was delivered by Epstein, J.A., on April 23, 2015.