Wednesday, June 20, 2012

Negligent misrepresentation and contributory negligence

The British Columbia Supreme Court in Neidermayer v. Gillies 2012 BCSC 143 reviews the relationship between negligent misrepresentation and contributory negligence at some length:

[111] The Court of Appeal in Chapeskie v. Canadian Imperial Bank of Commerce, 2004 BCCA 154 said:

[13] I am satisfied that findings of negligent misrepresentation and contributory negligence are not inconsistent in principle: see Avco Financial Services Realty Ltd. v. Norman, (2003), 226 D.L.R. (4th) 175 (Ont. C.A.). The question is whether the finding of contributory negligence can reasonably be supported on the facts of this case.

[112] In Citifund Capital Corp. v. Happy Valley Resort Ltd., 2010 BCSC 332, Humphries J. identified that contributory negligence can apply to negligent misrepresentation, but that it cannot relate to the reasonableness of the reliance. It was held:

112 The concept of contributory negligence can apply to a case of negligent misrepresentation (see Avco Financial Services Realty Ltd. v. Norman (2003), 64 O.R. (3d) 239 (Ont. C.A.), accepted by the British Columbia Court of Appeal in Chapeskie v. Canadian Imperial Bank of Commerce, 2004 BCCA 154 (B.C. C.A.)). However, the concept of contributory negligence cannot relate to the reasonableness of the reliance. That issue falls to be decided on the main question of whether there was reasonable reliance on the misrepresentation. The issue of contributory negligence arises in the consideration of whether the relevant party failed to consider that it may harm itself if it did not act reasonably and prudently. Neither party addressed this issue, each treating this case as "all or nothing" for their respective positions.

[113] The relationship between contributory negligence and negligent misrepresentation is aptly summarized in Avco Financial Services Realty Ltd. v. Norman, (2003), 64 O.R. (3d) 239 (Ont. C.A.) at para. 32:

[32] On the question of contributory negligence, the focus is on the event that occasioned the loss. The injured party's conduct, in all the circumstances surrounding that event, must be considered in order to determine whether it acted reasonably in its own interest or whether it contributed to the loss by its own fault. The circumstances surrounding the event that occasioned the loss, depending on the particular facts of the case, may be much wider in scope than the circumstances surrounding the negligent misrepresentation. Hence, at this stage of the inquiry, the reasonableness of the injured party's reliance on the misrepresentation must be assessed in the context of the event that occasioned the loss. According to the test for contributory negligence set out earlier at paragraph 26, the injured party will be found guilty of contributory negligence if it ought to have foreseen that it may harm itself by failing to act reasonably and prudently. In this context, the injured party's failure to act as a reasonable and prudent person may include a failure to guard against the foreseeable carelessness of others.

[Emphasis added.]

[114] The Ontario Court of Appeal also said:

[34] A similar result was reached in Spiewak, supra. A real estate agent was found liable in negligent misrepresentation in respect of incomplete and misleading information provided to prospective purchasers of an apartment building about the building's likely rental income. The plaintiffs relied on this information and entered into an agreement to purchase the building, as a result of which they sustained a loss. The plaintiffs, however, were found contributorily negligent because of their failure to consult a lawyer in respect of the transaction and their damages were accordingly reduced by 20%.

[35] It is my view that an approach that allows for the apportionment of fault in cases of negligent misrepresentation is not only consistent with the approach in other negligence cases, it is also consistent with the principle underlying the very concept of contributory negligence. This principle is rooted in a concern to do justice as between the parties; it was reiterated in Bow Valley, supra, where the court quoted with approval at para. 73 the words of Viscount Simon in Nance v. British Columbia Electric Railway Co., [1951] A.C. 601 at 611 (P.C.):

But when contributory negligence is set up as a defence, its existence does not depend on any duty owed by the injured party to the party sued, and all that is necessary to establish such a defence is to prove to the satisfaction of the jury that the injured party did not in his own interest take reasonable care of himself and contributed, by this want of care, to his own injury. For when contributory negligence is set up as a shield against the obligation to satisfy the whole of the plaintiff's claim, the principle involved is that, where a man is part author of his own injury, he cannot call on the other party to compensate him in full.

[Emphasis added.]


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