Tort of Civil Fraud

Gladu v Robineau, 2017 ONSC 37 (CanLII)

[276] Anson on Contract defines fraud as:

Fraud is a false representation of fact, made with a knowledge of its falsehood, or recklessly, without belief in its truth, with the intention that it should be acted upon by the complaining party, and actually inducing him to act upon it.

See Parna v. G. & S. Properties Ltd., 1970 CanLII 25 (SCC), (1971) S.C.R. 306, p. 316.

[277] At para. 87 of Hryniak v. Mauldin, 2014 SCC 7 (CanLII), (2014) 1 S.C.R. 87, the Supreme Court of Canada set out what a plaintiff must prove, on a balance of probabilities, in order to succeed on a claim for civil fraud:

(a) A false representation by the defendant;

(b) Some level of knowledge of the falsehood of the representation on the part of the defendant (whether knowledge or recklessness);

(c) The false representation caused the plaintiff to act; and

(d) The plaintiff’s actions resulted in a loss.

[278] The Ontario Court of Appeal has confirmed, in Krawchuk v. Scherbak, 2011 ONCA 352 (CanLII), 106 O.R. (3d) 598, that silence and half-truths can amount to fraudulent misrepresentation, and that, “once a vendor ‘breaks his silence’ by signing the SPIS, the doctrine of caveat emptor falls away as a defence mechanism and the vendor must speak truthfully and completely about the matters raised in the unambiguous questions at issue.”: see para. 77.

[279] In addition to silence and half-truths that mislead or imply something that is not true, active concealment “by the vendor of defects which otherwise would be patent is treated as fraudulent…” and will make the defence of caveat emptor unavailable: see Halsbury’s Laws of England, 4th ed. vol. 42 Reissue (London: Butterworths, 1998), at para. 46.

[280] The person relying on the representation is entitled to so rely. A waiver of a home inspection is not a waiver of the right to rely on the representations made.

[281] Dealing with the truth or falsity of a representation, the court in Curtis v. Chemical Cleaning and Dyeing Co., Ltd., [1951] 1 K.B. 805, [1951] All. E.R. 631 (C.A.), at p. 634, had this to say: A representation might be literally true but practically false, not because of what it said, but because of what it left unsaid. In short, because of what it implied. This is as true of an innocent misrepresentation as it is of a fraudulent misrepresentation.

[282] A defence of lack of due diligence is not available in a fraud case. This was clearly explained in May v. Platt, [1900] 1 Ch. 616, at p. 623:

The appellants concept of a due diligence defence in a fraud case was rejected over 125 years ago by Lord Chelmsford L.C. who said, “when once it is established that there has been any fraudulent misrepresentation or wilful concealment by which a person has been induced to enter into a contract, it is no answer to his claim to be relieved from it to tell him that he might have known the truth by proper inquiry. He has a right to retort upon his objector, ‘You, at least, who have stated what is untrue, or have concealed the truth, for the purpose of drawing me into a contract, cannot accuse me of want of caution because I relied implicitly upon your fairness and honesty’”: Central R. Co. of Venezuela v. Kisch (1867), L.R. 2 H.L 99 at pp 120-21.