2003 SKQB 115 Q.B. A.D. 2002 No. 332 J.C.S. IN THE QUEEN’S BENCH JUDICIAL CENTRE OF SASKATOON BETWEEN: ARLEN DIENO and BLAIR’S FERTILIZER LTD. DEFENDANT M. W. Owens for the plaintiff J. C. Will for the defendant FIAT WILKINSON J. March 11, 2003 [1] This is a motion for summary judgment under Rule 485 of The Queen’s Bench Rules of Court governing simplified procedure. The plaintiff says his creditor wrongfully converted monies after full and final settlement of his account was agreed upon. In addition, the plaintiff seeks punitive damages for the defendant’s “high-handed and malicious behavior”. [2] The plaintiff owed the defendant monies for chemicals and fertilizer. In May, 2001 the plaintiff assigned to the defendant his future crop insurance benefits and Canadian Wheat Board payments for application on his outstanding account. Subsequent to this, the parties agreed to settle the debt for lesser sum. The defendant says it was induced to settle by the plaintiff’s false representation that: 1. Saskatchewan Government Insurance was suing him for between $250,000 and $300,000; 2. That the plaintiff would be found liable; and 3. That the plaintiff would likely make an assignment in bankruptcy rendering the defendant’s account uncollectible. [3] On June 8, 2001 the plaintiff’s farmhand had an accident while operating his employer’s unlicensed vehicle. An occupant of the other vehicle involved in the accident was critically injured and died. The plaintiff says that SGI advised him he would be personally responsible for all damages as the owner of an uninsured vehicle, and that damages in the range of $250,000 to $300,000 would not be uncommon in the circumstances but it would be ultimately head office decision. The plaintiff gave statement to SGI on June 26, 2001 and accepted responsibility, acknowledging it was his truck involved and it was unplated. [4] According to the plaintiff, in early July, 2001, he told the defendant’s manager that he had no money, and with the impending action by SGI against him for the recovery of damages due to his unlicensed vehicle being involved in fatal accident, he was not to pay anything to anyone given his impending bankruptcy. The plaintiff then offered the defendant $2,000 in full and final settlement of his account. [5] What follows is the defendant’s version of events. The defendant says he asked the plaintiff if he was being sued for sure, and the plaintiff responded it was going to happen. The defendant’s manager said he advised the plaintiff they would not be prepared to accept $2,000 to settle $15,600 account if there was no law suit. The plaintiff again represented that he was definitely being sued by SGI. It was only then that the defendant’s manager said it would accept the $2,000 offer. The manager says that on August 2, 2001 the plaintiff came into the defendant’s office and presented the $2,000 cheque. At that time, he again asked the plaintiff if the court case was happening and the plaintiff told him that it was. The defendant’s manager issued the receipt for the cheque, and, at the plaintiff’s request, signed the receipt “paid in full”. He says he did so on the understanding, and on the plaintiff’s representations, that the plaintiff was definitely being sued by SGI. He says he later learned that SGI had not commenced legal action against the plaintiff for $300,000, or any amount. In November, 2001 the plaintiff contacted him requesting cancellation of the crop insurance assignment. The defendant’s manager said he advised the plaintiff they were not prepared to forfeit the assignment if they were not sure the court case would ever happen. On December 13 the plaintiff’s counsel wrote to the defendant referring to the settlement that had been reached and requesting release of the assignment. In January, 2002 the defendant, who was by then in possession of cheques from crop insurance pursuant to the assignment, purported to treat the settlement as null and void and applied some of the funds to retire the plaintiff’s total indebtedness. The plaintiff seeks to recover all monies retained by the defendant in excess of the $2,000 settlement, as well as punitive damages for the defendant’s allegedly reprehensible conduct. [6] As it transpired, SGI did not initiate proceedings against the plaintiff until May 22, 2002. The amount ultimately claimed from the plaintiff was $17,660, far cry from the original estimate of potential liability. [7] The defendant says if there was an accord and satisfaction, it was avoided due to mistake of fact or misrepresentation. Some brief summaries of the applicable law can be found in the following citations: 1. compromise may be impeached where there is misapprehension of fact, which goes to the root of the compromise and is shared by both parties: See Foskett, The Law and Practice of Compromise, (3d ed.) (London: Sweet Maxwell, 1991) page 43, referred to in Vandekerhove v. Litchfield (1993), 1993 CanLII 660 (BC SC), 84 B.C.L.R. (2d) 252 (B.C. S.C.); and 2. An accord and satisfaction may be vitiated by misrepresentation, whether fraudulent or innocent: See: Chitty on Contacts (25th ed.) 1983, page 816; MacLeod v. Ruck (1985), 1985 CanLII 527 (BC CA), B.C.L.R. (2d) 35 (B.C. C.A.); Mahadeen v. Hassan, [1958] O.J. No. 187 (QL) (Ont. C.A.). [8] On the pleadings and materials before me, the defendant is relying on misrepresentation as the ground for vitiating the settlement agreement rather than mutual mistake, although this was raised in argument. If misrepresentation is the issue in the present case, then it is question whether the plaintiff made an active misrepresentation or was merely conveying an honestly held belief [formed on the basis of information provided to him by SGI], that certain result would follow in the future. It is question of whether he said he was currently being sued by SGI for $250,000 to $300,000, as the defendant asserts, or whether he merely indicated he was facing the prospect of such claim. Case law suggests that in order for the defendant to succeed, there must have been an operative misrepresentation regarding matter of fact. For example, it has been said that an erroneous statement of opinion honestly held by person qualified to hold such an opinion cannot constitute an innocent misrepresentation founding an action for rescission. See: Mayer v. Mayer (1993), 1993 CanLII 6861 (BC CA), 83 B.C.L.R. (2d) 87 (B.C. C.A.). [9] As noted in Mayer, it is in the nature of an opinion that it may later turn out to be wrong and those who rely on an expression of opinion must be taken to do so, accepting that it may be wrong. The Court of Appeal in that case said it may sometimes be difficult to decide whether representation was reasonably understood as statement of fact, rather than of opinion. [10] The following statement is found in Halsbury’s Laws of England, Vol. 31, 4th ed. (London: Butterworths, 1980) at 621, para. 1012 and illustrates the difficulty in even narrower terms. It states: If person who has only an opinion or information as to matter chooses to state it as fact, the statement is representation of the matter stated and the falsity of the representation is established by proof that the matter is not as stated, even though the representor may have genuinely held the opinion or believed the information. Sometimes statement which is apparently in the form of an opinion, or uses words tending to suggest that it is only an opinion, may be held to contain or imply statement of fact, and even from an expression of opinion there may be an implication that the speaker knows facts which justify the opinion or at least knows no facts showing it to be unjustified. [11] The difficulty in distinguishing between representation as to future events or expectations and representation as to existing facts is explored in different context in Kelly v. Lundgard (2001), 2001 ABCA 185 (CanLII), 95 Alta. L.R. (3d) 11 (Alta. C.A.) (whether medical report predicting full recovery in the future could constitute negligent misrepresentation) and in Douglas J. Queen v. Cognos Incorporated, 1993 CanLII 146 (SCC), [1993] S.C.R. 87 (whether remarks made by an employer to prospective employee related to “future expectations” or the outcome of future events rather than to an existing state of facts and, thus, could not constitute actionable misrepresentation). [12] In motion for summary judgment under the simplified procedure rules, the question is whether the issue can be resolved in the absence of cross-examination. In Freeman v. General Motors Acceptance Corp. of Canada Ltd. (1999), 1999 SKQB 193 (CanLII), 186 Sask. R. 104 (Q.B.), Barclay J. noted that Rule 485 is the departure from the ordinary test for summary judgment and has lower threshold. Summary judgment is to be granted notwithstanding there may be triable issue, unless the court is unable to decide the issues in the absence of cross-examination, or it would be otherwise unjust. [13] The fundamental tension in the evidence is on the issue of misrepresentation. The subtleties involved in making the distinction, factually and legally, as to whether the plaintiff’s remarks constituted an operative misrepresentation cannot, in my view, be resolved in the absence of cross-examination. The test set out in Caudle v. Louisville Sales Service Inc. et al. (1999), 1999 SKQB 276 (CanLII), 190 Sask. R. 73 (Q.B.) does not assist the plaintiff. In that case, Laing J. said at para. 4: ...the test is not whether there is contradictory evidence in the affidavit material filed, but rather, whether despite the contradictory evidence, the issue(s) can be decided in the absence of cross-examination and it would not otherwise be unjust to do so. One way that contradictory evidence can be decided in the absence of cross-examination is where for the purposes of the application the court accepts the defendant’s evidence wherever it conflicts with that of the plaintiff and still concludes the plaintiff is entitled to judgment.... [14] If accept the defendant’s evidence, then must assume the plaintiff represented, as statement of fact, that he was being sued by SGI for damages in the range of $250,000 to $300,000, even if the remaining remarks (that he would be found liable, and that he would likely make an assignment in bankruptcy rendering the defendant’s account uncollectible) were merely prognostic, or mere statement of opinion. [15] The plaintiff’s application for summary judgment is dismissed. A summary trial is hereby ordered. [16] Costs will remain in the cause.
Creditor and Debtor - Conversion - Punitive Damages FIAT. A motion for summary judgment under Queen's Bench Rule 485 governing simplified procedure. The plaintiff claimed the creditor wrongfully converted monies after a full and final settlement of his account for a lesser sum ($2,000 on a $15,600 account). He sought punitive damages for 'high-handed and malicious behaviour'. The plaintiff assigned his future crop insurance benefits and Canadian Wheat Board payments for application to his outstanding account in May 2001. In June 2001 a farmhand had an accident, while operating his employer's unlicensed vehicle. An occupant of the other vehicle in the accident was critically injured and died. The defendant says it was subsequently induced to settle the debt for a lesser sum by the plaintiff's false representation that SGI was suing him for between $200,000 and $300,000; that he would be found liable and would likely make an assignment in bankruptcy, making the account uncollectible. SGI initiated proceedings against the plaintiff in May 2002 claiming $17,660. The defendant contended that, if there was an accord and satisfaction, it was avoided due to mistake of fact or misrepresentation. HELD: The application for summary judgment was dismissed. A summary trial was ordered. Costs in the cause. Whether the plaintiff's remarks constituted an operative misrepresentation could not be resolved in the absence of cross-examination.