No active concealment of material facts

Ontario civil | Contracts


No active concealment of material facts

Action by plaintiff for damages for fraudulent misrepresentation, breach of fiduciary duty, insider trading, and oppression. Plaintiff was experienced businessman who hired defendant as executive assistant. Plaintiff and defendant became unequal partners in company that defendant was permitted to operate. Subsidiary of company acquired small brewery with $3.3 million from plaintiff. Defendant successfully operated brewery. Plaintiff eventually wanted to be bought out for $9 million. Creditor agreed to refinancing subject to preparation of valuation report. Valuator prepared report using information and projections provided by defendant. Refinancing resulted in defendant being sole owner of brewery after plaintiff was paid $9.3 million in full satisfaction of his interest in brewery. Brewery ended up performing better than expected. Plaintiff felt cheated when large brewery offered to buy defendant’s brewery. Action dismissed. Brewery’s unexpected success was not product of deceit or fraud. Further, there was no misrepresentation of fact made by defendant to valuator or to plaintiff. There was no active concealment of material facts or any conduct preventing or discouraging discovery of true state of affairs. Defendant had not taken advantage of plaintiff in any way. Forecasts were intrinsically uncertain and inaccurate. Plaintiff had not been induced to act as result of any false statement in valuation report. Plaintiff had named his price prior to valuation and was indifferent to valuation in report. Plaintiff had acknowledged valuation report was prepared for creditor rather than him. Neither creditor nor valuator alleged they had been misled. Plaintiff had independent legal representation. Plaintiff would not have expected to pay refund if brewery had not performed as well as expected. Plaintiff had not suffered any damages since no superior transaction had materialized before he sold his interest.

Fracassi v. Cascioli (May 30, 2011, Ont. S.C.J. (Comm. List), Pepall J., File No. CV-08-7730-00CL) 204 A.C.W.S. (3d) 65 (100 pp.).

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