Judge holds defendant personally liable for plaintiffs’ investment losses
The Ontario Court of Appeal has found no valid basis to extend the time to file a notice of appeal upon discerning no factual or legal error in a judge’s decision holding a defendant personally liable for fraudulent misrepresentation.
In Wiebe v. Smith, 2025 ONCA 794, the plaintiffs’ claim alleged that Ms. H and Mr. S, her ex-spouse and business partner, defrauded them by misappropriating real estate project funds. The plaintiffs obtained summary judgment against Mr. S and other defendants.
A trial tackled whether to hold Ms. H personally liable for the plaintiffs’ investment losses.
On Oct. 22, 2024, a judge issued a decision making adverse credibility findings against Ms. H, as she failed to call Mr. S as a trial witness or maintain records of the relevant transactions.
The judge held Ms. H personally liable for fraudulent misrepresentation via false representations to the plaintiffs. The judge relied on case law indicating that silence could constitute a misrepresentation or an adoptive admission of another individual’s representations.
The judge determined that Ms. H’s representations regarding the project’s viability and profitability recklessly disregarded their accuracy or truth, considering the risks arising from her and Mr. S’s lack of experience working on a build project of a similar magnitude.
Ms. H asked her trial counsel to appeal. Last Apr. 9, amid various personal issues, trial counsel informed Ms. H that she had failed to deliver a notice of appeal within the time required by the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
As moving parties, Ms. H and an investment company sought to extend the time to deliver their notice of appeal.
Extension denied
The Court of Appeal for Ontario denied the motion to extend the time to file the notice of appeal and awarded the respondents all-inclusive costs of $5,000.
First, Ms. H alleged that the judge should not have held her personally liable for fraudulent misrepresentation or drawn an adverse inference against her for failing to call Mr. S, given that this was her trial counsel’s error with far-reaching implications.
The appeal court pointed out that Ms. H knew that Mr. S had not agreed to testify. The appeal court saw no evidence suggesting that Ms. H had instructed her trial counsel to call Mr. S or that trial counsel did not heed this instruction.
The appeal court added that Ms. H failed to preserve and provide the business records relating to her business partnership with Mr. S to support her testimony.
Second, Ms. H argued that the judge should not have found that she was knowledgeable or reckless to the truth of Mr. S’s representations because she was merely silent when Mr. S had made these representations.
The appeal court saw no reversible error in the judge’s analysis on this point. The appeal court noted that the judge rejected Ms. H’s claim that she lacked knowledge of key project aspects upon considering her business experience and personal liability for guaranteeing the building mortgage.
