Gosse-Millerd Ltd. v. Devine

for

DUFF J.-We have come to the conclusion that there must be a new trial; and consequently all unnecessary discussion of the facts will be avoided.

By an instrument of the 15th of March, 1925, the respondents, the Devines, leased a sawmill at Namu from the appellant company (a canning concern), and by agreements of the same date the Devines and the company (1) (1927) 38 B.C. Rep. 499.

mutually agreed, first, that the Devines were to manufacture all the box lumber in the yard of the mill into box shooks and to provide any additional lumber which might be necessary for that purpose, for which the appellant company was to pay at certain nominated rates; and, second that the Devines were to supply power for lighting and pumping, and steam for the cannery.

By the lease, the Devines covenanted to " take up " the appellant company's logging contracts, and in particular two specified contracts, of which one was with the Clayton Logging Company.

Three claims, based upon distinct alleged causes of action, were set forth in the statement of the counterclaim by the respondents: first, a claim based upon the allegation that the appellant company had induced the respondents to enter into the transactions mentioned, by falsely and fraudulently representing the contract with the Clayton Logging Company to be a subsisting contract at the date of the lease; second, a claim for damages for breach of the contract to take and pay for box shooks; third, a claim for damages arising from a series of malicious acts on the part of the appellant company, aimed, it is alleged, at compassing the ruin of the respondents.

The respondents in their factum admit that they failed to establish either the second or the third of these causes of action, and, as respects them, the counter-action should be dismissed; but we agree with the majority of the Court of Appeal that there was some evidence to go to the jury in support of the allegations of fraud, and, that accordingly the finding upon the issue raised by them cannot properly be set aside as perverse.

We are, however, constrained to the view that there was a mistrial. The charge was calculated to lead the jury to think that they might properly hold the appellant company responsible as for breach of the agreement to take and pay for box shooks under the contract of the 3rd of March; and, moreover, from some of the learned judge's observations, they may have received the impression that the respondents were entitled to reparation in respect of the alleged malicious acts, referred to above as constituting the respondents' third cause of action.

The jury did not disclose by their verdict how much (if any) of the damages awarded should be attributed to these /MB alleged causes of action now admitted to be without substance; and prima facie, therefore, the observations in the charge cannot be overlooked as innocious. In truth, they may have led the jury into substantial error. Upon both causes of action their respondents founded a claim for compensation for loss of profits in support of which evidence was copiously received-a claim which could not be supported upon the grounds stated in the pleadings, as the respondents now admit; nor, for reasons to be outlined, could such a claim be sustained for damages arising out of the fraud, according to the respondents' present contention. Yet, as the verdict was a general one, and as the learned trial judge gave the jury no guidance concerning the method by which damages should be measured, it is impossible to determine how far they may have deviated from the appropriate rule.

As already mentioned, the respondents alleged, by their statement of claim, that they had been induced to enter into the lease and the contemporary contracts, by the appellant company's fraudulent misrepresentations touching the Clayton Company's contract. Assuming the charge of fraud established, the respondents would be entitled to recover compensation for the loss arising naturally and directly from their assumption of the obligations of the lease and the contracts; but they were not entitled to be compensated for loss of profits which they might or would have made if the representations had been true, and which they did not realize because the facts stated to them were non-existent. The question for the jury was not, " How much would the respondents have gained in profits if the representations had been true," but, " What loss expressed in pecuniary terms, did the respondents suffer, that is directly ascribable to the transactions into which they were induced to enter?" McConnell v. Wright (1); Johnston v. Braham (2).

The respondents, if their allegations are well founded, were, on learning the true facts, entitled to repudiate the lease and the contracts; but they were not bound to do so, and having elected against repudiation, they were entitled to maintain an action for deceit, if the elements of such a cause of action were disclosed by the facts in evidence. Arnison v. Smith (1); Peek v. Derry (2); McConnell v. Wright (3); Goold v. Gillies (4).

The damages recoverable would include not only sums paid in execution of the obligations entered into, but also all loss reasonably incurred in carrying out those obligations or in measures reasonably taken for that purpose, allowance being made, of course, for moneys received and the pecuniary value of advantages gained.

It must be distinctly understood that nothing which has been said implies any opinion as to the effect or the weight of the evidence adduced either to support or to repel the charges of fraud, or upon any other question of fact within the province of the jury.

We have come to the conclusion that this is a case in which effect must be given to the British Columbia statute, R.S.B.C., c. 58, s. 55.

Having regard to the conduct of the trial and to the character of the learned judge's charge, we do not think the course taken by counsel for the defence was such as to disentitle.the appellant company from taking advantage of this enactment, although, in the special circumstances, there should be an exceptional order as to costs.

Therefore, as to the first of the above mentioned causes of action there will be a new trial, and as to the second and third causes of action the action will be dismissed.