Stephen,

The reasoning (such as it is) on the negligence claim doesn't support
this award. Finch CJBC correctly states that damages for a negligent
misrepresentation are "reliance damages, that is putting the plaintiff
in their original position". Absent evidence that the plaintiff's
"original position" in this case would have included the option -
that, but for the defendant's inducement, she would have exercised -
of making an unsecured loan for the higher interest rate, there seems
to be no basis for this award on the negligence side of the claim.
The only rationale (in his analysis of the negligent misrepresentation
claim) given for awarding more than is his passing reference to La
Forest and McLachlin JJ's reliance in BG Checo upon "particular
circumstances or policy", but (again, in the context of the negligence
claim) Finch CJBC does not identify any "circumstances" as significant
or any "policy" as being implicated.

If, as it appears in his analysis of the breach of contract claim, his
decision is motivated by what he sees as an unjust enrichment of the
defendant, he should probably have just said so and disposed of the
claim on that basis without the additional strain on the negligent
misrepresentation side.

That's my two-bits at 5 am.

Cheers,

Russ


Quoting "Stephen Pitel" <spitel@uwo.ca>:

In /Smith v. Landstar Properties Inc./, 2011 BCCA 44 the
plaintiff loaned the defendant $100K. She was promised a return of 8%
and that her investment would be secured against certain properties.
The defendant did not, in fact, secure the loan, so it was unsecured.
The defendant paid the money back and paid the interest. The
plaintiff sued the defendant in contract and tort (misrepresentation)
for additional interest, arguing that the interest rate on an
unsecured loan would have been significantly higher (over 24%). The
defendant argued that the plaintiff had not suffered any loss: from a
financial perspective she got what she was promised.

The trial court awarded the plaintiff additional interest, based on
the spread between the unsecured interest rate and the 8% actually
paid. The British Columbia Court of Appeal affirmed, but on somewhat
different reasoning.

My sense, on only a preliminary assessment, is that the case provides
some interesting damage calculation issues. Is the answer right? Is
the reasoning right, in contract or tort? The main case relied on is
/Experience Hendrix LLC v. PPX Enterprises Inc./, [2003] EWCA Civ 323.

The case is at
http://www.canlii.org/en/bc/bcca/doc/2011/2011bcca44/2011bcca44.html

Stephen

--Dr. Stephen G.A. Pitel Associate Professor Goodmans LLP Faculty
Fellow in Legal Ethics 2010-11 Faculty of Law, The University of
Western Ontario