In a recent decision, the Ontario Court of Appeal overturned a lower court decision that dismissed an action on a summary judgment motion. Significantly, the motion judge had dismissed the entirety of the claim, even though the Plaintiffs had moved for judgment on only a portion of it.
The Plaintiffs were unsophisticated investors, who purchased units in Toronto's Trump International Hotel, under a program in which owners placed their units in a common pool of rooms to be rented out at luxury rates. After unexpectedly low reservation rates, the plaintiffs sued for rescission of their purchases, claiming that they were misled by marketing materials that breached an Ontario Securities Commission exemption order.
At the outset of the hotel's operations, pains were taken before the OSC to treat the hotel units as real estate, rather than securities, asserting that the units would not be marketed as investments for profit or gain. The OSC granted the exemption, on the basis that the pool program was a feature secondary to occupancy rights, and that prospective purchasers would not be provided with cash flow forecasts, or induced to rely on expectations of economic benefits. The subsequent marketing materials estimated a yearly rate of return of up to 21% per unit.
The Plaintiffs moved for summary judgment. The motions judge held that the Plaintiffs had not established their claims in breach of the OSC ruling, and misrepresentations. However, it also dismissed the Plaintiffs' claims in oppression, collusion, and breach of fiduciary care.
The Court of Appeal held that the motions judge stepped outside of the scope of the motion by dismissing the additional claims not before the court, and that it was a denial of procedural fairness and natural justice to do so.
The Court of Appeal set aside the motions judge's order, and substituted an order rescinding the purchase, awarding damages for negligent misrepresentation, and remitting the claim for fraudulent misrepresentation to be decided properly on another motion.