First Court of Appeal Decision Released in 2025 a Win for Davidson Cahill Morrison LLP

I am proud to announce that the Ontario Court of Appeal’s first decision of 2025 is a win for Davidson Cahill Morrison LLP’s clients.

The case of Kramer v Ballantyne-Gaska, 2025 ONCA 1, involved the plaintiffs’, Yvette Kramer and Garry Andrade, purchase of a resort-style hotel and gas bar from the defendants, Johnson and Roselee Collins. Prior to the purchase, the defendants had assured the plaintiffs that the underground gas tanks on the property – a key component to the property’s business selling gas to drivers of motor vehicles, ATVs, and snowmobiles– was in good condition and met all applicable regulatory compliance requirements. The defendants knew, but did not disclose, the fact that the tanks were, in fact, in breach of numerous regulatory standards and were subject to numerous compliance orders by the TSSA.

Within months of purchasing the property, the plaintiffs learned of the regulatory noncompliance and, despite years of trying to find a way to comply with the orders while keeping the tanks operable, they were forced to decommission the tanks and remove them from the ground. The plaintiffs retained Davidson Morrison Cahill and sued the defendants, John and Roselee Collins, in breach of contract and fraudulent misrepresentation for failure to deliver a regulatorily compliant tank system as promised. They also sued their lawyer who represented them in the purchase, Ms. Ballantyne-Gaska. The plaintiffs settled with Ms. Ballantyne-Gaska prior to trial and the trial proceeded solely as against the Collins defendants.

In the trial decision, Andrade v Collins, 2024 ONSC 6011, the trial judge agreed that the defendants breached their contract when they failed to ensure that the property they conveyed to the plaintiffs had a regulatorily safe and compliant underground tank system. She also found that the defendants’ comments to the plaintiffs that the tank system was in a good condition despite their knowledge that this was not the case amounted to a fraudulent misrepresentation. She assessed damages as the cost to install a new underground storage tank system, which is what the defendants were contractually required to deliver. The defendants appealed.

In Kramer v Ballantyne-Gaska, 2025 ONCA 1, the Court of Appeal was asked to overturn the trial judge’s findings of breach of conduct and fraudulent misrepresentation, or alternatively to reduce the amount of damages on the basis that the damages awarded by the trial judge would provide the plaintiffs with brand new underground tanks when the contract promised them tanks that were decades old. The Court of Appeal dismissed the defendants’ appeal in its entirety. The Court of Appeal found that the trial judge applied the correct legal principles and made no error in applying those principles to the facts of the case in interpreting the purchase contract and in finding that the defendants breached that contract. The Court of Appeal did not need to address the fraudulent misrepresentation finding as the defendants did not pursue this avenue of appeal in their factum or at the appeal itself. As regards the damages, the Court of Appeal found that the defendant had failed to lead any evidence in support of its claim of betterment, and the trial judge consequently made no error in refusing to reduce the damages award on that basis.

The Appellants also argued at the appeal that the plaintiffs failed to immediately disclose the existence of their settlement with Ms. Ballantyne-Gaska, which was finalized by way of a Pierringer agreement, as would have been required. The Court of Appeal rejected this avenue of appeal on several grounds, including that while the defendants raised this issue at the outset of trial, they subsequently agreed to proceed to trial and to not seek an adjournment so as to move for a stay of proceedings in light of the alleged late disclosure. The Court of Appeal found that the defendants’ subsequent failure to ever seek any relief in light of the alleged late disclosure until it perfected its appeal disentitled it from the relief at the appeal itself. Furthermore, having never brought a motion to address the matter earlier, the Court of Appeal noted that the plaintiffs never had an opportunity to call evidence to show that the settlement agreement was, in fact, produced immediately after it was signed, and that the defendants’ counsel was notified of the impending settlement weeks prior in any event.

Both the trial decision and the appeal decision are well reasoned and provide thorough and helpful analyses of the law in the areas of fraudulent misrepresentation, breach of contract, and damages, and I commend them to anyone interested in these areas of law.