Nov 29, 2014

  • Facts: R borrowed money from RBC, $20 million. R was a developer and had lands to build subdivisions etc. R falls on hard times during recession, but shares with RBC confidential information about his business plans and how he will develop the lands. RBC assigns the loan to a company called B. B now has the security and enforces against the borrower R and they take over his land and sell it at a substantial loss, R is personally exposed to liability. Before he can get sued by B, he brings an action against RBC alleging they breached confidence by sharing the info with B to induce them into taking over the loan.

  • Trial: Justice Spense doesn’t accept the things pleaded by R, he decides that he lost an opportunity.
    • One of the grounds of appeal was that Justice Spense had no business making a finding based on a legal theory he had developed on his own. Improper as R as deprived of the opportunity to make submissions, etc and he was beyond his role.

  • Court of Appeal: if you don't plead it, can't recover on that basis. Spense should not have gone beyond what was in the pleadings. A fairness issue

  • Must be careful that you have contemplated all the causes of action in a pleading

60 It is fundamental to the litigation process that lawsuits be decided within the boundaries of the pleadings. As Labrosse J.A. said in 460635 Ontario Ltd. v. 1002953 Ontario Inc., [1999] O.J. No. 4071 (Ont. C.A.) at para. 9:

. . . The parties to a legal suit are entitled to have a resolution of their differences on the basis of the issues joined in the pleadings. A finding of liability and resulting damages against the defendant on a basis that was not pleaded in the statement of claim cannot stand. It deprives the defendant of the opportunity to address that issue in the evidence at trial. . . .

P61 By stepping outside of the pleadings and the case as developed by the parties to find liability, Spence J. denied RBC and Barbican the right to know the case they had to meet and the right to a fair opportunity to meet that case. The injection of a novel theory of liability into the case via the reasons for judgment was fundamentally unfair to RBC and Barbican.

P62 In addition to fairness concerns which standing alone would warrant appellate intervention, the introduction of a new theory of liability in the reasons for judgment also raises concerns about the reliability of that theory. We rely on the adversarial process to get at the truth. That process assumes that the truth best emerges after a full and vigorous competition amongst the various opposing parties. A theory of liability that emerges for the first time in the reasons for judgment is never tested in the crucible of the adversarial process. We simply do not know how Spence J.'s lost opportunity theory would have held up had it been subject to the rigours of the adversarial process. We do know, however, that all arguments that were in fact advanced by Mr. Rodaro and were therefore subject to the adversarial process were found wanting by Spence J.