Supreme Court of Canada
The Pas (Town of) v. Porky Packers Ltd. et al., [1977] 1 S.C.R. 51
Date: 1976-01-30
The Town of The Pas (Defendant) Appellant;
and
Porky Packers Ltd. (Plaintiff) Respondent;
and
Russell Bruce Tawse, Vallen Joseph Melnick and Albert Lutz (Third Parties) Respondents.
1975: November 20; 1976: January 30.
Present: Laskin C.J. and Martland, Judson, Ritchie, Spence, Pigeon, Dickson, Beetz and de Grandpré JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR MANITOBA
Negligence—Municipal corporations—Damages claimed for loss incurred by reason of statements by municipal officials—Information as to availability of industrial land supplied by secretary-treasurer to member of town council—Mayor and council informed by associates of council member that company being formed for establishment of packing-house plant—Resolutions of council authorizing sale of land quashed—Intention expressed by mayor to proceed regardless of decision—Council member in breach of s. 326 of The Municipal Act, R.S.M. 1954, c. 173—Provision of town planning scheme preventing use of land for slaughter-house—Objections to amending by-law allowed by Municipal Board—No liability on part of municipality.
T, a member of the Council of the appellant municipality and also a member of the planning commission thereof, had been engaged in the wholesale meat trade but due to a change in policy of his supplier was deprived of his source of meat. After studying a government report dealing with the usefulness of a meat processing plant in Northern Manitoba, T determined to attempt to establish such a plant in The Pas or in the surrounding area. He approached M, the secretary-treasurer of The Pas and made inquiries as to the availability of any industrial land owned by the municipality. M showed him a zoning map and pointed out certain town owned lots in a light industrial area.
Subsequently, two associates of T wrote a letter addressed to the mayor and Council of The Pas identifying the land and stating that they were in the process of forming a company to proceed with a packing-house
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plant. Eventually, a resolution was passed in Council that T and his associates be sold the particular lots at a stated price. A formal agreement was prepared and was executed under date of August 1, 1969. That agreement purported to be between the Town of The Pas and Porky Packers Ltd., and was signed by T “for Porky Packers Ltd.”. In fact, Porky Packers Ltd. was not incorporated until October 31, 1969.
Despite an objection to the proposed packing-house by two persons who owned an adjacent motel, which objection was based on the noxious and offensive uses section of the town’s planning scheme, M, on August 30, 1969, issued a building permit for the plant.
The town Council heard an argument on behalf of the objectors on September 3, 1969, and on the following day voted to confirm its earlier decision authorizing the sale of the lands. An application to quash the resolutions of Council in favour of the scheme took place on October 27, 1969, but judgment thereon was reserved until May 8, 1970. In the meantime, acting under the agreement of August 1, 1969, the respondent company, after its incorporation, called for a conveyance of the lands. The conveyance was delivered by the appellant to the respondent and duly registered. Considerable sums of money had been spent on the venture.
The resolutions of Council were quashed on the grounds that (1) T, as a member of Council, had a personal and pecuniary interest in the resolutions beyond his interest as an ordinary ratepayer in that he was one of the purchasers, and that when he either voted on the resolutions or took part in the discussion of Council leading up to the passing of the resolutions, he was in breach of s. 326 of The Municipal Act, R.S.M. 1954, c. 173, and (2) the provisions of the town’s planning scheme prevented the use of the lands for the purposes of a slaughter-house. There was no appeal from this decision.
When T learned of the notice of application of October 6, 1969, he spoke to the mayor and the mayor then expressed an intention of carrying out any necessary steps to permit the establishment and continuation of the industry no matter what the result of the application to quash. Almost immediately after judgment was delivered on the application, Council adopted a resolution to amend the offending sections of its planning scheme.
Objections to the amending by-law were subsequently allowed by the Municipal Board. The Board concluded that the proposed amendment did not reflect good plan-
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ning principles nor did the procedure followed by Council permit such a result. The Board also drew attention to a health by-law enacted in 1961 by which slaughterhouses were prohibited within the town.
The company then brought an action for damages for the loss of its investment and expectation of profit thereon and relied on negligent misrepresentation of the town officials as the basis of its claim. The claim was allowed by the trial judge to the extent of the company’s costs actually laid out or irrevocably incurred relating to the construction of its premises down to October 10, 1969. The Court of Appeal would have allowed judgment for all of the damages which the company was able to prove under ten different headings.
Held: The appeal should be allowed and the action dismissed.
Per Laskin C.J. and Judson, Spence, Dickson, Beetz and de Grandpré JJ.: The respondent failed to bring its case within the doctrine of Hedley Byrne & Co., Ltd. v. Heller & Partners, Ltd., [1963] 2 All E.R. 575, and, therefore, was not entitled to judgment against the appellant. It is requisite for liability under the Hedley Byrne principle that the representations be made to a person who has not expert knowledge himself by a person whom the representee believes has a particular skill or judgment in the matter, and that the representations were relied upon to the detriment of the representee. The representee in the present case, T, had more knowledge than the representor, M. There were, in all probability, no representations by M or, if there were such representations, they were not relied upon by T or the respondent company.
T was not relying on the skill or judgment of M. The advice which he sought was not whether there were lands available for a meat processing enterprise but whether there were town owned lands in the light industrial zone, and also whether the municipality could supply water and sewage facilities.
No fault could be attributed to the appellant for M’s failure to bring to T’s attention the provisions of the health by-law enacted in 1961, which forbade the use of any buildings as a slaughter-house within the town. There was a replacement of the earlier absolute bar by a subsequent detailed system of regulation, inspection and licence.
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A letter addressed by the town’s building inspector to the respondent, wherein it was stated that the property in question complied with the zoning regulations, did not constitute a representation that a clear zoning certificate was thereby issued to the company. The building did comply with the zoning regulations in that it was a completely enclosed building for light industrial use, and while the letter did not take account of the provisions of the noxious and offensive uses section of the town’s planning scheme, it was written after the respondent had acquired the lands and commenced its building, and to determine whether a use was within the prohibition required an exercise in judgment beyond the ordinary scope of a building inspector.
As to the action of the mayor who, after the argument on the motion to quash and prior to the delivery of the judgment thereon, expressed the intention of taking any steps necessary to assure the continuance of the operation of the enterprise, such undertakings by the mayor could not bind the town or its Council and therefore no liability could be assessed upon the town based upon such undertaking.
As to the action of the town after delivery of the judgment quashing the by-laws to amend the planning scheme in an attempt to bring the enterprise within its provisions, such action was exactly in accordance with the wishes of the respondent and the eventual effect of such amendments was only frustrated by the refusal of the Municipal Board to validate them.
Per Martland, Ritchie and Pigeon JJ.: The respondent company cannot recover on the basis of representations by officials of the appellant municipality when those representations were in relation to a contract which was held to be illegal by reason of improper conduct on the part of the principal promoter of the company.
APPEAL from a judgment of the Court of Appeal for Manitoba, dismissing the appellant’s appeal from a judgment of Wilson J. and allowing the respondent’s cross-appeal. Appeal allowed.
J.W. Brown, Q.C., and E.B. Leonard, for the defendant, appellant.
H.K. Irving, Q.C. and R. c. Dixon, for the plaintiff, respondent.
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The judgment of Laskin C.J. and Judson, Spence, Dickson, Beetz and de Grandpré JJ. was delivered by
SPENCE J.—This is an appeal from the judgment of the Court of Appeal for Manitoba pronounced on January 16, 1974. By that judgment, the said Court dismissed an appeal by the original defendants from the judgment pronounced on April 18, 1973, after trial by Wilson J., and allowed the plaintiff’s cross-appeal largely increasing the damages which had been awarded in its favour.
One R.B. Tawse had been engaged in the wholesale meat trade but due to a change in policy of his supplier was deprived of his source of meat. The Department of Industry and Commerce of the Province of Manitoba published, in March 1969, the results of its study dealing with the usefulness of a meat processing plant in northern Manitoba. Mr. Tawse studied this report and determined to attempt to establish such a meat processing plant in the Town of The Pas or in the surrounding area. He was a member of the Town Council of The Pas and in addition a member of the planning commission thereof. Mr. Tawse went to the town office not later than June 13, 1969, and there he conferred with a Mr. Moule who had, for many years, been the secretary-treasurer of the municipality.
In examination-in-chief at trial, Mr. Tawse testified:
A. I didn’t go to the town council I went to the Town Office and spoke to Mr. Moule the secretary-treasurer on that and asked him if there was land within the Town of The Pas that was available for building an abattoir out of this study that we had gone through.
…
A. And Mr. Moule took me into his office and there is or was at that time a large map on the wall divided up into areas for zoning.
…
Right. I looked at that map and he explained the zoning and the land that was owned by the town and the land that was owned by private people, no names of the private people’s property that I can recall.
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Q. And was Mr. Moule aware of the use to which the land was to be put?
A. Yes, I explained that it was to be an abattoir.
Mr. Tawse’s evidence was further extended on cross-examination, and I quote:
A. He took me into the office and showed me a map of the Town of The Pas, I think there is various colorings on it for various zones and for various private versus Town property.
Q. And who is the one who first pointed out lots one to four in block 81?
A. I think Mr. Moule was more conversant with the map than I was and while it is four years away I think that probably he pointed these out as being Town owned lots for light industrial use.
Q. Were you interested only in Town owned lots or in any lots?
A. Well we were interested in any lots that were available but in Mr. Moule’s capacity he was capable of showing us the Town owned lots.
Q. You used the phrase industrial, now I take it that you asked for industrial land did you?
A. Yes, it had to be industrial land.
Q. I know what it had to be but I want to know what you asked for?
A. Well we asked for industrial land.
Q. And did you specify a M-1 zone?
A. No we did not.
Q. Now you are aware that the lands in question that you eventually purchased were M‑1 zone?
A. That is correct because there was almost no M-2 land available other than Indian land in the Town of The Pas to my knowledge.
Q. And you were aware of Section 7.9 at that time?
A. This is again the obnoxious odors, this is the obnoxious odors?
Q. Yes.
A. Yes, I was aware of it at that time.
Q. And Mr. Moule didn’t tell you anything about what The Pas Planning Scheme provided did he?
A. No he didn’t, we didn’t ask him and he didn’t offer.
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After Mr. Moule had shown to Mr. Tawse the four lots which were the subject-matter of the transaction, Messrs. Lutz and Melnick, Mr. Tawse’s associates, wrote a letter addressed to the mayor and Council of The Pas identifying the land and stating that they were in the process of forming a company to proceed with a plant that “would provide portion control packing house products for northern Manitoba.” In this letter, Messrs. Lutz and Melnick specified that they would need to be supplied by the town with land, water and sewage facilities and requested the town to “arrive at a figure for the property involved and a method of handling the services required”. At a meeting of Council shortly thereafter, it was determined that the letter of June 13, 1969, be held in abeyance until the matter had been reviewed by town planning and that the town superintendent should make recommendations regarding the feasibility of providing services.
On June 25, 1969, Mr. Moule wrote to Mr. Melnick referring to the letter of June 13th and informing Mr. Melnick that he had been instructed to advise him to make application to The Pas Planning Advisory Commission. On July 2, 1969, The Pas Planning Advisory Commission recommended that the offer be accepted “on the grounds that it comes under Section 16-’M1’ of The Pas Planning Scheme”. Later, a resolution was moved in Council and passed that Tawse, Lutz and Melnick be sold lots 1-2-3-4 on Block 81-2 for the sum of $2,200. A formal agreement was prepared and was executed under date of August 1, 1969. That agreement purported to be between the Town of The Pas and Porky Packers Ltd. and was signed by Mr. Tawse “for Porky Packers Ltd.” As a matter of fact, Porky Packers Ltd. was not incorporated until October 31, 1969.
It is to be remembered that during the whole of this period of negotiation Mr. Tawse was a member of the Town Council of The Pas and attended the various meetings although on many occasions it is noted that he refrained from voting. The transaction whereby the town was to sell these lands to Mr. Tawse and his associates for Porky
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Packers Ltd. was one which met with the universal approval of the town officials both elected and appointed, and all but two persons seemed anxious that this new industry be established in the town. Those two were Messrs. Gibson and Kennedy who owned a motel adjacent to the site of the proposed packing-house. Under date of August 11, 1969, Messrs. Gibson and Kennedy wrote to the town planning commission to give notice of their protest and on August 26th a letter addressed to the town secretary-treasurer, Mr. Moule, was forwarded by a solicitor retained by them. The final paragraph of that letter read:
This is to therefore notify you that if the construction is permitted as planned that our clients intend to obtain an injunction restraining the prospective owners from proceeding contrary to the Scheme and you are hereby so notified and advised.
The Town of The Pas had created a town planning scheme in the year 1966 and had adopted that scheme by By-law 1487 which was enacted on February 2, 1966. That scheme is very long and detailed and I need only refer to certain sections thereof. Section 16 established what was entitled as an M.1 light industrial area and in s. 16(1) outlined the permitted uses for structures in the M.1 area. The first of such permitted uses read “any manufacturing or industrial use conducted within an enclosed building or structure”. It was this permitted use upon which Mr. Tawse relied when he sought from Mr. Moule information as to lands available in the light industrial zone. It was the contention of the solicitors for Gibson and Kennedy that the use of premises in an M.1 zone was barred by the words of s. 7.9 of the said planning scheme enacted by By-law 1487. Section 7.9 read:
7.9 Noxious or Offensive Uses
Notwithstanding anything herein contained, no use shall be permitted in any district other than the “M2” District which may be noxious or offensive by reason of the emission or production of odor, dust, refuse matter, wastes, vapour, smoke, gas, vibration or noise. This shall not be so interpreted as to overrule the next succeeding clause nor to prohibit those uses specifically permitted in the “A” Rural District.
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Despite the receipt of that letter from the solicitors of Messrs. Gibson and Kennedy, Mr. Moule, on August 30, 1969, issued a building permit to Porky Packers Ltd. for a meat packing plant “subject to the provisions of the building by-law or by-laws”.
At a meeting of Council held on September 3, 1969, the solicitor acting for Messrs. Gibson and Kennedy presented his case opposing the proposed packing-house but the next day the Council voted to confirm its earlier decision authorizing the sale of the town lands to be so used. The result was that on October 6, 1969, such solicitor on behalf of Messrs. Gibson and Kennedy filed a notice of motion to quash the resolutions of Council in favour of the scheme. Not only the town officials but Mr. Tawse became aware of that application within a very short time after its filing and service. However, neither Porky Packers Ltd., or, before its incorporation, Mr. Tawse and his associates as trustees thereof, nor the Town Council took any steps to in any way stay the construction of the meat packing plant. There was no rescission of the building permit. The site was cleared and footings poured for the building and construction thereof proceeded apace.
Argument upon the application took place on October 27, 1969, but judgment thereon was reserved until May 8, 1970. In the meantime, acting under the agreement of August 1, 1969, the respondent, after its incorporation, had called for a conveyance of the lands. That conveyance was delivered by the appellant to the respondent and duly registered. Considerable sums of money had been spent upon the venture.
Hunt J., in his reasons for judgment dated May 8, 1970, gave judgment quashing the resolutions which permitted the transaction. Hunt J. based his judgment in the main upon the circumstances in reference to Mr. Tawse. As I have already pointed out, he was, throughout, a town councillor and he did attend the meetings at which these matters were considered throughout the whole course of the transactions, but he did not vote thereon. Hunt J. quoted s. 391(1) of The Municipal Act, R.S.M. 1954, c. 173, as authorizing the quashing of a
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by-law for illegality and found such illegality in s. 326 of The Municipal Act, which provided:
326. No member of a council shall take part in the discussion of any question in which he has a personal and pecuniary interest beyond his interest as an ordinary ratepayer, nor shall he vote thereon; but this section does not apply to the appointment of a chairman or acting head of the council or to the naming of committees.
Hunt J. found that Mr. Tawse, as a member of Council, had a personal and pecuniary interest in the resolutions beyond his interest as an ordinary ratepayer in that he was one of the purchasers, and that when he either voted on the resolutions or took part in the discussions of Council leading up to the passing of the resolutions, he was in breach of the statute. Hunt J. then continued:
In addition to s. 326, attention must be paid to the provisions of The Pas Planning Scheme of the Town of The Pas 1966, which was adopted and approved pursuant to The Planning Act, 1964 (Man.), c. 39. This scheme is, and since 1966 has been in full force and effect in the Town of The Pas. The lands with which the two resolutions are concerned were thereby designated as an “M.1” district. Section 7, subss. (2), (9) and (11) of the Scheme provide as follows:
and relied on s. 7.9 of the planning scheme which I have already quoted as barring the use of the lands for a slaughter-house. The learned judge concluded:
In my opinion, the provisions of the Scheme prevent the use of this land for the purposes of a slaughter house. On this further ground, both resolutions must be quashed.
There was no appeal from the judgment of Hunt J. Mr. Tawse, when he learned of the notice of application filed on October 6, 1969, had spoken to the mayor and the mayor had expressed an intention of carrying out any necessary steps to permit the establishment and continuation of the industry no matter what the result of the application to quash and, almost immediately after the judgment of Hunt J., i.e, on May 29, 1970, Council adopted a resolution to amend the offending sections of its Planning Scheme By-law 1487. In accordance with the provisions of The Municipal Act, the amendment was dispatched to the Municipal Board. Again Messrs. Gibson and Kennedy intervened. A
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hearing was held and the Municipal Board gave judgment on November 6, 1970. In its reasons, the Board recited, in considerable detail, the circumstances which I have set out above and concluded:
On the basis of the evidence adduced and argument submitted the Board is compelled to conclude that the proposed amendment does not reflect good planning principles nor did the procedure followed by the Council permit such a result.
It would seem that the Board’s basis was that the original planning scheme did reflect good planning principles and that the amendment was made by the Council without any intervention or recommendation by the planning commission and without the aid of the provincial planning branch being sought. I refrain from commenting upon these reasons. The Board then concluded its reasons in these words:
For all of the above reasons the objections are ALLOWED.
The Board considers it advisable to direct the attention of Council to Section 26 of its By-Law 1284A which reads as follows:
“26. SLAUGHTER HOUSES—
No person shall use any place or building as a slaughter house or for the purpose of slaughtering animals within the Town of The Pas.”
[Exhibit 22]
It is suggested that the Council obtain advice as to whether this By-law is inconsistent with the provisions of the Planning Scheme.
By-law 1284A, which is known as the health by-law and which had been enacted in the year 1961, was never referred to in any conversation between Mr. Moule and Mr. Tawse nor in the argument on the application before Hunt J. Wilson J., in his reasons for judgment at trial, said:
One can only suppose that, prior to its discovery in the course of proceedings before the Municipal Board, that regulation had long since been forgotten, although at the time of its enactment in May 1961 it was signed by the persons who were then, and who continued throughout, as mayor and secretary-treasurer of defendant town.
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The existence of this provision was relied upon by Wilson J. at trial as part of the basis for his judgment in favour of the respondent and against the appellant town. Wilson J.’s conclusion is set out in his reasons for judgment as follows:
Plaintiff of course ought never to have been encouraged or allowed to build its abattoir within the town limits. Section 26, supra. To that extent plaintiff has established a basis for its claim: “A municipal corporation is responsible for the acts of its servants upon the same principle and to the same extent as a private individual”; Lewis v. City of Toronto (1876), 39 U.C.Q.B. 343, at p. 351. The fact defendant is a municipal corporation, however, cannot give to the plaintiff any greater rights than it would have against a private individual; Darby v. The Corporation of Crowland (1876), 38 U.C.Q.B. 338, p. 343; and generally see Rogers: The Law of Canadian Municipal Corporations, 2nd ed., s. 243.1.
The learned trial judge limited his award of damages to those which had occurred prior to October 10, 1969, that is, a reasonable time after the service and filing of the notice of motion to quash the by-laws.
Matas J.A., in giving reasons for the Court of Appeal, said:
With respect, I do not agree that it was incumbent on the company to stop construction when motion to quash was launched, nor as soon as objections had been raised by Kennedy and Gibson (as suggested by Mr. Bancroft).
and would have allowed judgment for all of the damages which Porky Packers Ltd. was able to prove under ten different headings. For reasons which I shall develop hereafter, I do not find it necessary to deal with this increase in the quantum of the damages allowed.
Wilson J., in the first paragraph of his reasons for judgment, stated:
Plaintiffs claim is that, lulled to security by the negligence or mala fides of the defendant, it has lost the cost of its investment and expectation of profit thereon, to wit, the construction and operation of an abattoir, built within the limits of the defendant town but upon lands whereon, unhappily, the zoning regulations forbade the carrying on of such a business.
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The learned trial judge awarded damages on that basis.
Matas J.A., in giving judgment for the Court of Appeal, said:
Packers Ltd. relied on negligent misrepresentation of town officials, appointed and elected, as the basis for its claim. Two cases in particular were cited in support—Hedley Byrne & Co., Ltd. v. Heller & Partners, Ltd., [1963] 2 All E.R. 575, and Windsor Motors Ltd. v. Corporation of Powell River (1969), 68 W.W.R. 173, 4 D.L.R. (3d) 155 (B.C.C.A.).
I agree with Matas J.A. that if the plaintiff’s claim is to succeed it must be upon the basis of the doctrine considered in the important decision of the House of Lords in Hedley Byrne. I quote the statement in Charlesworth on Negligence, 5th ed., para. 49, p. 32, as being a proper statement of the principle applied in that authority:
The House of Lords has thus expressed the opinion that if in the ordinary course of business including professional affairs a person seeks advice or information from another who is not under any contractual or fiduciary obligation to give it, in circumstances in which a reasonable man so asked would know that he was being trusted or that his skill or judgment was being relied on, and such person then chooses to give the requested advice or information without clearly disclaiming any responsibility for it, then he accepts a legal duty to exercise such care as the circumstances require in making his reply; for a failure to exercise that care, an action for negligence will lie if damage or loss results.
I am of the opinion, therefore, that the plaintiff’s right of recovery must be tested by reference to the requisites set out by the learned author. I will presume that Mr. Tawse should be considered as the trustee for Porky Packers Ltd., a company then yet to be incorporated, and that information which he sought should be considered as information sought by and given to Porky Packers Ltd. As I have already pointed out, Mr. Tawse was experienced in the meat trade, was also a town councillor, and was a member of the planning commission. I am of the opinion that the real inquiry made by Mr. Tawse to Mr. Moule was simply whether Mr. Moule could point out any town owned lands in the light industrial zone. Mr.
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Tawse already had seen and was generally aware of the contents of the planning scheme contained in By-law 1487 and had determined that the meat processing plant fell within the permitted use for lands zoned as light industrial. He was also aware of the provisions of s. 7.9 of the scheme and had formed the opinion that if he enclosed the whole of the plant within walls in order to bring it within the permitted use for M.1 zoning then he would not be affected y the provision in s. 7.9. In fact, Mr. Tawse admitted that he and his associates had altered the original plan for their building so as to provide for a total enclosure thereof in order to fit their building into the light industrial or M.1 zoning. It is true that Mr. Tawse did reveal to Mr. Moule, and later set out expressly in the letter signed by Messrs. Lutz and Melnick, that the enterprise to be carried on in the building was meat processing. But the advice which Mr. Tawse sought was not whether there were lands available for a meat processing enterprise but whether there were town owned lands in M.1, light industrial zone, and also whether the municipality could supply water and sewage facilities. I, therefore, can find no seeking of advice or information such as that required in the Hedley Byrne case.
Matas J.A. found that the town was negligent in overlooking the provisions of s. 26 of By-law 1284A and in omitting to inform Mr. Tawse of these provisions. As I have pointed out, s. 26 of By-law 1284A was a provision of the health by-law enacted in May of 1961 which forbade the use of any buildings or building as a slaughter-house within the Town of The Pas. This provision was not mentioned by either Mr. Moule or Mr. Tawse nor was it considered by Hunt J. upon the argument of the Gibson and Kennedy application to quash the town’s by-laws. It seems to have been first mentioned merely as an afterthought at the conclusion of the reasons of the Municipal Board and then only to suggest that Council obtain advice as to whether the by-law was inconsistent with the provisions of the planning scheme. Wilson
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J., in giving reasons at trial, seems to have been of the opinion that s. 26 of By-law 1284A did prohibit the use of lands as a slaughter-house and seems to imply that Mr. Moule’s failure to mention it was, at any rate, in part, a basis for the liability of the town.
The town also enacted in the year 1962 a licensing By-law, No. 1326, which required a licence and fixed a licence fee in s. O in these words:
Every person, firm or corporation who operates an abattoir, an annual fee of Five Dollars ($5.00).
Then the Town Planning Scheme, as enacted by By-law 1487, set out zones and provided in detail for the permitted use of the lands within those zones. The respondent Porky Packers Ltd. took out a licence under this by-law on February 15, 1970, that is, after the argument of the Gibson and Kennedy motion to quash and prior to the judgment thereon. After that judgment was given, and on May 29, 1970, at the same time as the Town Council enacted the amendments to the by-laws subsequently quashed by the Municipal Board, the Council suspended the business licence “until the rezoning of its plant site has been dealt with by council and other outstanding issues have been decided by council”.
Porky Packers Ltd. continued to operate despite the suspension of its licence until it applied for a renewal licence for the year 1971 and that renewal was refused.
It was argued before the Court of Appeal for Manitoba that s. 26 of By-law 1284A was no bar in that it applied to slaughter-houses in residential back yards and not to commercial operations. With respect, I agree with Matas J.A. when he found no words in s. 26 of By‑law 1284A which would support such a limitation. Matas J.A. was of the opinion that s. 26 of By‑law 1284A was not implicitly repealed by the subsequent enactment of By-law 1326 saying:
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If the governing laws in the municipality were changed to permit operation of a slaughterhouse, it would not be necessary to pass a specific new provision to provide for a licence fee.
In my opinion, that very event occurred.
In June 1966, the town enacted the Town Planning Scheme and divided the lands in the town into zones making exact provision for permitted uses in each of the zones. The respondent, through the transactions which I have outlined, bought lands in an M.1 zone, applied for a licence to operate a meat processing plant, the inspector inspected those premises and granted a licence. I can imagine no plainer example of the replacement of the earlier absolute bar by a subsequent detailed system of regulation, inspection and licence than the present one. Therefore, with respect, I differ with Matas J.A. in his conclusion that there is any fault attributable to the town in Mr. Moule’s failure to bring to the attention of Mr. Tawse the provisions of s. 26 of By-law 1284A.
Matas J.A. also found the town liable,
…in indicating to Tawse the availability of town land which might be used for an abattoir, in issuing a clear zoning certificate to the company in December, 1969, in encouraging the company to proceed with its building and in facilitating operation of the business until late 1970.
I have already dealt with the claim for liability in indicating the availability of town lands for use as an abattoir. The words “in issuing a clear zoning certificate to the company in December, 1969” refer to a letter, which Matas J.A. mentioned earlier in his reasons, dated December 22, 1969, addressed by the building inspector, one T.A. Earley, to Porky Packers Ltd. which read as follows:
Re: Lots 1,2,3,4, Block 81-2, Plan 508
Dear Sirs:
This is to certify that, to my knowledge, the foundation and dwelling within and upon the above described lands is contained entirely within the legally described
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limits of the property and that the property complies with the zoning regulations of The Town of The Pas.
Yours truly,
T.A. Earley,
Building Inspector.
I can find no representation whatsoever in that letter. For the reasons to which I have already referred, in my view, the building did comply with the zoning regulations in that it was a completely enclosed building for light industrial use in an M.1 area. If Matas J.A. was of the opinion that the letter was in error in its failure to take account of the provisions of s. 7.9 of the Planning Scheme By-law 1487, then it must be remembered that the letter is dated December 22, 1969, after the respondent had acquired the lands and commenced its building, and that to determine whether a use was within the prohibition in s. 7.9 of the said by-law required an exercise in judgment quite beyond the ordinary scope of a building inspector. There is, in fact, evidence that a provincial health inspector had informed members of the Council that all over the province slaughter-houses existed right in the middle of towns without any nuisance whatsoever and it is difficult to understand how, in the light of that statement from a provincial inspector, a municipal building inspector can be required to exercise a judgment that this building would, unlike others in the province, constitute such a nuisance as would bring it within the prohibition of the by-law. I am of the opinion that no liability of the town could be based on this slight ground.
Matas J.A.’s finding of liability “in encouraging the company to proceed with its building and in facilitating the operation of the business until late 1970”, apart from the issues with which I have dealt, must be concerned with the action of the mayor who, after the argument of the Gibson and Kennedy motion to quash and prior to the delivery of the judgment thereon, expressed the intention of taking any steps necessary to assure the continuance of the operation of the enterprise and with the action of the town after delivery of the judgment quashing the by-laws to amend the planning scheme in an attempt to bring the enterprise
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within its provisions. As to the action of the mayor, he was only expressing a desire which, as I have said, seems to have been the desire of everyone, with the exception of Gibson and Kennedy, that a new industry be permitted to operate in the town with its advantages to the ratepayers not only of possible employment but of a source of supply. As Wilson J. remarked in his reasons, undertakings of the nature given by the mayor could not bind the town or its Council, and therefore no liability could be assessed upon the town based upon such undertaking. As to the amendment of the by-laws, the town’s action in carrying out such amendments was exactly in accordance with the wishes of the respondent and the eventual effect of such amendments was only frustrated by the refusal of the Municipal Board to validate them. Again, I can find no negligence upon which the respondent could base its action under the principles in the Hedley Byrne case under either of those headings.
It is a requisite for liability under the Hedley Byrne principle that the representations be made to a person who has not expert knowledge himself by a person whom the representee believes has a particular skill or judgment in the matter, and that the representations were relied upon to the detriment of the representee. As I have pointed out, the representee in the present case, Mr. Tawse, had more knowledge than the representor, Mr. Moule. In my view, there were, in all probability, no representations by Mr. Moule or, if there were such representations, they were not relied upon by Mr. Tawse or Porky Packers Ltd. to their detriment but rather Mr. Tawse relied on his own knowledge and judgment throughout.
For these reasons, I have come to the conclusion that the respondent has not brought its case within the Hedley Byrne doctrine and is not entitled to judgment at all against the appellant. Having come to that conclusion, I am not required to consider various other matters dealt with in the
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carefully reasoned judgment of Matas J.A. and I express no opinion on them.
Had I come to another conclusion in reference to the plaintiff’s right to recover applying the principles of Hedley Byrne, then I would have had to consider another and a very different problem which I did not find discussed in the judgments either at trial or in the Court of Appeal for Manitoba. That problem would have been whether the respondent Porky Packers Ltd. could have recovered on the basis of negligent representations by the officials of the Town of The Pas when those representations had induced a contract which was itself illegal. It must be remembered that Hunt J. in his judgment quashed the by-law authorizing that contract as being illegal because of the actions of Mr. Tawse. That judgment was not appealed and has not been affected by the subsequent litigation. How then, even if the negligent misrepresentation required by Hedley Byrne had been made and had been relied on, could it be said that the contract so induced being an illegal contract there was any right to recover damages? I did not intend to discuss the problem, in view of my conclusion as to the plaintiff having failed to bring itself within the principles of Hedley Byrne, but had I come to the other conclusion upon such issue, I would have been faced with this serious problem.
I would allow the appeal with costs and dismiss the action. The appellant is entitled to its costs throughout. The appellant seeks only this relief in its factum and, therefore, I need not deal with the appellant’s counterclaim as urged in the Courts below.
The judgment of Martland, Ritchie and Pigeon JJ. was delivered by
PIGEON J.—In my view, the respondent Porky Packers Ltd. cannot recover on the basis of representations by officials of the Town of The Pas when those representations were in relation to a contract which was held to be illegal by reason of improper conduct on the part of the principal
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promoter of Porky Packers Ltd. On this basis, I agree with Spence J.’s conclusion without expressing any opinion on the other points raised in this case.
Appeal allowed with costs.
Solicitors for the appellant: Bancroft, Whidden, Mayer, The Pas.
Solicitors for the respondents: D’Arcy and Deacon, Winnipeg.
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