Syndicat Lyonnais du Klondyke v. Barrett, (1905) 36 SCR 279

Supreme Court of Canada

Syndicat Lyonnais du Klondyke v. Barrett (1905), 36 S.C.R. 279

Date: 1905-05-02

Le Syndicat Lyonnais du Klondyke (Plaintiffs on counterclaim) Appellants;

and

Joseph Barrett (Defendant on counterclaim) Respondent.

1905: March 23, 24; 1905: May 2.

Present:—Sir Elzéar Taschereau C.J. and Girouard, Davies, Nesbitt and Idington JJ.

ON APPEAL FROM THE TERRITORIAL COURT OF YUKON TERRITORY.

Mines and minerals— Vendor and purchaser—Sale of mining locations—Consideration in lump sum— Separate valuations—Misrepresentation— Deceit and fraud—Measure of damages.

Upon representations made by the vendor the plaintiffs purchased several mining locations, the consideration therefor being stated in a lump sum. In an action of fraud and deceit brought by the purchaser against the vendor the trial judge, in discussing the total consideration for the properties purchased, found that there was evidence to shew the values placed by the parties upon each of two of these properties as to which false and fraudulent representations had been made, and which had turned out worthless or nearly so.

Held, reversing the judgment appealed from, the Chief Justice and Idington J dissenting, that the finding of the trial judge as to the consideration ought not to be disturbed upon appeal and that the proper measure of damages, in such a case, was the actual loss sustained by the purchaser by acting upon the misrepresentations of the vendor in respect of the two mining locations in question irrespectively of the results or values yielded by the other locations purchased at the same time and as to which no false representations had been made. Peek v. Derry (37 Ch. D. 541) followed.

APPEAL from the judgment of the Territorial Court of the Yukon Territory reversing the judgment of Mr. Justice Craig at the trial, and dismissing the appellants' counterclaim against the respondent, with costs.

The history of the case is stated by Mr. Justice Craig, the trial judge, as follows:

[Page 280]

"The agents of the syndicate, Paillard and Tarut were invited by Barrett to visit these properties, Paillard being the syndicate's manager and agent, and Tarut their assistant manager or operating manager. They were well known to be men who came to this country for the purpose of investing in mining properties, and met Mr. Barrett, who was the owner of these various claims. * * * There is no doubt in my mind that they were prospective purchasers of any property which they thought would be profitable for them to invest in; that their position in the country as such was known, and that those persons having properties which they were willing to dispose of naturally would seek out these men. Paillard and Tarut were quite willing to invest in mining properties; that was their object here, and they were going about the country looking at claims. As to the visit in April * * * they simply went as men. looking about the country. They went on the claim and remained two or three days, and I think it would take them that time to walk over the properties even in a cursory manner. They went down some shafts which were open, spent from twenty minutes to half an hour in the drifts, and walked about and looked at the drifts; did not do any panning in the drifts, but examined the sides and walls with a candle. When they came to the surface of the ground they were shown by Barrett the various drifts or locations of them, and where they had been worked out. Barrett himself says in his evidence that nothing was said about purchasing, but it is admitted that a price was named of $260,000 for these claims, including the dumps, before the parties left, and that they said they were not then considering buying. Barrett himself in his evidence, says: 'We discussed this property after the April visit; I had no notion of a sale; we spoke

[Page 281]

about the creek claims. There was no intention of leading up to a sale in the conversation; had several such conversations; simply idle conversation without any object.' This evidence came up in reference to another matter which I have to refer to later on, but it is Barrett's sworn statement, and while he contends with one breath that he relies upon the investigation of April as proof that the syndicate knew what they were buying, yet in the other breath, when meeting another aspect of the case, he gives the evidence which I have just cited. But this can matter little because I think that any investigation, if it could be called such, which these agents of the syndicate made in April, was so trifling as not to be called an investigation at all. Still, whatever they did see at that time would no doubt be in their minds, and be probably to a certain extent remembered by them at the subsequent visit in June In view of the evidence given by the agents, and what Barrett says as to the idle nature of the conversation regarding the April visit, I do not find that the syndicate agents went on the ground in April with any intention of purchasing the claim, or with a view of ascertaining the nature of the ground with intent to buy.

"We now come to the June visit, and at this visit they certainly went on the ground as prospective purchasers. They were there three or four days visiting these various claims. As to what they did when there I have not the slightest doubt at all. They went on to the claim with Barrett. They asked Barrett to prepare a plan of the ground; Paillard and Tarut both swear to this, and Barrett does not deny it. This is important. The answer which Barrett gave, according to the evidence of these men, was that he was not expert enough to prepare such a plan, but he would shew them the ground and give them all the in-

[Page 282]

formation. I consider this evidence is important, and is consistent with the evidence given by Paillard and Tarut throughout. They walked over the top of the ground, entered one or two shafts which were then open, because in the great majority of the cases where the old drifts had been taken out the shafts were filled and there was no possibility of entering the drifts. In the drift which they did go down (No. 3) they went about with a candle and looked at the sides. Barrett says they saw gold in the walls. This they say they do not remember. They also went down new shafts in drift 7 on 32 which Barrett was then sinking. They saw machinery. For some time they sat near the shaft and counted the buckets coming up, and in relation to this matter there was an endeavor made * * * to shew that in counting the buckets they were trying to ascertain the value of the property. This to my mind is absolutely absurd. How a person could tell the value of the dirt hauled out of the shaft by counting the buckets passes my comprehension. It was an attempt to throw dust in the eyes of the court, which was very silly. The object of counting the buckets clearly was, both from the evidence of these parties, and from the evidence of the engineer, to see how the machinery was working. In addition to this they either panned themselves or saw some panning done both from the dump and from the faces of open cuts on claim "12" and from the dumps and drifts on claim "32", and they also saw two or three small cleanups. Barrett pointed out to them where the ground had been worked, that is, the extent of the workings. The main ground of complaint * * * is that the nature of the ground, that is, its richness, was not correctly given to them, and in addition that certain drifts and workings which appeared and were discovered on the ground after the

[Page 283]

sale, were not pointed out to them by Barrett, and in fact, that in pointing out what had been worked out he gave the impression, therefore, that the ground not so pointed out was still virgin ground and intact. The agents say that while on the ground they noted particularly the extent of the ground worked out as represented by Barrett, and that Paillard took notes of these representations in a notebook which he had with him, and the taking of these notes, it seems to me, is consistent with the statement that they took notes of what Barrett said with intent to rely upon it. Of course it may be argued on the other hand, that it is singular that these parties, in a large transaction, and relying upon representations, did not have those representations in writing and signed by Barrett when they were so various and covered so many distinct points hard to remember. This note book was produced at the trial, and the notes were fyled as exhibits. While I cannot myself follow the notes clearly, yet Paillard in his evidence, pointed out that he had made these notes, and no attempt was made by counsel to shew that the notes did not correspond with the evidence which he was giving in regard to the representations, and I take it that the notes correctly conform to the evidence which he gave, the only question of fact being—were the notes made at the time that Barrett made the representations on the claim? Paillard and Tarut swear they were, the only evidence against that being that the parties present did not see them. Whether or not Paillard and Tarut made pannings themselves, it is certain that some pannings were made for them and in their presence, not extensive probably in all, at the June visit. Some eight or ten pans were washed. This is the extent of the investigation made by the defendants. They sank no holes whatever; there is not a title of evidence to

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shew that any investigation was ever made on the virgin ground to prove its richness or otherwise. Whatever statements Barrett made as to that they took his word, and the question whether he did or did not make these representations I will deal with later; but it is beyond a doubt that they themselves did not at all explore the untouched soil. They saw pannings made of ground taken out of the then workings. That is the only investigation, if it can be called an investigation, which they made of the placer ground. As to the extent of the old workings, it is also equally clear to my mind that they made no investigation themselves, and it is not seriously contended that they did make any investigation themselves to ascertain the extent of the old working's. Whatever information they had as to those old workings they got from Barrett and could get it from no one else. In the nature of things it was impossible for them to learn the extent of the old workings because, as is admitted, the shafts entering these old workings were not open. Barrett does not deny that he pointed out the old workings. He does deny the representations alleged respecting the richness of the ground to a certain extent. We are now in this position; two men from France who had previously had some experience in the Klondyke—limited, it is true, but they had bought claims before, and spent some little time in the territory, had gone home to France and organized a new company—came out here and bought this property, paying for it the very large sum of $167,000. They made the investigation which I have indicated and no more. The contention is that the investigation which they made was a sufficiently independent investigation to enable them to rely upon their own judgment and not upon the statements of Barrett, and if their present contention be correct they might just as

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well have taken the representations anywhere else as on the claim; that it was a useless piece of work for them to go on the claim at all if they so fully relied on Barrett as they now contend they did. I cannot myself see the force of that argument. * * * * They contend that they relied absolutely on Barrett and his representations; they went upon the property which they were thinking of purchasing for the purpose of seeing it, its situation, the extent of the workings and the mode in which it was worked, and it is reasonable to believe they would do that and at the same time rely upon Barrett's representations as to the nature of the soil. As I have said before, as to the extent of the workings they had to rely upon Barrett. These properties are all placer claims. In this territory gold in placer claims is found in various conditions. In the creeks it usually runs in well defined pay streaks, parts being richer than others, the theory being that the gold is deposited by its own weight and settles to the bottom through the loose gravel as washed down. It is also found on hillsides and benches in varying depth and in varying quantities, sometimes a wide extent and of considerable depth, and the nature of the pay depends entirely Upon the quantity of placer ground in one place, and the ease with which that can be worked or operated, and many things enter into the cost of working these grounds—the difficulty of handling water, the amount of waste to be removed, the depth of the shaft to be sunk, the price of wood in that vicinity, and the distance from centre of supplies. Some attempt was made during the trial to show the syndicate did not work these claims properly, but I will take no account of that because it was not followed up in such a manner that I could make any deduction from the evidence, because it was clearly sworn to

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 that the cost of operating mines depends entirely upon the surrounding conditions, and no comparison could be made unless all the conditions of the various claims worked were considered.

"As to the extent of the old operations, as I have said, the syndicate had to rely upon Barrett, and did rely upon what he said. * * * They contend respecting claim "32 "that Barrett in pointing out a drift known, as "drift 9 " said that the extent of the workings was only about 30 by 30 feet, whereas it was afterwards discovered that over 8,000 square feet of bed rock was uncovered and taken out. Barrett denies making any such representation, but says that he told them that the former owner had told him he had worked out only that small quantity. On this point there is the evidence of two against one, and I must believe the two. I believe that Barret' must have known of the extent of that working, and I find as a fact that the extent of the workings is as sworn to by the agents, and that Barrett did say that only 30 by 30 feet was worked out. Coming to claim 12, I have more difficulty.* * *The contention is that Barrett in showing the extent of the old workings pointed out only a drift marked. "3" on the plan, and did not point out another drift marked "4" * * *since discovered to have been worked out. Paillard and Tarut both say that he pointed out drift "3," known as "Lamar drift," but did not point out drift "4," know as the "Cassidy drift." Barrett swears that he did point out both drifts. Paillard and Tarut say that the name of Cassidy was not mentioned. A man called Soper, * * * in this respect confirms Paillard and Tarut as to the location of the drift, but he says that the name of Cassidy was used. Now, the name is not important in this connection; the location of the drift and the extent of it is the all

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important thing, and here we have the evidence of Paillard and Tarut and Soper to this, that Barrett did not point out any drift where "4" now exists. It is true that a witness called Renaud, called on behalf of Barratt, swears that Barrett asked him in the presence of Paillard and Tarut if it was Cassidy's drift that " we saw on the right, and I said I thought it was one of Cassidy's or Lamar's." This would indicate that the name of Cassidy was used again, but Cassidy himself was called on behalf of the syndicate and he says that no indications could be seen of where this shaft was. Barrett's witnesses swear that the cribbing could be seen. Cassidy denies this. He was the man who made the drift; he also swears that the shaft was not timbered, but that a scaffolding was erected upon the top of the shaft for the purpose of hoisting the dirt, which scaffolding he says had disappeared. Tailings were all over the place and might as readily have come from one drift as the other, and no one could tell whether the tailings had come from three, four, or the adjoining claim. I am inclined to think that the weight of evidence is with the syndicate on this matter, and that Barrett did not point out drift "No. 4."

"As to the richness of the ground, * * * Paillard's evidence is the following, * * * 'He (Barrett) showed us the part worked out and the parts left to be worked; he gave us the figures for each and every drift; I put them on my memorandum at the same time, and he said that the same pay would be found all over the claim.' Further on Paillard swears that Barrett said that ' the same pay which had been found in those different drifts was to be found all over the claim from rim to rim; he told me that several times. 'Further on:' Q. Did he state to you at any time how he arrived at the knowledge

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 that '32' was a claim that would yield such enormous profit?—A. He said that judging from the amount of gold he had taken from those drifts, and being certain that the same pay was to be found all over the claim. Q. Did he tell you how he was certain?—A. He said that he was certain that the same pay was to be found from rim to rim. Q. Did he say what made him certain as to that?—A. He said he had prospected the claim, so that he was certain. Q. What parts of it did he say he had prospected?—A. He shewed us several holes that he had sunk on that ground. Q. Did he say what part of the claim he had prospected?—A. Yes, he said he had prospected on the right limit and on the left limit; that is to say, from each side of the drifts worked at the time. Q. If he hadn't made these representations to you which you have stated would yon have purchased the property at any such price?—A. No. Q. What did you rely on in making the purchase?—A. I took his word. Q. As to what.?—A. I took his word on what he said to me about the yielding of the property. Q. Did you make any examinations yourself?—A. We went merely on the ground and simply I put down the explanation of Mr. Barrett except the occasion when I went to the drift, but we didn't examine drifts at all.' Asked by myself: 'Q. You tell me that you bought this property relying solely on the representations of Mr. Barrett?—A. Yes. Q. And made no investigation either by yourself or by any other person on your behalf?—A. No. Q. And depended entirely on the word of Mr. Barrett?—A. Entirely; I have every confidence in Mr. Barrett.'

"These are the representations relied upon and this story is confirmed by Tarut, who was present with Paillard all the time. Barrett in reply denies this, and he is the only witness who can answer the defendants.

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He was asked: 'Q. Did you ever make any representations of that kind? A. There was something talked about it. They asked me if I thought the pay was as good on the creek as where I was working. I told them I had no reason to believe it was not as good because I did not know.' That is Barrett's answer to the direct evidence of these men. Let us consider the conduct of the parties; Paillard and Tarut certainly made no investigation as to the richness of the soil beyond panning or seeing the panning done of the dirt coming up from the then drifts. As to the balance or unworked portion of the ground, (which was really what they were buying, and not the holes which had been worked out) they made no investigation. Barrett had been on the ground since 1899. If any one knew it he should know it. This company was investing a large amount of money and claim ' 32 ' was supposed to be a rich one. Is it reasonable to suppose that these men would have bought the ground without some statement as to the possible richness of the undeveloped part? That Barrett did make some representation even from his own shewing is clear. He admits that he told them about two holes that he had sunk on the right and left of the old drifts. In one he swears that he told them that he got $25 in a rocking of an hour and a half, and in another that he got good pay. He did make these statements; he does not deny it; and he says that these statements were true, and that these are the only holes he spoke of except that he said that the pay which he got out of the old drifts which he had worked was good, and that he had worked the claim to a considerable profit. Barrett says that this was all he knew about the property and that it was all he said he knew; that he did not represent the pay as they said he did, to be good and equally good from

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rim to rim. He also says that he did not tell them the output of the various drifts, but that he did give them the output of some. I do not see why he should deny that because he threw open his books to them for inspection and prepared a statement as to the output. There was no reason why he should conceal the output of those drifts. It would be the most natural thing in the world for the syndicate to ask when investing this money what the output had been and what the previous profit had been. The question for me to determine is: Did Barrett make these representations or not, or did he simply say—'From my knowledge of the ground I have reason to believe that the pay is good and will continue good?'—which is practically what he says-' I told them I had no reason to believe it was not as good because I did not know.' The workings of the claim 32 are confined to the centre of the claim practically, and run up and down the valley, and are drifts 2, 3, 6, 7, 8 and 9, which extend throughout the claim from end to end of a nearly uniform width of about 200 feet by 500, which is the length of the claim. These claims have been worked since the year 1898, and it strikes one as singular that the claim should be in this shape and that the working should be confined to the centre of the claim in this manner. It also strikes me as singular why the operations should stop, as they did stop, in a practically straight line up and down the claim, and did not branch off into the limits of the property. Barrett says, and some of his witnesses swear, that when they stoped on the edge of 3 and 2 and 6, the pay was just as good as the pay which they took out in any other part of the drift, that is, that pay did not get low and run out; and to explain why they ran up and down the creek instead of crosswise they say it would have been too far to wheel the dirt. Now,

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that is not a reasonable contention. We do not know where the shafts were, but supposing the shaft to be in the centre, then it was not harder to wheel the dirt from the side of the claim near the unworked portion to the centre than it was to wheel it from the end, nor as hard, and if the shafts had been at either end the same argument applies and is stronger. Looking at the operations, without any evidence at all, it strikes one that the pay gave out or became poor at the outer edges of those drifts, and with the evidence which was given I am convinced that that was the fact. Now, as to whether there is or is not pay outside of those old drifts, so far as the evidence given goes, one must conclude that there is no pay. The defendants after purchasing, worked out the, regular shaped drifts * * * at considerable loss; the pay was exceedingly poor; of that I have no doubt. It was in this vicinity that Barrett told them he sank the shaft which resulted in good pay. It is certain that if that is so the operations carried on by the defendants did not confirm Barrett's panning. As to the other side of the drifts—the part lying below 3 and 7, we have evidence of nine shafts being sunk * * * and in some cases considerable drifting done from them. In none of these was pay got. By ' pay' is meant placer gold that will pay to take out, and certainly no such pay as was found in the old drifts worked was got in those prospecting shafts. * * * There is no evidence to rebut the positive evidence that in all these holes the pay was extremely poor, small pans being got and at other times not even colours. It was contended that the prospecting done as evidenced by these holes, is not sufficient to base any opinion on as to the value of the unworked ground. * * * While it is but barely possible that spots may be found containing good pay between these holes yet I am

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satisfied that the prospecting there done is sufficient to show that the placer gold in that part is not even and extensive and of the same grade and quantity as was taken out of the worked drifts. Wilkins, a very intelligent witness of large experience, says what he found he would not call pay at all. * * * Bell, another expert miner, confirms him. It is true that other witnesses—Butler, a man also of large experience, says that he would not be satisfied with that prospecting, but would require to run drifts or tunnels between these various shafts so as to cross cut, and that pay might be found in that part which these shafts had not struck. No one denies that. It is possible that some pay may exist in spots between these shafts, but it must dodge around in a very curious manner to avoid all these shafts if it is there at all. Shafts were also sunk by laymen at E and D shown on the plan, and no pay found. Here we have both sides of the old workings explored, and so far as the explorations have gone (and they have been pretty general over the ground) no pay has been struck. I am of the opinion that for future operations claim ' 32 ' is worthless as a mining proposition

"Now, did Barrett know this? man was in a better position than he was to know it. "Witnesses were called who had taken lays of this ground, and it is also proven that Barrett knew of these lays when they were granted. The laymen swear that the lays extended up the creeks from the lower part—three 50 foot lays which would take in 150 feet of the claim and that Barrett must have known of the holes G, F, H, K and I, J. Barrett says he did not know of those shafts. It is hardly reasonable to believe that a man owning a property and being interested in it and knowing that lays were operated on it, and that the lays had been abandoned, would not make some in-

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quiry as to why they were abandoned, and would not know the result of the operations on this very ground of which he was the owner. It passes my comprehension and my belief that any one operating a mining claim would be so indifferent as not to know what the result of these laymen's operations had been. I believe that Barrett knew that this ground had been explored and was as it has turned out to be now. There is nothing to contradict his own story that he found good pay in three shafts that he sank * * * but if Barrett found good pay in those places then the subsequent operations made by the then explorers resulted differently. * * * Viewing all the circumstances, considering the fact that the syndicate made no investigation of the virgin ground, and that Barrett was in a position to know when they were not, I believe he made the representations which they say he made, and that he knew at the time he was making it that it was not correct. There is no doubt in my mind that these parties have been overreached, that they have acquired in '32' a practically worthless property. * * * These men say that they come from a country where business is not conducted upon these principles, where a man's word is taken. They say they were introduced to Mr. Barrett and met him several times at the house of Mr. Justice Dugas. * * * 'We did trust Mr. Barrett implicitly; we had been introduced to him by Judge Dugas, and it is a French custom when a high official such as Judge Dugas, one of the best men in the territory, introduces you—it is French custom to believe in him entirely.' And they say throughout their evidence that they did trust Barrett because they found him as they say they did find him. It is not denied—Barrett admits—that a very great part of the conversations which were carried on were carried on in Mr. Justice Dugas' house. Now, I

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can conceive that these men, coming from a different atmosphere, and meeting Barrett as they say they did, would be inclined to believe in him, that any suspicions they might have would be lulled in this way, and that they were the easier taken in. It did not occur to them that Barrett might have been imposing on the good nature not only of themselves, but of the judge, and under the cloak of this good company he was endeavouring to unload upon them properties which he had worked out. In this connection * * *Barrett endeavoured to show that no property ever carried pay from rim to rim, and particularly that Dominion Creek could not, as it is spotty, and that any one who believed such a story would be foolish, and it is true that all the witnesses with one or two exceptions, swore that if any man told them a yarn like that they would not believe him. Wilkins, one of the main witnesses for the syndicate, said he would not take any man's word for any such statement, but Barrett himself says that he has known a claim with pay from rim to rim, and it would not be unreasonable to believe a man if he said so. This he modified afterwards on re-examination, when his counsel saw the effect of what he was saying, by saying that when he knew of claims containing pay from rim to rim he meant claims which had pay in spots from rim to rim, but not even an extensive pay. I agree, upon the whole evidence, that it is most unusual, in fact, exceedingly rare, to find any claim in the Yukon Territory which carries pay as represented ; that is, even and extensive pay from rim to rim, pay as a rule being found only in certain channels or spots on the claim, larger or smaller, but not at all, as a rule, spread over the entire claim, and I believe that any man having experience in the Yukon Territory would not have believed a person making such a

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statement without investigation. Now, as to the meaning of even and extensive pay, I take it that the impression which they then got, and which Barrett intended to convey, was that the pay in the portions of the ground unworked was of the same nature and extent as the pay in the ground already worked out, and that basing a calculation upon the result of the former works and the area of the ground unworked, a very large profit would result from future operations. Of course, when one would say ' even and extensive' it could not possibly mean that every pan would be alike; that is manifestly impossible; but it would mean that the pay over the whole ground would in the wash up average the same, and that the same pay would be found all over the claim. As to claims '9' and '12,' I have already touched upon '12' so far as the extent of the operations is concerned. As to the extent of the pay I do not find the evidence so clear on behalf of the defendants. They swear that Barrett told them that pay was good and that the claim could be worked to a profit and that the same pay would be found all over the claim as was found on the face of the hillside, and in the part already worked. Barrett denies this, and it is evident that some considerable panning was done on the hillside, and I do not think the representations are as clear cut in regard to this claim at least, or not sworn to as clearly as in the other—'32.' In regard to '9,' the question of the value of the ground did not come up directly beyond the question of the output of a certain claim, and it is also confused, so that I cannot give any judgment or come to any conclusion upon the fact. I, therefore, do not find that the repre-sentations as to the extent of the pay have been proved in regard to these two claims and '12' hillside. Barrett says that he had worked the claim to a profit, but

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I cannot find that the representations were of the same direct nature respecting 12, nor as to 9, so far as the nature of the ground is concerned."

The learned trial judge in assessing damages continued as follows :—" There is also evidence that something was said of each parcel of four being valued at $35,000, and this claim No. 32, which I am considering, was taken at $35,000. That, I may say, however, was not definitely ascertained or sworn to, but some such conversation did take place. More than that, one Stearns was the owner of a half interest in this claim and that half interest was got in at $17,500 ; therefore the whole claim upon that basis would be worth $35,000. All these various pieces of evidence coming together would lead me to believe that the value fixed by Barrett to the knowledge of the syndicate, for this claim, in estimating the total value, was $35,000. The claim is now worthless. It could not be sold at all today for any money in my opinion. Will I assess the damages at $35,000, the price paid while allowing the defendants to retain? If revision of the contract had been asked for I have no doubt that would be the measure, less the profit derived from the claim. Now the syndicate have taken out a net profit from this claim of $13,317. Am I to allow this profit in estimating? If any other damage than the actual damage or loss sustained, in fact based upon restoration, would be allowed, then I may ignore the profit. The defendants also made a loss, but I think the net profit is $13,317. The question which is troubling me is—shall I deduct the profit from that value? If I am to go upon the principle of allowing profit and loss from the various workings I will have to estimate the loss for the working of drift 9, that is, I will have to calculate the value of the ground taken out of that claim in excess

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of what was represented by Barrett to have been taken out and in all other parcels as well. But I have no means of ascertaining this without a reference. No evidence on the question of total profit and loss was given. If this property had been sold before or after the working of drifts '7' and '5,' which were made by the syndicate, what would it have brought if intending purchasers were ignorant of the result of the prospects made upon the claim which revealed its worthlessness? I cannot tell this and there is no possibility of ascertaining it now. On the whole I think I am justified in allowing as damages the full price paid for this claim at $35,000 as loss of bargain. If I should have assessed upon the other principle I now make the calculation in case I may be wrong. There should be allowed $35,000, less the net profit of $13,317, but adding to that the value of the ground taken out of ' drift 9 ' in excess of representation ; also the syndicate should have interest upon the balance of their money from the date of the purchase until judgment. Then, as to the balance of the damages, the only other claim against which I allow damage is claim No. 12, and that is for the Cassidy drift, known as drift 4. In this I have no trouble in coming to the amount of the damages. It is sworn that the total product was $11,000 from this drift, but that it was worked upon a lay, in which the laymen received fifty per cent, which was a fair allowance; therefore, the loss in this case is $5,500, which will be added to the other, making the total damages against the defendant Barrett $40,500. There will be judgment for the syndicate for this amount on the cross action."

And directions were given as to the taking of accounts, etc.

On appeal to the full court the decision of the trial court judge was set aside by the judgment now

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appealed from and the syndicate's counterclaim against Barrett was dismissed with costs.

The questions raised upon the present appeal are stated in the judgments now reported.

Chrysler K. C. for the appellants.

Aylesworth K.C. and Ridley for the respondents.

The Chief Justice (dissenting.—I unhesitatingly would dismiss this appeal upon the simple ground taken by the majority in the court below, that these appellants, assuming that their allegations of misrepresentation and fraud have been proved, have not proved that they have suffered any damages. No separate valuation was put upon these properties, and it is quite consistent with the evidence that the value of the properties purchased by the appellants, apart from " Claim No. 32," exceeded the $167,500 they paid, and there is no evidence whatever as to the value of " Creek Claim No. 12 " at the time of the trial. Now, if the appellants got $167,500 worth of property or more, what damage have they suffered? The fact that they do not ask for the rescission of the contract would tend to indicate that they have not made such a bad bargain. I would also have found it impossible to reverse for the reasons that I gave in Kirkpatrick v. McNamee ([1]) upon an analogous appeal.

GIROUARD J.—I would restore the judgment of the trial judge purely and simply, but as the majority of the court think that the amount of the damages should be reduced I will not dissent.

Davies J.—I concur generally in the judgment of my brother Nesbitt, and think the appeal should be allowed and the judgment of the trial judge restored subject to the variation hereinafter stated.

[Page 299]

The findings of fact of the trial judge should not, I think, under the circumstances, be reversed. A great deal depended upon the manner in which the witnesses gave their evidence and I do not find anything in the evidence which would justify me in reversing these findings. So far as they affect this appeal the learned judge found as a fact that the appellants' agents in the purchase of the properties bought by them relied upon the representations made to them by the defendant Barrett at the time the bargain was made and the purchase completed. He had the means of knowledge and they had not. They "took his word about the yielding of the property" and "relied solely upon his representations" as to that fact. The representations were as to '"Plot 32" substantially that he, defendant, was certain the same pay was to be found from rim to rim; that he had prospected the claim so that he was certain; that he shewed them several holes that he had sunk on that ground and that he had prospected on the right limit and on the left limit, that is to say, from each side of the drift worked at that time, and that if he had not made these representations to them they would not have purchased the property at any such price.

The learned judge found as a fact not only that these representations were made and that the purchaser relied upon them in purchasing the property, but that they were false to the knowledge of the defendant Barrett when he made them. The representations made with reference to the "Cassidy claim. No. 4" were also found by him to be false to the knowledge of respondent Barrett, and that the appellants relied upon them in making the purchase. That being so the action would lie for deceit and fraud and the question would then remain whether or not, the representations being false as to two of the properties purchased,

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damages could be recovered irrespective of the other properties included in the purchase and irrespective of the results or values which these other properties yielded as to which no false representations were made.

The learned judge found as a fact that in making up the total consideration for the entire property purchased there was evidence shewing the values which had been placed by the parties upon each of the two properties as to which false and fraudulent representations had been made with respect to their yielding qualities.

On this point the evidence I am bound to say is not as clear and conclusive as I could wish but I accept the finding of the trial judge as correct upon the point.

Then, as to the measure of damages recoverable, it is clear that such damages must in actions for false and fraudulent representations not only be proximate but must be clearly defined and ascertained. All speculative values or damages must be excluded. The plaintiffs' loss is not in an action for deceit the value of his bargain. If the false statements relied on had not been made the plaintiff would have retained the consideration he paid but would have had nothing more, and the difference between that consideration and the actual value of the property represents all the loss that the defendants' wrong has caused.

The rule is laid down by Ch. J. Fuller of the Supreme Court of the United States in delivering the judgment of that Court in the case of Smith v. Bolles ([2]), who says:

What the plaintiff might have gained is not the question but what he has lost by being deceived into the purchase.

And further:

What the plaintiff paid for the stock was properly put in evidence not as the basis of the application of the rule in relation to the difference between the contract price and the market or actual value but as estab-

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lishing the loss he has sustained in that particular. If the stock had a value in fact that would necessarily be applied in reduction of the damages.

This is also the English rule. In Peek v. Deek ([3]) Cotton L. J. said:

The damage to be recovered by the plaintiff is the loss which he sustained by acting on the representations of defendant. That action was taking the shares. Before he was induced to buy the shares he had the £4,000 in his pocket. The day the shares were allotted to him which was the consequence of his action he paid over that £4,000 and he got the shares. And the loss sustained by him in consequence of his acting on the representations of the defendant was having the shares instead of having in his pocket the £4,000. The loss therefore must be the difference between his £4,000 and the new value of the shares.

It is true that both the English and American cases were those of fraud in the sale of a chattel. But the reason of the rule must, I take it, be equally applicable to the purchaser of mining properties such as those here in dispute and would be the difference between the value of the property and the price paid. It has been so followed in the Federal Courts of the United States. See Alwater v. Whiteman ([4]); Glaspell v. Northern Pacific Railroad Co. ([5]).

In the case now before us the trial judge found that the price paid for the property "No. 32" was $35,000. He also found that the purchaser had before the trial realized a net profit from the working of part of that lot of $13,317, and that the property as it then stood after deducting that $13,317 was practically worthless. This net profit being deducted from the price paid would leave the damages on lot "No. 32" at $21,683 which was the actual loss or damage sustained by the plaintiff on that lot. Then, as to the damages on the other property "Claim No. 12," for the "Cassidy drift" known as "No. 4," he finds, on the same principle, the damages to be $5,500 which added to the $21,683

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would make $27,183, for which amount judgment should be entered.

Nesbitt J,—I have had the advantage of reading the very carefully prepared judgment of my brother Idington, and shall therefore content myself with shortly stating why I am unable to agree with his conclusions. I fully concur with his statement of the law as to what is necessary to be proved in an action for fraudulent deceit The learned trial judge, however, who had the law there fully argued before him, and was quite alive to the necessity of distinct proof of the various matters referred to by my brother Idington, has found in a very fully considered judgment against the defendant Barrett. He says that having in view the fact that the defendant made no investigation of the virgin ground—

I believe he (Barrett) made the representations which they say he did and that he knew at the time he was making it that it was not correct. There is no doubt in my mind that these parties have been overreached; that they have acquired in 32 a practically worthless property.

In dealing with the other claim "12" he goes into the evidence very fully and concludes that "drift No. 4" was not pointed out and further concludes that inspection would not have revealed the drift. The learned judge found the greatest difficulty in coming to a conclusion as to how he should assess the damages He finds that while the price agreed upon was $167,500 that in reference to "32" the result of the evidence is:

There is also evidence that something was said of each parcel of four being valued at $35,000. That, I may say, however, was not distinctly ascertained or sworn to, but some such conversation did take place. More than that, one Starnes was the owner of a half interest in this claim and that half interest was got in at $17,500; therefore, the whole claim upon that basis would be worth $35,000. All these various pieces of evidence coming together would lead me to believe that the value fixed by Barrett to the knowledge of the defendant for this claim in estimating the total value, was $35,000. The claim is now worthless.

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He then proceeds:

It could not be sold at all today for any money in my opinion. Will I assess the damages at $35,000 the price paid while allowing the defendants to retain? If revision of the contract had been asked for I have no doubt that would be the measure, less the profit derived from the claim. Now the defendant syndicate have taken out a net profit from this claim of $13,317. Am I to allow that profit in estimating? If any other damage than the actual damage or loss sustained, in fact based upon restoration, would be allowed, then I may ignore the profit. The defendants also made a loss, but I think the net profit is $13,317. The question which is troubling me is—shall I deduct the profit from that value? If I am to go on the principle of allowing profit and loss from the various workings I will have to estimate the loss for the working of drift 9, that is, I will have to calculate the value of the ground taken out of that claim in excess of what was represented by Barrett to have been taken out and in all the other parcels as well. But I have no means of ascertaining this without a reference. No evidence on the question of total profit and loss was given. If this property had been sold before or after the working of drifts 7 and 5, which were made by the defendant company, what would it have brought if intending purchasers were ignorant of the result of the prospects made upon the claim which revealed its worthlessness? I cannot tell this and there is no possibility of ascertaining it now.

On the whole I think I am justified in allowing as damages the full price paid for the claim at $35,000 as loss of bargain. If I should have assessed upon the other principle I now make the calculation in case I may be wrong. There should be allowed $35,000 less the net profit of $13,317, but adding to that the value of the ground taken out of drift 9 in excess of the representation ; also the defendant company should have interest upon the balance of their money from the date of the purchase until judgment. Then, as to the balance of the damages, the only other claim against which I allow damage is claim No. 12, and that is for the Cassidy drift, known as drift 4. In this I have no trouble in coming to the amount of damages. It is sworn that the total product was $11,000 from this drift, but that it was worked upon a lay, in which the laymen received fifty per cent, which was a fair allowance; therefore, the loss in this case is $5,500, which will be added to the other, making the total damages against the defendant Barrett of $40,500. There will be judgment for the defendant syndicate of this amount on the cross-action, and there will be judgment for the bank, the plaintiffs, against the syndicate for the amount sued for by them, with costs.

I think that the true rule is laid down by the Supreme Court of the United States in Smith v. Bolles ([6]), in the following language:

 [Page 304]

He was bound to make good the loss sustained, such as the moneys the plaintiff had paid out and interest, and any other outlay legitimately attributable to defendants' fraudulent conduct, not the expected fruits of an unrealized speculation.

Also Mullett v. Mason ([7]).

The damages recoverable are such as result from false representations in so far only as the defendant is presumed to have known they were false. See Kerr on Fraud (3 ed.) p. 369.

I think, therefore, that assuming $35,000 was the price fixed for thirty-two the plaintiffs are entitled to the actual loss suffered.

It was urged very strenuously that the rule laid down in Peek v. Derry ([8]), in the Court of Appeal in England, was the rule applicable here, and that plaintiffs were compelled to show that the balance of the property remaining in their hands was not of such value that no loss might ultimately be suffered. I do not think that this is correct. I think that as to the balance of the property, although the purchase money is a lump sum, as the trial judge has found, that, in making up that lump sum, thirty-two was taken at $35,000, that, in absence of proof to the contrary by the plaintiffs, it must be presumed that the representation as to the balance of the property was true and that the property is worth the price agreed upon between the parties and that as the plaintiffs could not claim for speculative profits in connection with it, so the defendant cannot claim that there may be speculative value over and above the value at which it was taken between the parties, and the plaintiffs are entitled by their bargain to any speculative values which may exist in the properties, or to any enhanced value which may arise after the sale. The defendant cannot claim these enhanced values as an offset to the damage arising from fraudulent representation in respect to a distinct and separate parcel. The price at which the property

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is sold is not conclusive as to its value though very strong evidence, and so thought Lord Denman in Clare v. Maynard ([9]), at page 743. Had the sale been of all the properties for a lump sum without referring to the price separate as to one of them I still think it is a question of evidence entirely as to damages suffered in respect of one parcel. It may be difficult of proof. It cannot be the law that if I purchase five undivided mining properties and in developing the first one at a large expense I find I have been swindled and an action of deceit lies against the seller that I cannot recover the damages I have suffered from such fraud in respect of that property. I think the rule would be in such a case that if I could prove what the fair proportionate value of such property was to the other properties included in the purchase, and so establish what my loss was in respect of that one, I am entitled I think to assume that the representations as to the others are correct and that there is no loss to me in regard to them. But surely I cannot be compelled at a vast expenditure of money to go on and explore these properties to shew that they too are worthless, or if I do go on and explore them and find speculative value in them that this can be set off against my loss on the one on which loss has been occasioned. I am entitled by my bargain to get the benefit of any such speculative values if they should be found. The seller cannot claim the benefit of them. He is entitled on the contrary, until his representations are proved to be false and fraudulent, to have it assumed that the properties are of the character represented, and if the true proportionate value can be established at which they were taken in making up the lump sum, then the difference between the true proportionate value and the lump sum which

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I have paid for the whole would be my actual loss by reason of the fraud in reference to one, if that one worthless. I could also add the legitimate expense I have undertaken by reason of the fraud such as was necessarily to be expected to be undertaken as attributable to defendant's fraud.

Mr. Aylesworth illustrated a case of purchase of fifty shares of stock in one company and fifty shares in another company and the purchaser retaining both stocks and bringing an action for deceit. One stock proved, at the trial, to be utterly worthless and the other to have risen largely in value since the date of the purchase. He claimed that as it was only the actual loss which could be recovered in an action of deceit, that the person committing the fraud was entitled to set off the loss arising from the worthlessness of one stock by appealing to the enhanced value of the other. I do not think this is sound, I think the purchaser is entitled to the benefit of his bargain of the fifty shares with all its possibilities and that the vendor is liable for the fraudulent deceit in reference to the other. We are not, however, in view of the trial judge's finding in this case, driven to solve this difficulty because he finds that "claim 32," had a price set apart for it and we are able to arrive at the damage arising to the purchaser from the fraud which has been practiced. Apart from the question of damages I do not think we can, in view of the authorities, substitute ourselves in such a case as this for the trial judge, and I think that the findings of fact should not have been interfered with and they should be restored by this court. The memorandum book so much relied upon does not impress me in the same way as it has my brother Idington. The entries made in it are of an

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entirely distinct character from the representations relied upon.

The learned trial judge sat in appeal and after hearing full argument and the judgments of his brother judges he reiterates the view already expressed, and as it is peculiarly a case in which the local conditions of mining and certainly demeanor in the box plays such an important part I cannot feel that it is right for an appellate court to come to a conclusion that the trial judge was clearly wrong in his findings of fact. I would, therefore, restore the judgment with the variation suggested by my brother Davies.

Mr. Aylesworth also urged that as the counterclaim of the syndicate had been dismissed as against the plaintiffs no judgment could be given in the counterclaim against Barrett who has come in at the trial and consented to the case being gone on with against him. There is no direct authority I can find but it seems to me to be the better view that as the court was given jurisdiction by consent judgment can be entered. It may be that Barrett should be held to have nominated the trial judge the tribunal to dispose of the dispute between himself and the Syndicat in which case his judgment would not be appealable. See Attorney-General of Nova Scotia v. Gregory ([10]).

I think the appellant is entitled to costs in this court and in the courts below.

Idington J. (dissenting).—On the 23rd day of June, A.D. 1901, the defendant, the Syndicat Lyonnais du Klondyke, through its manager, L. Paillard, purchased from the defendant Barrett, one of the defendants by the original action, and defendant in the counterclaim, the following mining claims and machinery on same :

1. Creek Claim No. 32, below Upper Discovery, on Dominion Creek;

[Page 308]

2. Creek-Claim No. 12, above Lower Discovery, on Dominion Creek;

3. Hillside placer mining claim opposite the upper half of No.12, above Discovery, on the left limit of Dominion Creek;

4. Creek Claim No. 9, above Lower Discovery, on the same creek;

5. Creek Claims, upper and lower halves of No. 2, Cariboo Creek;

6. Hillside opposite the upper half of 28, on the left limit of Eldorado Creek;

7. A one-fifth interest in about 150 claims on Barlow Creek.

Also a roadhouse or hotel on mining claim No. 36, below Upper Discovery, on Dominion Creek, and a stock of provisions and liquors as described in the chattel mortgage, Exhibit "C" (referred to in the evidence, page 22) at the price of $167,500, payable $75,000 in cash and the balance of $92,500 secured by mortgage and note.

The appellants having received conveyances of these properties entered into possession and worked part of the property. The Canadian Bank of Commerce, as holders of this note and mortgage, sued appellants on the 16th May, 1902, therefore, and they set up fraud, and by a counterclaim that raises in effect an action of deceit, sought to recover from the bank and the respondent Barrett, damages arising from this deceit Barrett was not thus brought into the suit until the trial when he at once, upon amendment being directed and allowed, pleaded to the counterclaim denying the alleged fraud.

All other questions and issues are now out of the case and the counterclaim dismissed as to the bank. The trial judge, while dismissing the bank, found against Barrett in respect of four out of a much larger number of alleged misrepresentations which he was charged with making.

These findings are not literally as alleged, though said to be founded upon those set out in the pleadings. The appellants' factum summarizes them as follows:

(a.) That with regard to Creek Claim No. 32, below Upper Discovery, said defendant Barrett had prospected the claim all over;

(b.) That the pay-streak on said claim was even and extensive extending from rim to rim, and the said Barrett guaranteed that it was as good

[Page 309]

in the part unworked as in the part he had worked out himself, and that, by reason of his knowledge of what it contained and calculating upon the area worked by him, it would yield profits exceeding $400,000.

(c.) That, for the purpose of prospecting said claim, he, Barrett, had taken out a small drift at the upper end towards the left and that the ground taken out of said drift would not exceed 900 superficial feet.

(g.) That, excepting certain specified work, no work had been done on the upper part of Creek Claim 12.

To appreciate the evidence in support of these findings, we must bear in mind that fraud is proved when it is shown that a false representation had been made knowingly, or without belief in its truth, or recklessly, careless whether it be true or false, and that to prevent a false statement from being fraudulent there must always be an honest belief in its truth. Moreover, in an action of deceit, The plaintiff cannot establish title to relief simply by showing that the defendants have made a fraudulent statement; he must also show that he was deceived by this statement, and acted on it to his prejudice. To be a ground for an action of deceit the false statement must be material. It is an inference of fact, not of law, that the representation was the inducement. It is not sufficient defence to prove that the person deceived made some investigation into the facts.

The appellants were represented in the transaction by Paillard, and for the purposes of considering the evidence, and indeed the whole case, I will deal with him as if he were a party. He has stated what induced him to enter into the contract as follows:—

Q. What was the figure?—A. The figure we agreed upon was $167,500.

Q. What induced you to come to such an agreement and give such price?

A. Because he represented to us that the claims were pretty good, that it was a good investment and that, for instance on 32, I would get as much in proportion as he had taken out before, that the claim 32 would yield a profit of $400,000, that the expense would not be over 40 per cent of the gross output; I said to him several times that I relied entirely upon his word.

[Page 310]

At another time he stated:

Q. Did you rely upon yourself for any facts at all?

A. No, I took only the figures of Mr, Barrett, that is all. I could rely only on those figures.

It will be observed that in these two statements there is no distinction attempted to be drawn between the representation as to the figures and the representation or representations that I may refer to as of a general character, speaking in regard to the value or supposed value of the investment. It is necessary to bear this in mind in considering Exhibit "F 3," which contained memoranda made at the time in Paillard’s notebook. This notebook is referred to by Paillard in his evidence as follows:

Q. Did you make any other investigation on 32?

A. We went all over the ground and we asked Mr. Barrett the parts worked out and not worked out.

Q. You asked him as to the parts worked out, and did he give you any measurements?

A. He gave us a measurement.

Q. I think you told my learned friend that you put that down carefully in a memorandum book?

A. Yes.

Q. Everything he said to you about the measurement?

A. Yes.

Q. Everything he told you about the quality of the ground?

A. Yes.  .

Q. And in fact everything he said from the time you went there until the purchase was concluded was kept track of?

A. Not perhaps everything.

Q. Everything of moment V

A. Yes.

Q. You carefully put that down in a memorandum book?

A. Yes.

Q. With what object did you do that?

A. It was to have an idea of the ground worked out in that claim, to see how much ground was left to work, and to see how much that claim had yielded, and to see how much it would yield.

He says the entries thus made on this note book were made at the time, standing upon the property

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that was being bargained for, and in the course of the talk he had with Barrett in relation thereto.

It strikes me as most singular that in these memoranda there is not to be found a single reference to any one of the grounds upon which the misrepresentations are now rested.

I have no doubt that Paillard got all that appears in Exhibit "F. 3" for the express purpose of testing the value of the property and forming from that his own judgment, and that he discarded as of no consequence what he was told, if ever told, about even and extensive continuation of the same rich products from rim to rim; the $400,000 prospective profits; the 30 x 30 feet at foot of No. 9 shaft; Barrett's assertion of having prospected all over, and the materiality of that now raised as to numbers 3 and 4, the products of which might have come out of one shaft as well as two.

The commendation and all that bears that character is left out of the note book. What one expects a prudent man to have noted is noted, and what a business man of that kind would discard has been discarded. It destroys by what it includes, and what it omits, the theory now put forward by Paillard of his having relied entirely on these representations now in question.

The excuse is given that Paillard did not put down those because they did not deal in quantities.

The quantities given were but the means of testing the quality of the property.

Why should express representations of quality in such a case be omitted if stated and relied upon?

The excuse given does not appear to me well founded. The manner of making the representations stated by Paillard and the circumstances of giving them are stated as follows:

[Page 312]

Q. What occurred when you went to him?

A. Mr. Barrett showed us the properties; he took us on the ground.

Q. What ground first?

A. First, he took us on 32 below upper; I requested him to make a plan in order to understand better his explanations, and he said it was better to see, on the ground itself; he showed us the part worked out and the part that was left to be worked; and he gave us the figures for each and every drift; I put them on my memorandum at the same time.

Q. What did he say, if anything, as regards the drift of 32?

A. For each drift he gave me the figures of the output of that drift, and he said that the same pay would be found all over the claim.

Q. What figures did he give you?

A. He gave me several figures, one for each drift.

And again:

Q. Did he state to you at any time how he arrived at the knowledge that 32 was a claim that would yield such enormous profit?

A. He said that judging from the amount of gold he had taken from those drifts, and being certain that the same pay was to be found all over the claim.

Q. Did he tell you how he was certain?

A. He said that he was certain that the same pay was to be found from rim to rim.

Q. Did he say what made him certain as to that?

A. He said that he had prospected the claim so that he was certain.

Q.What parts of it did he say he had prospected?

A. He showed us several holes that he had sunk in the ground.

Q. Did he say what part of the claim he had prospected?

A. Yes, he said he had prospected on the right limit and on the left limit, that is to say, from each side of the drifts worked at the time.

Q. If he hadn't made these representations to you which you have stated would you have purchased the property at any such price?

A. No.

Q. What did you rely on in making the purchase?

A. I took his word.

Again (p. 100):

Q. Coming to the particulars of the alleged misrepresentations, we will take up the first one, that is A., respecting creek claim 32; did he show you the holes on the claim?

A. He showed us some holes; yes.

Q. Did he show you all the holes that you have on this plan, Ex. "H. 2"?

A. No; all the holes that are on that plan were not there at the time.

Q. Did he show you all thus holes that were there at the time?

A. He showed me several holes; I don't know if they are all on this plan or not.

[Page 313]

Q. Can you point out any holes on this plan that were there at the time he showed you?

A. I can mention the holes that are on this plan that he showed us.

Q. I want to know if there are any holes on that plan which were there at the time that he didn't show to you?

A. I don't know if there were more holes that he didn't show me because there were some tailings on the ground.

Q. Have you any holes marked on that plan as being there at the time when you made the examination which he didn't show you at the time?

A. I don't see any.

Q. Well then, when you say prospected all over, you mean that he said that he had sunk these holes?

A. He said he had prospected the claim all over.

Q. And he showed you the holes that he prospected?

A. He showed me some of them, but I don't know if he showed all the holes that he had sunk because there was some tailings.

(P. 102):

Q. You say in item B, of your alleged misrepresentations that calculated by the area it would yield $400,000; that is 32?

A. Yes.

Q. Did he absolutely guarantee to you that?

A. He said he was sure the pay would yield a net profit of $400,000 according to what he had and that he was sure the pay was the same on the balance of the claim; he said he was certain.

Q. How could he be certain?

A. I don't know; he said he had prospected all the claims so that he knew pretty well what was in that claim.

(P. 122):

Q. Have you any entry in your memorandum book with regard to the representation which you say Mr. Barrett made that the claim would yield you a profit of $400,000?

A. No.

Tarut, the assistant of Paillard, who went with him, says, p. 124:

Q. For what purpose did you go?

A. We went at that time for examination of the claim.

Q. After you got there what did you do?

A. Mr. Barrett took us over the ground and showed us all the limits of the claim, his plant, and gave us every opportunity about seeing the claim.

Q. Well, what claims were talked of, if any?

A. He took us the first to 32 and Mr. Paillard requested him to make a sketch of the claim. He said that he was not able to do so, but that

[Page 314]

he would give Paillard full information and then Paillard wrote down the information and made a sketch according to his statement.

Q. Where was this done?

A. This was done on the ground, on 32.

Q. Do you remember what was said by Barrett as to 32?

A. He told us that the pay was even from rim to rim; that he had prospected the claim all over and had ascertained this fact, and he showed us an old shaft where he had taken out $25 in an hour and a half from rocking; this was close to the right limit in the upper part of the claim. On the right limit he showed us a hole where he had found good pay.

Q. Did he say anything further as regards the claim?

A. He gave us the output that had been taken out for each drift.

And, p. 125, after stating quantities taken, he is asked:

Q. Anything after that?

A. After that he said the area of what was worked on the claim, and for drift No. 1 we estimated, according to his statements, that there was 2000 square feet worked out.

What is meant by the term "prospecting," so frequently used by these gentlemen? What did Paillard think it meant? Did he not take it to mean what he had been shown there, the tests put before him? It is not said by Paillard that he understood it in any other sense. It ought not to be taken in any other sense than what any person of ordinary intelligence standing where they stood on the property, going from one hole to another on it as they did, seeing what could be seen there, measuring results as given and noted down, might, when such a phrase was used, reasonably he expected to intend it to mean.

Barrett was speaking of and in relation to this very means of exploration of which Paillard was taking notes. The meaning of prospecting here is not what others might think or attach to it as a generic term or descriptive of the exceeding care that a cautious man might use for himself to test such property. The evidence relating to that and that kind of work was, I submit, beside the question and misleading. It

[Page 315]

seems to me that the learned trial judge did not correctly appreciate the evidence

Listening to witnesses explaining what was not for the purpose then in hand a technical term shows this. This is not a case for rescission, where it might be possible to conceive of this language having led to such misconception as to entitle one who did not really understand it to relief.

It is an action of deceit of which the very essence is that there should be no doubt of what the speaker intended and the listener understood by the language used.

Is it not a most remarkable feature of the case that this man who is charged with fraud has not in a single instance of those numerous and important specific statements set down as from him in this note book, been proven to have made in regard to any of them a single false statement?

Is it not equally remarkable that such proof failing it is sought to rest the charge of deceit on evidence of conversations which all authority warns against as fruitful of errors? Misunderstanding of each other's meaning in conversation and the possible faults of memory at the end of two years as to the exact language used, render it dangerous to try to so fix upon any one a charge of fraud.

The learned trial judge infers from the knowledge Barrett had that he knew a great deal more than I can find the evidence as showing he knew or pretended he knew.

There may be much ground of suspicion that the pay-streak in the main drifts had been so rich that Barrett was afraid the rest would not prove as fruitful as that had so far been. We must have much more than suspicion, we must have clear proof of it, or facts from which we cannot infer anything but fraud, before

[Page 316]

we can act. We cannot infer it from the results here in so hazardous and uncertain a business as mining.

The fact that the learned trial judge allowed himself for an instant to impute to Barrett the knowledge before the sale of the results derived from digging the holes G. F. H. K. and IJ, which were dug after the sale tends, I submit with every respect, to deprive his judgment of that weight which it is usual to give to the trial judge's opinion.

Then, did Paillard rely upon these representations now relied upon? The learned trial judge says:

At first I was amazed that the men should have believed, as they say they did believe.

With great respect I am unable to understand how he ever got rid of his first impression. The story of Paillard relying entirely on these alleged unnoted misrepresentations is exceedingly improbable. Consideration of this point is of importance in a twofold aspect. If the stories were not relied on then there is no ground of action. And if they are incredible or improbable that tends to discredit the man who says he did rely on them. Take the one that "the claim 32 would yield a net profit of $400,000." This property was one of four (included in this sale) that the man so implicitly relied on put before the witness Paillard as of an equal value, and on this basis he furnished equally good expectations to the witness of realizing $1,600,000, and this Barrett was giving away for $167,500, and the gentleman of education, who had been in Dawson City in the Yukon on mining business for two years previously to receiving this tale, swears he believed and relied upon it and was induced thereby to enter into this contract. And he believes all that from the mouth of a man who was a comparative stranger.

I call attention the more readily to all this in weighing Mr. Paillard's evidence, because I find him by the

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following evidence telling something that a regard for his own honour ought to have seen put right by the end of this trial; (p. 93):

Q. And did you receive a letter in reply?

A. Yes.

Q. Where is that letter?

A. That letter is lost.

Q. You received another letter about this too?

A. Yes.

Q. That met a like fate?

A. That was lost too.

Q. And they were burnt?

A. No, not that I know of.

Q. You have an office on the claims out there?

A. Yes.

Q. Some place to keep documents?

A. Yes, we have an office.

Q. These letters disappeared almost immediately after you received them, didn't they?

A. No.

Q. We hadn't them on the 14th October, the time the examination was held?

A. Yes, I could not find them at that time.

Q. When did you receive them?

A. I think I received the first of them in the beginning of September.

Q. The examination was held on the 18th October?

A. That may be. I don't remember.

Q. These letters were valuable papers, were they not?

A. I didn't consider them.

Q. They referred to a large transaction?

A. Yes.

Q. And I suppose they contained the commendation or blame of you entering into this large transaction?

A. Yes.

Q. And yet they disappeared?

A. They were mislaid.

If he relied on what he now is said to have relied on, the correspondence with his principals would have shown it and been quite clearly admissible to refresh his memory, if on no other ground.

It is not the case of the destroyer of the documents, so there is in law possibly no legal presumption against

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him. But the principle lying at the bottom of that rule may as matter of reason be well applied.

I have dealt with the case as we, I think, ought to regard it from the salient points of view. We have to determine whether or not the court below were right in overruling the judgment of the learned trial judge.

Though I have not here set out an analysis of the evidence in detail I have read everything, including not only that referred to by the factums but also all that which in the case is presented on behalf of the appellants, and much of it many times, and find nothing sufficient therein to correct or change, but rather on the contrary to deepen, the general impressions received and presented above.

When one approaches the other evidence from the point of view I have taken in regard to Mr Paillard I think there can be no doubt, in the absence of a report to the contrary expressly discrediting the witnesses testifying against him, that the evidence they gave is entitled to equal credibility with that of Mr. Paillard or any other, and the weight of evidence manifestly is thus found against the appellants. The main claim of misrepresentation thus falls to the ground, and the others I think must go with it.

For example, I find Paillard thought at one time after investigating the matter that the so-called 30 x 30 feet area which is spoken of as the excavation of No. 9, was much less than about one half what he now alleges. As to that matter there is not any reliable basis for saying more than that probably the area exceeded 30 x 30 feet somewhat, but how much, or how much at least, is not shown. The story as to Cassidy and his work, and whether there were two shafts or one seen or shown, does not seem to me of much importance. Pail lard at any one time after discovering these things did not seem to attach more importance to them

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than as being probable mistakes. It was by dwelling upon the extravagant meaning attached to the word " prospecting " that seems to have led to the fundamental error in this case of imputing to Barrett a representation he cannot necessarily be said to have intended, and then imputing to him a knowledge that he is not shown to have possessed or to have pretended to possess.

And the basis for the assessment of damages for $35,000 is thus gone. That being the case, I need not dwell upon the features of the case in which the further sum of $5,500 is allowed. Not only does it fail by reason of the weight of evidence being against it, but the principle upon which such assessment was made is, I think, entirely wrong. This brings me to the question of damages, which I need not in the view I take decide, and say upon what basis they should be assessed. I am quite clear that they have been assessed upon an entirely erroneous basis. The plaintiff in an action for deceit is entitled only to such damages as he can show he has sustained. This contract was not a joining of a number of sub contracts together resulting in a total, but was one entire contract for the block sum already stated Whatever Barrett may have" thought or said, Pail lard expressly discards any other way of looking at the matter at the time of the bargain than as a complete whole. His company may not have been damnified a single cent. We have not the evidence upon which, whatever may be the correct legal method of assessing damages in this case, we can apply successfully the legal principle that only for such damage as the appellants sustained could they recover damages here. They had a very obvious remedy in rescission if, when their suspicions were first awakened, they had taken steps

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to that end. They had done no more than in the case of The Lindsay Petroleum Co. v. Hurd ([11]). The appeal should be dismissed with costs.

 Appeal allowed with costs.

Solicitors for the appellants: Bleecker & O'Dell.

Solicitors for the respondent: Pattullo & Ridley.