In Midland Resources Holding Limited v. Shtaif, 2017 ONCA 320, the trial judge found the appellants liable to a company’s shareholders for fraudulent misrepresentations before and after an initial public offering (IPO). On appeal, the appellants argued that the trial judge erred in finding liability based on the IPO-related statements because the respondents did not plead or argue at trial that such statements amounted to fraudulent misrepresentations.
The Court of Appeal stated that a pleading of fraud or misrepresentation must set out with careful particularity the elements of the misrepresentation relied upon, including:
- the alleged misrepresentation itself;
- when, where, how, by whom and to whom it was made;
- its falsity;
- the inducement;
- the intention that the plaintiff should rely upon it;
- the alteration by the plaintiff of his or her position relying on the misrepresentation;
- the resulting loss or damage to the plaintiff; and
- if deceit is alleged, an allegation that the defendant knew of the falsity of his statement.
The Court of Appeal overturned the trial judge’s finding of liability in respect of the IPO-related statements.