Manitoba Court of Appeal leaves equitable fraud open in ordinary contracts.
The Manitoba Court of Appeal has refused to strike out a pleading alleging equitable fraud where there was a contractual relationship only but no special relationship nor plaintiff's vulnerability: Vitacea Company Ltd et al v The Winning Combination Inc et al [2016] FICR 40; 2016 MBCA 126.
The defendants applied to strike out the allegation on the basis that it did not disclose a reasonable cause of action, arguing that a claim of equitable fraud only arises in the context of a special relationship or special circumstances where a plaintiff is vulnerable but not where only a contractual relationship exists between the parties. The trial judge refused, holding that it was not plain and obvious that the claim in equitable fraud was not supportable in law or that it was beyond doubt that it would fail. The defendants appealed.
Monnin J for the Court of Appeal said at [11] that whether a claim based on equitable fraud can only arise in circumstances where a special relationship has existed is very much an open question.
While it must be remembered that this was on a strike-out application where the test is whether it is plan and obvious that the claim will fail, the comments of the Court of Appeal indicate that this is more than a case where a claim is simply arguable, and is one which might be a vehicle for change or clarification of the law by this court of the Supreme Court of Canada.
