Nesbitt, Thomson & Co. Ltd. v. Pigott et al.

Nesbitt, Thomson & Co. Ltd. v. Pigott et al.

The prospectus statements were not justified by the contemporaneous engineering reports and were false; the circular's draftsman acted with at least reckless indifference to their truth, which suffices for civil liability and rescission; Pigott, though a trustee, as the contracting purchaser had standing to rescind; the limitation period did not begin to run until plaintiffs discovered or suspected the fraud (late 1934), so the 1935 action was timely; accordingly rescission and repayment for the shares purchased in 1927 were ordered.

Citation
[1941] SCR 520
Parties
Appellant Defendant: Nesbitt, Thomson & Company Limited; Respondent Plaintiff: Joseph M. Pigott; Respondent Plaintiff: Pigott Construction Company Limited
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
7 October 1941
Procedural Posture
Contract (prospectus Misrepresentation; Rescission) / Appeal to the Supreme Court of Canada From the Court of Appeal for Ontario; Judgment on Merits (appeal Dismissed)
Outcome
Appeal dismissed with costs; judgment of Court of Appeal for Ontario affirmed; partial rescission granted to respondents
Legal Topics
Rescission, Fraudulent Misrepresentation, Prospectus Liability, Limitation Period (concealed Fraud), Trusts and Standing to Sue
Source Language
English
Contract Equity Securities Rescission Fraudulent Misrepresentation Prospectus Liability Limitation Period (concealed Fraud) Trusts and Standing to Sue

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Parties

Nesbitt, Thomson & Company Limited

Appellant Defendant

Joseph M. Pigott

Respondent Plaintiff

Pigott Construction Company Limited

Respondent Plaintiff

Procedural Posture

Contract (prospectus Misrepresentation; Rescission) / Appeal to the Supreme Court of Canada From the Court of Appeal for Ontario; Judgment on Merits (appeal Dismissed)

Legal Issues

  1. 1 Whether statements in a selling circular/ prospectus were false and made knowingly or with reckless disregard such as to ground rescission/damages
  2. 2 Whether purchaser who held shares as trustee had standing to sue for rescission
  3. 3 Whether the action was statute-barred under the Limitations Act and when the limitation period began to run

Ratio Decidendi

The prospectus statements were not justified by the contemporaneous engineering reports and were false; the circular's draftsman acted with at least reckless indifference to their truth, which suffices for civil liability and rescission; Pigott, though a trustee, as the contracting purchaser had standing to rescind; the limitation period did not begin to run until plaintiffs discovered or suspected the fraud (late 1934), so the 1935 action was timely; accordingly rescission and repayment for the shares purchased in 1927 were ordered.

Court Disposition

Appeal dismissed with costs; judgment of Court of Appeal for Ontario affirmed; partial rescission granted to respondents

Orders

  • Contract for purchase of specified shares (100 preference and 40 common bought 22 June 1927) rescinded upon return of share certificates
  • Defendant to repay purchase price of $9,800 with interest and costs upon delivery of certificates