Canadian NBA player triumphs in fraudulent misrepresentation suit

A brief summary of the facts

In May 2023, with plans to start a family, Gilgeous-Alexander and his partner purchased a luxury home in Burlington, Ontario, through a holding company (the “Buyer”). They acquired the property from 1000176653 Ontario Inc. (the “Seller”), whose sole director and owner was Ray Gupta. The couple made the purchase on the understanding from the Seller, represented chiefly by Ray’s son, Sandeep, that the property was “private and secure”. 

Shortly after closing, the couple learned that Aiden Pleterski, more widely known as Ontario’s infamous “Crypto King”, last lived at the property as the Guptas’ tenant. Given the widely publicised bankruptcy proceedings against Pleterski, stemming from allegations that he had defrauded cryptocurrency investors of over CAD 25 million, the property had been the subject of recent attempted break-ins and vandalism. Upon learning of the risks, the couple vacated the property and, through the Buyer, sued the Seller for fraudulent misrepresentation, among other claims.

Fraudulent misrepresentation

Fraudulent misrepresentation occurs when a defendant makes a false representation of fact, either knowing it was false or being reckless as to its truth, with the intention that it be acted upon by the plaintiff; the plaintiff does indeed rely on that statement and, as a result, suffers damages.[2]

How fraudulent misrepresentation was applied in the decision

At trial, the motion judge ordered recission of the Agreement of Purchase and Sale of the Property for fraudulent misrepresentation and latent defect. The Court of Appeal upheld the findings, holding that the Seller marketed the property to the couple as private and secure, while knowing there was a safety risk. Evidence had been adduced on the motion that Sandeep was worried about defrauded investors physically harming Pleterski at the property, and also knew that he had been kidnapped, and a CAD 3 million ransom had been sought for him.[3] The Court inferred the intention to defraud, holding that “silence can amount a fraudulent representation where, as here, the Seller failed to disclose relevant information about the Property”.[4] The couple relied on the Seller’s statements when buying the property and then suffered damages in the form of costs incurred from purchasing an unsafe property.

Going forward

This decision serves as a reminder to sellers that full disclosure in real estate transactions is essential, and includes providing accurate information about a property’s safety. 

Saghi Khalili focuses on commercial real estate matters, including the acquisition, disposition, financing, and leasing of all types of real property. She regularly assists clients across all industries in drafting and negotiating commercial and real property-related agreements.