In 561895 Ontario Inc.v. Metropolitan Trust Company of Canada, the Ontario Court of Appeal recognized the courts:
“well established policy in favour of upholding and enforcing settlements agreed upon by litigants, or potential litigants, absent evidence of fraud, mistake of fact or unconscionability”.
The Court then considered the elements of fraudulent misrepresentation:
"It is common ground before this court that the elements of fraudulent misrepresentation are: (1) that the defendant made a false representation of fact; (2) that the defendant knew that the statement was false or was reckless as to its truth; (3) that the defendant made the representation with the intention that it would be acted upon by the plaintiff; (4) that the plaintiff relied upon the statement; and that the plaintiff suffered damage as a result."
The first element is satisfied where there is a failure to disclose a material fact where the party is under an obligation to disclose. As the trial judge determined that the party was under a fiduciary obligation and they had failed to disclose a material fact, the trial judge was was upheld in setting aside the release.
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