Date: Mon, 12 Jun 2006 15:00:37 -0400

From: Jason Neyers

Subject: Economic Loss & Government Liability

Dear Colleagues:

For an interesting case of economic loss and government liability, see Sauer v. Canada 79 O.R. (3d) 19 (SC).

The borders to the United States, Mexico and Japan were closed to Canadian cattle and beef products after an Alberta cow was diagnosed with BSE. The plaintiff in a proposed class proceeding alleged that the infected cow consumed feed that included ruminant meat and bone meal contaminated with BSE. The plaintiff sued the Attorney General of Canada, as regulator of the cattle industry in Canada, R Inc., the manufacturer of the cattle feed alleged to have been consumed by the infected cow, and RC Ltd., the Australian parent company of R Inc., on behalf of Canadian commercial cattle farmers. The plaintiff alleged that the federal government was negligent in enacting, or failing to enact in a timely fashion, regulations pursuant to the Health of Animals Act, S.C. 1990, c. 21 or the Feeds Act, R.S.C. 1985, c. F-9 with respect to the permissible ingredients in cattle or ruminant feed. It was alleged that R Inc. was negligent as a result of its continued inclusion of RMBM in cattle feed sold in Canada, despite alleged knowledge that RMBM used in feed could cause BSE in Canadian cattle, and that R Inc. knew or ought to have known that a diagnosis of BSE would result in a ban of importation of cattle and beef products to the United States. As against RC Ltd., the plaintiff claimed that the corporate veil should be pierced and that the parent company should be held liable for the alleged wrongs of R Inc. Each defendant moved for an order striking the statement of claim as against it as disclosing no reasonable cause of action.

Held, the motions of R Inc. and the Attorney General should be dismissed; the motion of RC Ltd. should be granted.

Happy reading,

--
Jason Neyers
January Term Director
Assistant Professor of Law
Faculty of Law
University of Western Ontario
N6A 3K7
(519) 661-2111 x. 88435

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