Here is the correct link: https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/18539/index.do

 

 

 

Dear Colleagues:

 

The Supreme Court of Canada has today released its decision in 1688782 Ontario Inc. v. Maple Leaf Foods Inc., 2020 SCC 35 which deals with the recovery of pure economic loss in negligence: https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/18538/index.do?q=39006. Over 168 paragraphs, the court divided 5-4 as to whether the supplier (Maple Leaf Foods Inc) owed a duty to the franchisees of Mr. Sub.

 

The majority decision is far-reaching, and both decisions, cite numerous ODGers. Rather than attempt a case comment, and in light of the fact that I was a consultant on the case, I’ll rather indicate some of what I take the key points of the majority to be:

 

1.    The best understanding of the tort of negligence is the rights-based view. The reason why pure economic loss claims fail is because rights are missing not because prima facie duties are negated by policy.

 

2.    Duty is a question of law and is therefore subject to the standard of correctness on review.

 

Negligent Performance of a Service

 

3.    The combination of an undertaking and reasonable reliance is a right creating event in tort law, meaning that negligent misrepresentation and negligent performance of a service are not separate categories of economic loss using different principles.

 

4.    The appellant’s claim fails on this Hedley Bryne v Heller principle since: (a) the undertaking was not made to them (but rather to its customers), (b) nor could the appellant prove detrimental reliance since they were bound, and had no alternative courses of action to pursue.

Winnipeg Condo

5.    The recovery in Winnipeg Condo is justified on the basis of reasonably protecting the rights to physical integrity or property of the plaintiff. Recovery is therefore limited to situations of danger to the plaintiff him- or herself.

 

6.    This means that : (a) the principle, as a practical matter, will hardly every apply to justify repair costs of consumer goods since they can easily be disposed of; and (b) that the court might be willing to draw a distinction between the cost of removing the danger and the cost of repair (which was awarded in Winnipeg Condo) in the future.

 

7.    The appellant’s claim therefore fails on the Winnipeg Condo principle since whatever costs were incurred in disposing of the tainted meat where incurred to protect the rights of the third parties/customers not the rights of the appellant.

 

8.    Because Winnipeg Condo was decided before Cooper v Hobart, it cannot be fully relied upon as an authority and courts, on a going forward basis, should also robustly address proximity.

Novel Duty

 

9.    In relation to establishing a novel duty of care, it is best to start with the proximity stage of the analysis, rather than foreseeability since what is foreseeable will be intimately linked to and governed by the relationship of proximity.

 

10.In considering proximity in cases where there are chains of contracts, the vulnerability of the plaintiff, ie their ability to protect themselves from the loss suffered and whether they have actually done so, could/should be examined.

 

11.A plaintiff will not be said to be vulnerable when that vulnerability is self-induced or where they did not seek insurance coverage for the loss.

 

12.The appellant’s novel duty claim therefore fails since the appellant choose to operate as a franchise rather than independently, which entailed certain vulnerabilities in exchange for certain advantages (use of the franchisor’s trademark, its system of operation, and the franchisor’s buying power, etc). Moreover, the appellant choose not to avail itself of insurance.

Happy Reading,

 

 

Jason Neyers
Professor of Law
Faculty of Law
Western University
Law Building Rm 26
e. jneyers@uwo.ca
t. 519.661.2111 (x88435)