Dear Colleagues:

 

Those teaching torts, and looking perhaps for exam inspiration, will be interested in the recent decision of the ONCA in Subway Franchise Systems of Canada, Inc. v. Canadian Broadcasting Corp :https://www.ontariocourts.ca/decisions/2021/2021ONCA0025.pdf.  The plaintiff (Subway) sued the defendant (Trent University) for defamation and negligence after a CBC television program alleged that Subway's chicken sandwiches were made of only slightly more than 50% chicken. Prior to broadcasting the program, CBC had contracted with Trent to test the chicken content of the sandwiches. The results of that testing were, in part, the basis for the statements made on the broadcast. The plaintiff alleged that its loss occurred because Trent was careless in performing a service, testing Subway's products, and that Trent's carelessness in testing led the CBC to make false statements about those products, thereby affecting consumer behaviour and causing Subway's pure economic loss.

 

The court held that the plaintiff’s case should be dismissed since its claim did not show substantial merit on the duty of care requirement.  This was on the basis that there was no undertaking made to the plaintiff and no reliance by the plaintiff on that undertaking. Moreover, the court concluded that no novel duty of care could be recognized since:

 

128 The constellation of factors to which Subway points are primarily about foreseeability of harm, not proximity. They do not show a close and direct relationship. They do not show any expectations, representations, reliance, or statutory obligations as between Trent and Subway. They do not show anything that fulfils the purpose served by the requirement for an undertaking and reliance in a negligent misrepresentation or performance of services case, that is, something that shows a legally cognizable right of the plaintiff is affected. Nor do they show interests affected akin to rights in person or property. Subway's negligence claim is only about the pure economic harm it suffered.

 

Along the way, the court also cast doubt (at para. 114-16) on the correctness of its own decision in Haskett v. Trans Union of Canada Inc. (2003), 63 O.R. (3d) 577 (C.A.). It also summarized what it took to be the import of Maple Leaf Foods:

 

78 First, proximity is distinct from reasonable foreseeability of harm. Parties are not in a proximate relationship

simply because it is reasonably foreseeable that carelessness by one will harm the other economically. "[T]he

defendant's ability to reasonably foresee injury to a plaintiff is insufficient to ground a finding of proximity": Maple

Leaf (SCC), at para. 84.

 

79 Second, the proximity analysis takes place against the backdrop of the fundamental principle that a plaintiff

must have a right, or legally cognizable interest, that would be vindicated by recognizing a duty of care on the part

of the defendant. This is particularly important in cases of pure economic loss because there "is no general right, in

tort, protecting against the negligent or intentional infliction of pure economic loss". The loss to be recovered must

be "the result of an interference with a legally cognizable right": Maple Leaf (SCC), at paras. 18-19.

 

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)