COURT OF APPEAL FOR BRITISH
COLUMBIA

Citation:

The Los Angeles Salad Company Inc. v. Canadian Food
  Inspection Agency,

2013 BCCA 34

Date: 20130129

Docket:
CA039160

Between:

The Los Angeles
Salad Company Inc. and

Los Angeles Salad
International Inc.

Appellants

(Plaintiffs)

And

Canadian Food
Inspection Agency and Her Majesty the Queen in
Right of Canada as Represented by the Attorney General of Canada

Respondents

(Defendants)

Before:

The Honourable Mr. Justice K. Smith

The Honourable Mr. Justice Frankel

The Honourable Madam Justice Bennett

On appeal from:
Supreme Court of British Columbia, June 15, 2011
(
The Los Angeles Salad Company Inc. v. Canadian Food Inspection Agency,
2011 BCSC 779, Vancouver Registry S076293)

Counsel for the Appellant:

Dale G. Sanderson, Q.C.
Tina Mihoc

Counsel for the Respondent:

Marlon Miller
Jim Shaw

Place and Date of Hearing:

Vancouver, British
  Columbia

May 14 and 15, 2012

Place and Date of Judgment:

Vancouver, British
  Columbia

January 29, 2013

Written Reasons by:

The Honourable Mr. Justice K. Smith

Concurred in by:

The Honourable Mr. Justice Frankel

The Honourable Madam Justice Bennett

Reasons
for Judgment of the Honourable Mr. Justice K. Smith:

[1]

This appeal raises the question whether federal government food
inspectors owe a private law duty of care to sellers of food products the
breach of which would found an action for damages in tort.

[2]

The appellants, United States corporations that distribute carrots for
retail sale by Costco in Canada and the United States, sued the respondents for
damages for negligence in their inspection of carrots the appellants imported
into Canada. At the material times, the respondent Canadian Food Inspection
Agency (the CFIA) was exercising its inspection powers under the
Canadian
Food Inspection Agency Act
, S.C. 1997, c. 6, and the
Canada
Agricultural Products Act
, R.S.C. 1985, c. 20 (4th Supp.). The
respondent Attorney General of Canada represents the Public Health Agency of
Canada, established pursuant to the
Public Health Agency of Canada Act
,
S.C. 2006, c. 5, and Health Canada (presided over by the Minister of
Health), which agencies assisted the CFIA in the investigation.

[3]

On application in chambers by the respondents, the Honourable Mr.
Justice Harris of the Supreme Court of British Columbia (as he then was)
concluded the respondents owed the appellants no duty of care and, as a result,
that the appellants statement of claim disclosed no reasonable claim. Accordingly,
he struck their statement of claim and dismissed their action.

[4]

The chambers judge applied the analytical framework derived from
Anns
v. Merton London Borough Council
, [1978] A.C. 728 (H.L.) (the
Anns
test), as it was refined in
Cooper v. Hobart
, 2001 SCC 79, [2001] 3
S.C.R. 537 (the
Anns/Cooper
test

) to the question whether the
CFIA owed the appellants a duty of care. This framework posits that if the
plaintiff has established that the existence of the duty of care alleged has
been recognized, a
prima facie
duty of care may be presumed. If not, the
analysis considers whether there is, in the relationship between the parties,
reasonable foreseeability of harm to the plaintiff from the defendants
carelessness
and
sufficient proximity between the parties to make it
just and fair to impose a
prima facie
duty of care. Finally, if a
prima
facie
duty of care arises, the analysis considers whether there are
residual policy considerations outside of the relationship between the parties
that ought to negate or limit the
prima facie
duty.

[5]

The chambers judge concluded that the circumstances of this case do not
fall within a category of cases in which a duty of care has been recognised;
that the CFIAs duty was owed to the public at large, not to commercial food
suppliers; and that, although the respondents admitted reasonable
foreseeability of harm, the appellants had not established sufficient proximity
between the parties to support the duty of care they claimed. He concluded, in
the alternative, that if a
prima facie
duty of care did arise, its
existence would be negated by the overarching policy problem of indeterminate
liability.

[6]

Citing
Hunt v. Carey Canada Inc.
, [1990] 2 S.C.R. 959 at 980, 74
D.L.R. (4th) 321, the chambers judge said, The action should be struck only if
it is plain and obvious that the statement of claim does not disclose a cause
of action. He concluded the respondents had discharged that burden since it
is plain and obvious that on the facts as pleaded or as they could be amended,
no duty of care is owed by the defendants to the plaintiffs.

[7]

The appellants contend the chambers judge erred in his application of
the
Anns/Cooper
test and in the conclusions he reached at each stage of
the analysis. As well, they submit, he erred in his application of the test set
out in
Hunt
by failing to find that they might be able to establish a
duty of care, that is, in failing to recognize that it was not plain and
obvious that there was no possibility or no chance they could succeed if
the action should be allowed to proceed. Accordingly, they ask this Court to
set aside the impugned order and to dismiss the respondents application.

[8]

For the reasons that follow, I would not accede to the appellants
submissions and I would dismiss the appeal.

THE PLEADED FACTS

[9]

The appellants case as it was pleaded before the chambers judge was
this: the appellants exported carrots to Canada where they were sold to the
public by Costco; the CFIA is an agent of Her Majesty in right of Canada and
has responsibilities under the
Canadian Food Inspection Agency Act
and
the
Canada Agricultural Products Act
that include the inspection and
grading of food products in import, export, and interprovincial trade; as a
result of reports of illness by four consumers of the carrots, the CFIA,
assisted by the Public Health Agency of Canada and Health Canada, inspected the
carrots; the inspection was done negligently; the CFIA stated to the
appellants, to Costco, to the US Food and Drug Administration, and to the
public that the carrots might be contaminated with Shigella bacteria, which
could cause illness, and advised the public not to consume them; as a result,
Costco recalled the carrots from its retail stores in Canada, the appellants
recalled their carrots from retail stores in the United States, and the
recalled carrots were destroyed, along with the appellants carrots in
inventory and in the ground; the carrots were not contaminated with Shigella
and did not cause the alleged outbreak of Shigellosis; and the appellants
suffered economic losses as a result.

[10]

The appellants seek to expand their case on appeal. Although they
pleaded the CFIAs post-inspection statements were made negligently, they did
not plead they relied on the statements, an essential element of a negligence
action founded on misstatement. Accordingly, they apply for leave to make
amendments to support this new claim. As well, they seek leave to plead that
the negligent misstatements were also made to and were relied upon by Costco in
order to support a claim that they suffered either relational economic loss
or transferred loss, two recognized categories of recovery, by reason of
their contractual obligation to indemnify Costco for the loss of its carrots.

[11]

Since I would dismiss the appeal, formal amendments are unnecessary and
I will consider the appeal as if the statement of claim had been amended as the
appellants propose.

DISCUSSION

1.
Duty
of Care Analysis

(a)
Whether the duty of care has been recognized

i)   Whether the claim falls within the recognized
category  of negligent inspection/investigation by a government entity

[12]

The
Anns/Cooper
proximity analysis begins by considering whether
the case falls within a category of relationship in which the alleged duty of
care has been recognized. If the duty has been recognized, it can usually be
inferred that there is sufficient proximity between the parties to raise a
prima
facie
duty of care and there is no need to consider proximity further;
however, if the case does not clearly fall within a previously recognized
relationship, whether proximity has been established must be carefully
considered:
Cooper
at para. 36;
Childs v. Desormeaux
, 2006
SCC 18 at para. 15, [2006] 1 S.C.R. 643.

[13]

The appellants contend this case falls within or is analogous to a recognized
category they describe as negligent inspection/investigation by a government
entity that gives rise to a duty of care owed to all those who could
reasonably be injured by its negligence.

[14]

Before the chambers judge, the appellants relied in support of their
submission on
Ingles v. Tutkaluk Construction Ltd.
, 2000 SCC 12, [2000]
1 S.C.R. 298;
Rothfield v. Manolakos
, [1989] 2 S.C.R. 1259, 63 D.L.R.
(4th) 449;
Hill v. Hamilton-Wentworth Regional Police Services Board
,
2007 SCC 41, [2007] 3 S.C.R. 129; and
Adams v. Borrel
, 2008 NBCA 62, 297
D.L.R. (4th) 400, leave to appeal refd [2008] S.C.C.A. No. 470. They also
referred to
Just v. British Columbia
, [1989] 2 S.C.R. 1228, 64 D.L.R.
(4th) 689, which was discussed in
Ingles
and
Adams
.

[15]

In
Ingles
and
Rothfield
, the Court found that municipal
building inspectors owed a duty of care to a homeowner and an owner-builder
respectively who incurred repair costs as a result of the inspectors failure
to take reasonable care to ensure that construction on their houses was
properly carried out. In
Hill
, the Court held that the police owed a
duty of care to a suspect of crime who, as a result of their negligent
investigation, was wrongfully convicted and imprisoned. In
Adams
, the
Court held that Agriculture Canada owed a duty of care to commercial potato
farmers who suffered economic loss as a result of its faulty investigation of
the source of a potato virus. In
Just
, the Court held that government
inspectors of rock slopes adjacent to a public highway owed a duty of care to a
driver who was injured by a falling rock.

[16]

The chambers judge did not accept the appellants contention that these
cases establish a duty of care in respect of all reasonably foreseeable losses
arising out of negligent inspection. He said,

[33]      In my view, the
proposition that a duty of care is owed by any government official to
all
who
may be injured in any way by
any
negligent inspection without
restriction is too broad.

Rather, he said, it is
necessary to engage in a more discriminating analysis. He distinguished the
case at bar from building and road inspection cases on the basis of the
relationship between the inspectors and the class of persons intended to be the
beneficiaries of the inspections, and on the basis of the nature of the losses
suffered and the interests protected. He said,

[34]      ... A necessary part of the analysis is the
recognition of both the class of persons and the type of interest intended to
benefit from the inspection; an analysis involving both who and what. Not
all interests are the same. Conduct creating a risk of bodily injury is treated
differently from that endangering purely economic interests.

[35]      This action is
not
one brought by a consumer who fell ill after eating food that had been
inspected by CFIA, which had negligently failed to recognise that the food was
contaminated. Such an action would be closer, but not completely analogous to,
for example, the road inspection cases. Similarly, the action is
not
one
brought to protect economic interests consequential on property damage or pure
economic loss where it is apparent that the inspection scheme is intended to
protect purchasers of homes. This case is materially different from those. In
this case the injured party is a supplier of food that was inspected and tested
by the defendants to determine whether it was safe for consumers to eat. The
supplier has a statutory and common law obligation to ensure that it does not
market or sell food that is unsafe for human consumption or is contaminated. It
suffered pure economic loss. In my view, this case is not analogous to the
building or road inspection cases either in respect of the intended beneficiary
of the inspection or the interest to be protected.

[17]

Thus, he decided the search for precedent had to go beyond mere
foreseeability of harm to examine the relationship between the parties:

[36]      It is not the simple
fact of an inspection or an investigation that gives rise to the existence of a
duty of care. It is the fact that the inspection or investigation occurs in
circumstances giving rise to a relationship of proximity between the inspector
or investigator and a person who alleges injury by a negligent inspection or
investigation. An examination of the factors bearing on recognizing the
existence of proximity is inescapable in deciding whether or not a duty of care
may exist.

[18]

He distinguished
Hill
on the basis that the Courts proximity
analysis in
Hill
focussed on the details of the interests engaged in a
criminal investigation, adding that this examination of the interests involved
would have been unnecessary had a duty of care arisen simply from the fact of
the investigation. He found support for this view in
River Valley Poultry
Farm Ltd. v. Canada (Attorney General)
, 2009 ONCA 326, 310 D.L.R. (4th)
152, leave to appeal refd [2009] S.C.C.A. No. 259, a case in which the
Court found the CFIA and Health Canada owed no duty of care to an egg producer
that suffered pure economic loss when it destroyed healthy chickens as a result
of their negligent inspection of its poultry flock for infection by salmonella.
He agreed with the reasoning in
River Valley
that distinguished
Hill
on the basis that
Hill
dealt with a criminal investigation of a
particular individual in respect of harm that had already occurred and that the
suspects liberty and
Charter
interests were involved, whereas
River
Valley
concerned a non-criminal investigation for the purpose of preventing
a threat of future harm that engaged the appellants purely economic interests.

[19]

Finally, the chambers judge did not accept that
Adams
established
an unqualified tort of negligent inspection, as the appellants contended.
Although the Court in
Adams
gave other grounds for its decision, the
chambers judge focussed on the Courts finding that a key determinant was
the nature of the statutory scheme under which the government actor [was]
performing and on its conclusion that an immediate purpose of the legislative
scheme is to protect the agricultural sector of the economy by protecting the
interests of farmers. By way of differentiation, he reasoned, it could not be
said in the case before him that the immediate purpose of the legislative
scheme is to protect the economic interests of a supplier of food products who
is the author of the potential risk being investigated.

[20]

Accordingly, the chambers judge concluded this case was not within or
analogous to a category in which a duty of care in inspection has been
recognized.

[21]

The appellants contend the chambers judge erred in considering whether
the protection of their interests was a purpose of the legislative scheme. In
their submission, this question is properly confined to the second step in the
proximity analysis. At the first step, they say, the proper question is whether
the factual matrix of the case is the equivalent or an analogue of the factual
matrices of decided cases in which the duty of care has been recognized. They
refer to strikingly similar facts in
Adams
and argue, as they put it
in their factum, that the chambers judge did not consider whether the facts in
the case at bar were similar to the facts in
Adams
or any of the other
cases relied upon by the Plaintiffs.  They contend
Ingles
and
Rothfield
(negligent inspections by government authorities) and
Hill
and
Adams
(negligent investigations by government authorities) are dispositive and, since
this was a case of a negligent inspection and investigation by a government
authority and, since the harm suffered by the appellants was reasonably
foreseeable, this case is
ipso facto
within the category of negligence
claims recognized by these cases.

[22]

This submission fails to recognize the critical role of proximity in the
creation of a duty of care. In Supreme Court of Canada cases decided before
Cooper
,
including
Ingles
and
Rothfield
, foreseeability of harm dominated
the duty of care analysis. However, as the Court held in
Cooper
(at
para. 22), Lord Atkins seminal statement of the negligence principle in
Donoghue
v. Stevenson
, [1932] A.C. 562 at 580-81 (H.L.), made it clear that
foreseeability alone was not enough; there must also be a close and direct
relationship of proximity or neighbourhood. The Court observed (at para. 35)
that there is no single unifying characteristic or broad general proposition
that will determine whether proximity exists in a given situation. Rather, the
Court said, [p]roximity may be usefully viewed, not so much as a test in
itself, but as a broad concept which is capable of subsuming different
categories of cases involving different factors, quoting the remarks of McLachlin J.
(now C.J.C.) in
Canadian National Railway Co. v. Norsk Pacific
Steamship Co.
, [1992] 1 S.C.R. 1021 at 1151, 91 D.L.R. (4th) 289. The Court
itemized several categories in which sufficient proximity has been recognized
and concluded at para. 36,

When a case falls within one of
these situations or an analogous one and reasonable foreseeability is
established a
prima facie
duty of care may be posited.

[23]

Accordingly, the Court said, at para. 41,

The first question is whether the
circumstances disclose reasonably foreseeable harm and proximity sufficient to
establish a
prima facie
duty of care. The first inquiry at this stage is
whether the case falls within or is analogous to a category of cases in which a
duty of care has previously been recognized.

[24]

Chief Justice McLachlin, writing for the Court in
Childs
at para. 15,
amplified the precedential aspect of the
Anns/Cooper
test, stating,

The Court in
Cooper
introduced
the idea that as the case law develops, categories of relationships giving rise
to a duty of care may be recognized, making it unnecessary to go through the
Anns
analysis. The reference to categories simply captures the basic notion of
precedent: where a case is like another case where a duty has been recognized,
one may usually infer that sufficient proximity is present and that if the risk
of injury was foreseeable, a
prima facie
duty of care will
arise. On the other hand, if a case does not clearly fall within a
relationship previously recognized as giving rise to a duty of care, it is necessary
to carefully consider whether proximity is established.

[25]

Thus, at this stage of the proximity analysis, the question is not
whether negligent inspection/investigation is a recognized tort, but whether
there is a reasonable prospect that the relationship between the parties
alleged in the pleadings will give rise to liability for negligent
inspection/investigation:
R. v. Imperial Tobacco Canada Ltd.
,
2011 SCC 42 at para. 37, [2011] 3 S.C.R. 45 [
Imperial Tobacco
(S.C.C.)].
A case will not be like another case where a duty has been recognized unless
the relationships in the two cases are similar, and the chambers judge was
correct to focus his search for precedent on a comparison of the relationships
at issue and not, as the appellants contend, on foreseeability of harm and
superficial factual similarities.

[26]

As a result, in order to satisfy the first inquiry in the
Anns/Cooper
duty of care analysis, the appellants were required to show that their
relationship with the CFIA clearly falls within or is analogous to a category
of relationship in which a duty of care has been recognized.

[27]

The appellants contend that
Wilson Fuel Co. v. Canada (Attorney
General)
, 2009 NSSC 215, 280 N.S.R. (2d) 298, a case that was not placed
before the chambers judge, recognized the duty of care for which they contend.
In
Wilson Fuel
, the trial judge reasoned

that an investigation of
alleged violations of the
Weights and Measures Act
, R.S.C. 1985, c. W-6,
by a government inspector was analogous to the police investigation in
Hill
and the case was therefore within the category of negligent investigation
giving rise to a duty of care owed to the subject of the investigation. I do
not agree that the relationship in
Wilson Fuel
was analogous to the relationship
in
Hill
which, in my view, was correctly described as set out above by
the chambers judge and by the Court in
River Valley
. Moreover, the
reasoning in
Wilson Fuel
on which the appellants rely was
obiter
dicta
, since the trial judge ultimately dismissed the action. Accordingly,
Wilson
Fuel
does not assist the appellants.

[28]

The relationship in issue in the instant case is between a government
food inspector and a food seller, a person who, as the chambers judge noted,
had control over the very risk the inspection was intended to mitigate and,
moreover, who was prohibited by legislation from selling contaminated food. In
my view, the judge correctly concluded that this relationship was materially
different from the relationships between the government authorities and the
claimants in the cases relied upon by the appellants, that the appellants were
therefore asserting a new cause of action in negligence, and that a full
Anns
analysis of this claim was required.

ii)   Whether the claim falls within the recognized
category of damage to property

[29]

In an argument raised for the first time on appeal, the appellants
submit their claim in respect of the destruction of their carrots is based on
physical damage to property. The Court in
Cooper
noted (at para. 36) that
the law has recognized a duty of care where the defendants negligent act
causes foreseeable physical harm to the plaintiffs person or property.
However, the physical harm must be the immediate consequence of the negligent
act, as Chief Justice McLachlin made clear in
Childs
at para. 31,
where she said the duty arises where the defendants overt act
directly
causes foreseeable physical harm. She explained why this is so in
Norsk
at 1153, where she said,

Where there is physical injury or
damage, one posits proximity on the ground that if one is close enough to
someone or something to do physical damage to it, one is close enough to be
held legally responsible for the consequences. Physical injury has the
advantage of being a clear and simple indicator of proximity.

[30]

However, here, the respondents negligent acts were not the direct cause
of the destruction of the appellants carrots. Rather, the appellants
voluntarily recalled their carrots when (according to the appellants proposed
amendments) the CFIA threatened Costco that, if Costco failed to recall the
carrots from its stores, it would obtain an order pursuant to s. 19 of the
Canadian Food Inspection Agency Act
compelling Costco to recall them.
The destruction of the carrots was pleaded in the passive voice in a context
that implies that the carrots were destroyed by Costco and by the appellants
themselves. Thus, this claim is not within the category of directly caused
foreseeable physical damage to property in which the proximity necessary to raise
a duty of care has been established.

iii)  Whether the claim falls within the
recognized category of negligent misrepresentation

[31]

On the basis of their proposed amendments, the appellants also raise
negligent misrepresentation as a recognized category into which their case
falls. Negligent misrepresentation was identified as a recognized category in
Cooper
at para. 36. In
Imperial Tobacco
(S.C.C.), the Court explained what
must be shown to sustain this claim:

[37]      ... [I]t is important
to note that liability for negligent misrepresentation depends on the nature of
the relationship between the plaintiff and defendant .... The question is not
whether negligent misrepresentation is a recognized tort, but whether there is
a reasonable prospect that the relationship alleged in the pleadings will give
rise to liability for negligent misrepresentation.

[32]

The appellants submit that
Northern Goose Processors Ltd. v. Canadian
Food Inspection Agency
, 2006 MBQB 198, 206 Man. R. (2d) 276, recognized a
duty of care in negligent misrepresentation in circumstances analogous to those
in the case at bar.
Northern Goose
was cited to the chambers judge, who
distinguished it at para. 118, stating it was a case in which

proximity was created by the
repeated provision of incorrect, misleading or inaccurate information that was
relevant for Northern Gooses efforts to export product to the EU. The court
considered that the case was an example of negligent misrepresentation or the
negligent provision of a service.

Of course, negligent misrepresentation was not pleaded in
the statement of claim that was before the chambers judge, but it is now before
this Court for consideration.

[33]

The plaintiff in
Northern Goose
was a processor of poultry meat
and had been approved by Germany as an importer of that product. During a
reorganization of the European Unions regulatory system for food importation,
an EU representative, accompanied by representatives of the CFIA, inspected the
plaintiffs plant and found various deficiencies in the production line. As a
result of that and of some miscommunications by representatives of the CFIA
with the EU, the plaintiff was removed from the EUs list of approved
importers. Relying on misinformation provided by CFIA representatives in many
interactions over a period of several months the plaintiff erroneously
understood it was simply suspended and could be readily reinstated with the
EU upon correcting the deficiencies. Accordingly, it purchased the business of
a competitor and entered into a large contract with its German customer. In the
result, it was unable to obtain reinstated status with the EU in time to
fulfill the contract and suffered losses for which it sued the CFIA, alleging
negligence, malice, and misfeasance in public office.

[34]

The trial judge dismissed the claims of malice and misfeasance in public
office. She observed the CFIA is a public authority carrying out public duties
and that the question in negligence was whether it owed the plaintiff a private
law duty of care. She referred to the
Anns
approach and expressed her
application of it to the question in the following passages:

[262]    Section 11 of the
CFIA Act
gives CFIA the
responsibility for enforcing the
MIA
[
Meat Inspection Act
, R.S.C.
1985, c. 25 (1st Supp.)]. Clearly this creates a public duty, but in
addition, it creates a statutory relationship between CFIA and the individual
registered establishments it regulates. That relationship creates a duty to
enforce any applicable legislation and regulations in accordance with its
powers, but also to act in a reasonable and prudent manner.

[263]    Section 11 also results in CFIA being the entity
that the EU interacts with in connection with exports of meat from
Canada. CFIA was a third country authority, recognized by the EU to
enforce its standards and regulations.

[264]    In matters of export to the EU, a registered
establishment had to be licenced, be approved by CFIA, and be on the EUs list
of approved establishments. Each of these components were regulated by
CFIA.

[265]    As to the second step in
the
Anns
test, this is a case about operational negligence, not policy
decisions. As was the situation in
Anns
, the harm here was
occasioned as a result of public officials not carrying out their
responsibilities in a reasonable and prudent manner.

[35]

The trial judge rejected the submission that the scope of CFIAs
liability should be limited because the claim was one for pure economic loss
and, after noting that
Norsk
(at para. 31) identified five
categories of economic loss in claims against public authorities (Independent
Liability of Statutory Public Authorities, Negligent Misrepresentation,
Negligent Performance of a Service, Negligent Supply of Shoddy Goods or
Structures, and Relational Economic Loss), she said,

[268]    For the reasons
described earlier, I am of the view that CFIA was negligent in carrying out its
obligations to Northern Goose. These acts (or omissions) of negligence
would properly be described as negligent misrepresentation. Overall, these
breaches of duty amount to either negligent performance of a service or
independent liability of a statutory authority (if what is meant by the latter
is negligence, rather than misfeasance in public office), or both.

[36]

The remedy for an unreasonable exercise of delegated discretionary
powers by a statutory regulator is normally judicial review on administrative
law principles: see
Baker v. Canada (Minister of Citizenship and
Immigration)
, [1999] 2 S.C.R. 817 at para. 53, 174 D.L.R. (4th) 193.
Although the failure to act reasonably may give rise to private law liability
in some cases, the trial judges assertion, unsupported by authority, that the
mere fact that the CFIA was charged with enforcing the statute in question
created a statutory relationship that raised a private law duty to act in a
reasonable and prudent manner toward all regulated individuals is not a view
to which I would subscribe. The failure of the trial judge to undertake the
first-step precedential analysis and to perform the careful proximity analysis
of the relationship between the parties as required by
Childs
at para.
15 disqualifies
Northern Goose
from consideration as the author of a
recognized category of relationship giving rise to a duty of care such that a
prima
facie
duty might be presumed. As well, the substance of the inspection and
the nature of the relationship between the parties in
Northern Goose
differed markedly from those in the case at bar. Moreover, the trial judges
somewhat indecisive finding as to the precise cause of action in play is less
than a clear and unequivocal finding of negligent misrepresentation as the
basis of the plaintiffs claim.

[37]

The appellants have not referred to any other case in which a government
inspector has been found to owe a duty of care in an action based on a
negligent misstatement made to the person subject to the inspection.
Accordingly, this is a novel claim that must undergo an
Anns
analysis.

(b)
Whether there is sufficient proximity
between the parties to raise a new duty

[38]

The precise meaning of proximity has been evolving since it emerged into
the spotlight from the shadow of reasonable foreseeability in
Cooper
. In
Hill
, after observing (at para. 23) that the relationship between the
alleged wrongdoer and the victim must be sufficiently close and direct to make
it appropriate to impose a duty of care on the wrongdoer, the Court explained
proximity in this way:

[24]      Generally speaking, the
proximity analysis involves examining the relationship at issue, considering
factors such as expectations, representations, reliance and property or other
interests involved:
Cooper
, at para. 34. Different relationships
raise different considerations. The factors which may satisfy the
requirement of proximity are diverse and depend on the circumstances of the
case. One searches in vain for a single unifying characteristic:
Cooper
,
at para. 35. No single rule, factor or definitive list of factors can be
applied in every case. Proximity may be usefully viewed, not so much as a
test in itself, but as a broad concept which is capable of subsuming different
categories of cases involving different factors (
Canadian National Railway
Co. v. Norsk Pacific Steamship Co.
, [1992] 1 S.C.R. 1021, at p. 1151, cited
in
Cooper
, at para. 35).

[39]

Policy concerns must also be considered in the proximity analysis. As
Justice Abella said for the Court in
Syl Apps Secure Treatment Centre v. B.D.
,
2007 SCC 38, [2007] 3 S.C.R. 83, at paras. 26-28,

[26]      There must also be a relationship of sufficient proximity
between the plaintiff and defendant. The purpose of this aspect of the
analysis was explained by Allen Linden and Bruce Feldthusen in
Canadian Tort
Law
(8th ed. 2006) as being to decide whether, despite the reasonable
foresight of harm, it is unjust or unfair to hold the defendant subject to a
duty because of the absence of any relationship of proximity between the
plaintiff and the defendant (p. 304).

[27]      When the relationship occurs in the context of a
statutory scheme, the governing statute is a relevant context for assessing the
sufficiency of the proximity between the parties (
Cooper
, at para. 43;
Edwards
,
at para. 9). As this Court said in
Edwards
: Factors giving rise to
proximity must be grounded in the governing statute when there is one (para.
9).

[28]      Where an alleged duty
of care is found to conflict with an overarching statutory or public duty, this
may constitute a compelling policy reason for refusing to find proximity (
Cooper
,
at para. 44;
Edwards
, at para. 6). Such a conflict exists where the
imposition of the proposed duty of care would prevent the defendant from
effectively discharging its statutory duties.

[40]

In
Imperial Tobacco
(S.C.C.), the Court explained that [a]
complicating factor [in a proximity and foreseeability analysis] is the role
that the legislation should play when determining if a government actor owed a
prima
facie
duty of care (at para. 43). The Court indicated proximity may
be found in three circumstances. First, the relationship may be created in the
statute itself, although the Court cautioned that, since statutes are most
often aimed at public goods, it may be difficult to infer that the
legislature intended to create private law tort duties, especially where such
duties would conflict with the duty to the public and where the public duty is
overarching (at para. 44). Next, proximity may arise from a series of
specific interactions between the government and the claimant although, even
here, a finding of proximity might have to give way for policy reasons if to
recognize it would conflict with the statutory public duty (at para. 45).
Finally, proximity may be found in a combination of statutory duties and
interactions between the parties (at para. 46).

[41]

The chambers judge correctly noted that the proximity stage of the
Anns
test involves consideration of foreseeability, proximity and policy issues as
they arise from the relationship between the parties. He outlined his task in
assessing proximity as follows:

[44]      The critical question
is whether it is plain and obvious that there is no relationship of proximity
between the parties. Answering that question requires that I consider whether
the statutory scheme contemplates or excludes the existence of such a duty. If
the question still remains open, I must examine the allegations of fact to
determine whether by a course of conduct in a purported exercise of the
powers the government officials have created the proximity necessary to
justify recognition of the possible existence of a duty of care.

[42]

He began his analysis by stating,

[69]      It is clear that regulators will generally not owe
a duty of care to regulated entities if the purpose of the regulatory scheme is
to promote the public interest and the regulatory scheme does not disclose an
intention that in exercising their powers regulators are to take care to
protect the interests of persons affected by the scheme of regulation.

[70]      Regulator[s] immunity
from liability in tort when acting in their capacity as regulators in the
public interest is the common position in British Columbia and Ontario. This
much is illustrated by
Imperial Tobacco
[
British Columbia v. Imperial
Tobacco Canada Ltd.
, 2009 BCCA 540, 98 B.C.L.R. (4th) 201] and
Knight
[
Knight v. Imperial Tobacco Canada Ltd.
, 2009 BCCA 541, 99 B.C.L.R.
(4th) 93].

[43]

After explaining why, in his view, the reasons of this Court in
British
Columbia v. Imperial Tobacco Canada Ltd.
, 2009 BCCA 540, 98 B.C.L.R. (4th)
201, and in
Knight v. Imperial Tobacco Canada Ltd.
, 2009 BCCA 541, 99
B.C.L.R. (4th) 93, supported these statements, the judge turned to Ontario
jurisprudence, stating,

[79]      A number of Ontario
cases also support the finding that where the statutory scheme places duties on
the regulator to the public at large, the regulator cannot be said to owe individuals
a private law duty of care in the exercise of those duties. Examples include
Klein
[
Klein v. American Medical Systems, Inc.
(2006), 278 D.L.R. (4th) 722,
84 O.R. (3d) 217 (Ont. S.C.J., Div. Ct.)]
, Eliopoulos
[
Eliopoulos v.
Ontario (Minister of Health & Long-Term Care)
(2006), 276 D.L.R. (4th)
411, 82 O.R. (3d) 321 (C.A.)]

and
Attis
[
Attis v. Canada
(Health)
, 2008 ONCA 660, 300 D.L.R. (4th) 415].

[44]

Then, he summarized his view of the effect of the Ontario and British
Columbia cases:

[81]      The following
principles can be drawn from the case law:

A regulator may owe a duty of care for actions taken outside
the scope of its regulatory role;

Where a duty is owed to the public at large, there is
generally no private law duty to a member of the public; and

Where the statute confers certain
powers or duties on the regulator for the benefit of a discreet [
sic
]
class the regulator may owe a duty of care to a member of the class.

[45]

Next, the judge set out the purpose of the legislative scheme and the
issue as he saw them:

[83]      The first element of the scheme, as it is engaged
by the facts of this case, is to require that fruit and vegetables marketed and
sold in Canada are safe for consumers to eat, uncontaminated or adulterated and
that they are edible and prepared in a sanitary manner. The primary obligation
not to market or sell contaminated food resides with the supplier. CFIA has the
power to enforce compliance with the regulations that require suppliers of food
products to ensure that they do not market or sell food that is contaminated.

[84]      The purpose of the legislative scheme is obviously
and plainly to protect the safety of food eaten by consumers. It is obvious
that a purpose of the scheme is to protect the health of the public and to
prevent the spread of disease. This is a purpose designed to protect and
promote the public interest, not create a duty of care.

[85]      The issue then is
whether this legislative statement of purpose leaves any room for concurrent
duties of care owed to the regulated entities.

[46]

Continuing, the judge discussed the appellants submissions that the
statutory scheme, properly construed, contemplated the protection of their
economic interests. In support of their submissions, the appellants had
referred to provisions in the
Crown Liability and Proceedings Act
,
R.S.C. 1985, c. C-50, granting the right to sue the Crown; to provisions
in the
Canadian Food Inspection Agency Act
requiring the Minister act
on reasonable grounds in ordering a recall and to similar requirements in the
Food and Drugs Act
, R.S.C. 1985, c. F-27, and the
Canada
Agricultural Products Act
; and to the absence of an immunity provision or
compensation scheme in those Acts. In the view of the chambers judge, the
relevant statutory powers were to be exercised to protect the public from the
risks associated with the consumption of contaminated food and nothing in the
scheme imposed an obligation to have regard to the appellants economic
interests. Accordingly, he concluded it was plain and obvious that the
statutory scheme does not create a relationship of proximity between the
defendants and the plaintiffs.

[47]

The judge turned next to whether the respondents had created a
relationship of proximity with the appellants by their conduct.

[48]

The conduct on which the appellants relied before the chambers judge was
pleaded thus:

10A.     At all material times
the Plaintiffs and the Defendants were in a relationship of proximity. In
particular:

(a)        The CFIA published on
its public web page statements indicating that it owed a duty of care to the
food industry. In particular it made the public representations:

(i)         To develop effective
policies and strategies, we value the perspectives of the stakeholders who are
affected by our decisions. ... External stakeholders include all levels of government,
consumers, regulated parties and various other interest groups.

(ii)        Safeguarding the
Canadian Public, Environment and Economy.

(iii)       The Agencys Corporate
Business plan delineates our commitment to Canadians in five key areas: public
health by protecting Canadians from preventable health risks; environmental
protection by sustaining the plant and animal resource base; public security by
promoting the security of Canadas food supply; economic growth by delivering a
fair and effective regulatory regime; and good governance by providing sound
Agency management.

(b)        the Defendants knew or
ought to have known that the Baby Carrots they were investigating, testing and
reporting about to the public as well as to the US FDA, were products of and
supplied by the Plaintiffs;

(c)        the Defendant CFIA, was
in direct contact with the Plaintiffs on August 17th, 2007 to discuss the
possible contamination of the Baby Carrots, before the Public Announcements
were issued, the recall requested and the matter reported to the US FDA;

(d)        the Defendants knew or ought to have known that
the breaches of duty of care referred to herein could reasonably cause damage
to the Plaintiffs.

[49]

The judge reasoned (obviously with reference to paragraph 10A(c)) that
mere interaction by a government regulator with the subject of its
investigation is not sufficient to create the necessary close and direct
relationship to found a duty of care. In his view, in its interactions with the
appellants the CFIA was simply carrying out its statutory mandate and
fulfilling its duties to the public at large. He said it would be inconsistent
with the exercise of the statutory powers if the respondents were also required
to consider the effect of their exercise on the commercial interests of the appellants.
In this regard, he said,

[112]    ... The following comment by Laskin J.A. in
River
Valley
, albeit in the context of a different piece of legislation enforced
by CFIA, is applicable to this case:

[69]      Inspectors charged with tracking the spread of infectious
disease inevitably must focus their investigations on persons or sites where
exposure or contamination has potentially occurred. In carrying out their
investigation, inspectors appointed by CFIA have broad discretionary powers to
inspect enterprises, even seize and detain and quarantine animals. In
exercising these broad powers, inspectors are not obliged to be mindful of the
economic interests of individual farmers. Their overriding concern is the
protection and promotion of human and animal health.

[50]

Further, the judge found that the statements on the CFIA website
(pleaded in paragraph 10A(a)) were too general to support the appellants
submission that they implied an obligation to consider the economic interests
of food suppliers when testing for food safety and were not sufficiently
connected to the circumstances of the plaintiffs to ground any arguable case
that a relationship of proximity was created.

[51]

The judge summarized his analysis as follows:

[119]    The outcome of this case is determined by authority
binding on me [
Imperial Tobacco
and
Knight
]. The general
proposition that duties owed only to the public do not give rise to a duty of
care is the common position both in British Columbia and Ontario. Although
proximity may be created by regulators conduct, it does not typically arise
when the regulator is simply discharging his or her statutory responsibilities
in the public interest. Knowledge of the existence of the regulated entity or
the entitys product is not sufficient to create proximity which the statutory
scheme does not otherwise create.

[120]    Here, the statute
creates a duty to the public at large; the plaintiffs are not members of a
discreet [
sic
] class the legislation seeks to protect. In my view, it is
plain and obvious that the conduct alleged in the pleadings does not rise to
the level or type of conduct which some courts have been prepared to conclude
has created a relationship of proximity sufficient to support the existence of
a
prima facie
duty of care.

[52]

The appellants submit first that the chambers judge erred in concluding
that regulators are immune from liability when acting within the scope of their
regulatory role. They refer to his statement that Regulator[s] immunity from
liability in tort when acting in their capacity as regulators in the public
interest is the common position in British Columbia and Ontario (at para. 70).
However, this statement must be read in its context. It is apparent from the
immediately preceding paragraph that the judge was there referring to regulators
acting under legislative schemes designed to promote a public interest that do
not disclose a legislative intention to protect the private interests of those
affected. As an observation on the current state of the jurisprudence, the
judges statement was generally true. Indeed, he said (at para. 81 of his
reasons, quoted at para. 44 above) that is generally the case and (at
para. 119) that proximity does not typically arise when the regulator is
simply discharging his or her statutory responsibilities in the public
interest. Thus, he did not state a rule that there cannot be a private law
duty of care if the purpose of the legislative scheme is to protect and promote
the public interest, as the appellants contend. Rather, he examined the relationship
between the parties, as he should have, having regard to the statutory scheme
in issue and the particular conduct alleged to create proximity in this case.
As I have explained, that is the correct approach and I would therefore reject
the contention that he erred in taking it.

[53]

The appellants take issue with the chambers judges construction of the
statutory scheme and with his rejection of their submission that the necessary
proximity was created by the respondents conduct. Essentially, they repeat
submissions that were made to and rejected by the chambers judge and ask this
Court to reach different conclusions. I will not set out the judges discussion
of these submissions any further since it is lengthy and it is readily
available in his reasons for judgment to anyone who might wish to read it.
Suffice it to say that I agree with his conclusions on these issues
substantially for the reasons he gave at paras. 83-118 of his reasons and
that nothing the appellants have added on this appeal persuades me that he
erred.

[54]

The appellants seek to buttress their conduct-based claim of proximity
by their proposed amendments. They would plead that, before announcing the
result of their investigation, the CFIA wanted Costco to obtain certain
information from the Plaintiffs to assist their investigation and that [t]he
Plaintiffs promptly provided all information sought.  They would also provide
particulars of the CFIAs statements made on or about August 17, 2007 as
pleaded in paragraph 10A(c) of their statement of claim (see above at
para. 48) and would add that the CFIA advised them on August 20, 2007
that the recall in Canada was based on a statistical analysis that implicated
the carrots and that the carrots were probably contaminated with Shigella and
were connected to four confirmed illnesses associated with their consumption.

[55]

These proposed amendments do not add anything material to the pleaded
facts that were before the chambers judge in respect of the claim of
conduct-based proximity. In my view, the clear purpose of the relevant
legislative scheme is to protect the health of Canadians by preventing the sale
of contaminated food in Canada. To recognize a private law duty of care to food
sellers would conflict with that purpose. It would put food inspectors in the
untenable position of having to balance the paramount interests of the public
with private interests of food sellers and would thereby have a chilling effect
on the proper performance of their duties. Thus, the statutory scheme excludes
the possibility of sufficient factual proximity to make it just and reasonable
to impose a
prima facie
duty of care in the circumstances of this case:
see
Imperial Tobacco
(S.C.C.) at para. 47. The appellants also
propose amendments to plead that the CFIAs statements were made to induce
Costco and the plaintiffs to recall the carrots in Canada and the United States
respectively, that the appellants and the CFIA were in a special
relationship, and that both Costco and the appellants, in reasonable reliance
on the statements, recalled the carrots and the carrots were destroyed. On
these proposed amendments, the appellants found three submissions.

[56]

The first is that the CFIA owes them a duty of care in an action for
negligent misrepresentation. As I have already noted, though negligent
misrepresentation is mentioned as a recognized category at para. 36 in
Cooper
,
whether the appellants claim falls within this category depends on the nature
of the relationship between the parties

(
Imperial Tobacco
(S.C.C.) at para. 37). The appellants claim

does not fit within a
settled category of negligent misrepresentation, as

the law has not yet
recognized the relationship between a government food inspector and the subject
of a food inspection as giving rise to a duty of care such that a
prima
facie
duty

might be presumed in this case.

[57]

Therefore, an
Anns
analysis is necessary. For the reasons already
stated, an analysis of the relationship in this case does not lead to a
prima
facie
duty of care. Accordingly, the claim based on negligent
misrepresentation would be bound to fail.

[58]

The appellants second submission is that Costcos reliance on the
CFIAs statements resulted in a contractual relational economic loss suffered
by the appellants, another category of case in which a duty of care was
recognized in
Cooper
at para. 36. In
Design Services Ltd. v.
Canada
, 2008 SCC 22, [2008] 1 S.C.R. 737, the Court,
per
Rothstein J.,
described the claim for relational economic loss:

[33]      ... Linden and Feldthusen, at p. 477, define
relational economic loss as a situation in which the defendant negligently
causes personal injury or property damage to a third party. The plaintiff
suffers pure economic loss by virtue of some relationship, usually contractual,
it enjoys with the injured third party or the damaged property.

[34]      The appellants do not fit within the relational
economic loss category because no property of Olympic was actually damaged in
this case. From its origin, relational economic loss has always stemmed
from injury or property damage to a third party.

[35]      The reason appears to
be that physical damage tends to ensure a reassuringly proximate nexus between
tortious act and recoverable damage (
Caltex

Oil (Aust.) Pty. Ltd. v.
The Dredge Willemstad
(1976), 11
A.L.R. 227 (H.C.), at p. 255). This is not to say that in the development
of new categories under the
Anns
test, physical injury or property
damage would necessarily be a requirement to justify a finding of
proximity. However, insofar as the existing category of relational
economic loss is concerned, injury or property damage to a third party has been
a requirement.

[59]

Here, although the appellants suffered a loss by reason of their
contractual obligation to indemnify Costco for its losses in the transaction,
the CFIAs negligent misstatements did not cause direct physical damage to
Costcos carrots. As a result, it is my view that the appellants claim for
relational economic loss would be bound to fail.

[60]

The appellants third submission is that the appellants suffered a
transferred loss, that is, because they were contractually obliged to
indemnify Costco for Costcos loss, the appellants are for purposes of tort law
treated as if they were in Costcos shoes and their claim falls within the
joint or common venture category recognized in
Cooper
at para. 36.
The theory of this claim was explained in
Norsk
by McLachlin J.
(now C.J.C.) at 1162-1163:

... [W]here the plaintiffs operations are so
closely allied to the operations of the party suffering physical damage and to
its property (whichas damagedcauses the plaintiffs loss) that it can be
considered a joint venturer with the owner of the property, the plaintiff can
recover its economic loss even though the plaintiff has suffered no physical
damage to its own property. To deny recovery in such circumstances would
be to deny it to a person who for practical purposes is in the same position as
if he or she owned the property physically damaged.

The second question
is whether extension of recovery to this type of loss is desirable from a
practical point of view. Recovery serves the purpose of permitting a
plaintiff whose position for practical purposes, vis‑à‑vis the
tortfeasor, is indistinguishable from that of the owner of the damaged
property, to recover what the actual owner could have recovered. This is
fair and avoids an anomalous result. Nor does the recovery of economic
loss in this case open the floodgates to unlimited liability. The category
is a limited one. It has been applied in England and the United States without
apparent difficulty. It does not embrace casual users of the property or those
secondarily and incidentally affected by the damage done to the
property. Potential tortfeasors can gauge in advance the scope of their
liability. Businesses are not precluded from self‑insurance or from
contracting for indemnity, nor are they penalized for not so
doing. Finally, frivolous claims are not encouraged.

[61]

This submission also suffers from the defect that the CFIAs negligence
did not directly cause foreseeable physical harm to Costcos carrots.
Accordingly, this claim, too, would be bound to fail.

[62]

These conclusions are sufficient to dispose of this appeal and it is not
strictly necessary to comment on the appellants challenge to the alternative
finding that a duty of care should be rejected on the overriding policy ground
of indeterminate liability. Nevertheless, I will comment on this matter.

(c)

Whether the policy ground of
indeterminate liability would negate any duty of care

[63]

The concern about indeterminate liability is that the duty of care
claimed may be so broad that its limits are indeterminable. As the Court
explained in
Fullowka

v. Pinkertons of Canada Ltd.
, 2010 SCC 5,
[2010] 1 S.C.R. 132:

[70]       ...The concern is that
the proposed duty of care, if accepted, would impose liability in an
indeterminate amount for an indeterminate time to an indeterminate class, to
use the often repeated words of Cardozo C.J. in
Ultramares Corp. v. Touche
,
174 N.E. 441 (N.Y. 1931), at p. 444. At the root of the concern is that the
duty, and therefore the right to sue for its breach, is so broad that it
extends indeterminately. In this sense, the policy concern about indeterminate
liability is closely related to proximity; the question is whether there are
sufficient special factors arising out of the relationship between the
plaintiff and the defendant so that indeterminate liability is not the result
of imposing the proposed duty of care: see, e.g.,
Canadian National
Railway Co. v. Norsk Pacific Steamship Co.
, [1992] 1 S.C.R. 1021, at p.
1153. What is required is a principled basis upon which to draw the line
between those to whom the duty is owed and those to whom it is not: see, e.g.,
Bow
Valley Husky (Bermuda) Ltd. v. Saint John Shipbuilding Ltd.
, [1997] 3 S.C.R.
1210, at para. 64,
per
McLachlin J. (as she then was).

[64]

On the other hand, the duty may be circumscribed and the liability
appropriately limited when the claimants comprise a finite group:
Fullowka
at para. 71.

[65]

The appellants submission that indeterminate liability is not a concern
in the instant case is founded on the premise that their loss is made up of
physical damage to their property, consequential economic loss (a result of
physical damage to their property), relational economic loss, and/or transferred
loss. Thus, they say, their claim does not raise the spectre of liability in
an indeterminate amount for an indeterminate time to an indeterminate class.
However, for the reasons I have set out above, none of these categories is
applicable.

[66]

The chambers judge said this about indeterminate liability:

[124]    ... If a duty of care to
protect the economic interests of a supplier of food existed, then it is
difficult to see on what principled basis a duty would not be owed to a
multitude of other persons whom it would be reasonably foreseeable would suffer
economic loss by negligent inspection. Claims could be advanced by retailers,
wholesalers, suppliers, food processors, distributors, farmers and employees of
each of the above. This appears to be exactly the kind of problem that has led
to a
prima facie
duty of care being negatived in other circumstances.

[67]

In support of his conclusion he quoted from this Courts decision in
Knight
at paras. 79 and 82-83, which cited
Bow Valley

Husky (Bermuda) Ltd. v. Saint John Shipbuilding Ltd.
, [1997]
3 S.C.R. 1210, 153 D.L.R. (4th) 385 at paras. 62-63, and from
Alberta
v. Elder Advocates of Alberta Society,
2011 SCC 24, [2011] 2 S.C.R. 261 at
para. 74. These passages fully support his conclusion. In fact, in their second
amended statement of claim, the appellants allege the CFIA owed duties to
suppliers, importers, manufacturers, and distributors of food products. In my
view, the chambers judge was correct on this issue.

2.
The Test for
Striking Claims

[68]

The appellants submit the action should have been allowed to proceed to
trial because it was not plain and obvious they had pleaded no reasonable claim
so long as there was a possibility or a chance they might establish a duty
of care when all the facts are out, as counsel put it during submissions.
They note that because the common law is always evolving, the test should not
be applied strictly so as to foreclose an opportunity to pursue novel but
arguable claims:
Imperial Tobacco
(S.C.C.) at para. 21.

[69]

The appellants invoke
Mohl v. University of British Columbia
,
2006 BCCA 70, 265 D.L.R. (4th) 109, where this Court held it was not plain and
obvious that claims for breach of contract, breach of fiduciary duty, and
negligence brought by a failed student against his university were an abuse of
process. They rely specifically on the Courts remark (at para. 41) that there
was at least a hint of some merit in the plaintiffs claims as an affirmation
of the high bar to be overcome by the respondents on the strike application.

[70]

However, the Courts remark was part of its discussion of a submission
made by the student, an in-person litigant, that the case should be allowed to
proceed as a novel claim for educational malpractice. Since some Canadian
trial courts had struck such claims at the pleadings stage and others had
refused to do so, and since the Supreme Court of Canada had recently stated in
Young
v. Bella
, 2006 SCC 3, [2006] 1 S.C.R. 108, albeit in another context, that
universities owe general and contractual duties to their students, the Court
said it would be premature to decide that the students claims were not
actionable and that it would not strike them from the statement of claim on
that basis.

[71]

However, the university did not argue that the students claims were not
actionable. Rather, its submission was that the claims were an abuse of process
because the facts material to the claims had already been decided against the
student by a Senate Committee during an internal university appeal of his
failing grade. The Court rejected the universitys submission that the facts
had been decided and, in the statement relied upon by the appellants, observed
in passing that it appeared there might be some evidence to support the students
claims. The Court permitted the plaintiffs claims to go forward for trial not
because there might be evidence to support them, but because it was not plain
and obvious that the material facts pleaded disclosed no reasonable claim for
breach of contract, breach of fiduciary duty, or negligence. Accordingly,
Mohl
represents simply an application of the test for striking claims and neither
alters nor elucidates the test.

[72]

As already noted, the test assumes the facts pleaded (or that might
reasonably be pleaded by amendment) are true and asks whether it is plain and
obvious that the statement of claim discloses no cause of action:
Hunt
at
980;
Minnes v. Minnes
(1962), 34 D.L.R. (2d) 497 at 505, 39 W.W.R. 112
(B.C.C.A.). Another way of stating the question is to ask whether, considered
in
the context of the law and the litigation process
, the claim has no
reasonable chance of succeeding:
Imperial Tobacco
(S.C.C.) at para. 25;
see also paras. 17, 21.

[73]

Accordingly, the respondents were required to demonstrate that the
appellants claim had no reasonable chance of succeeding, and I would not
accede to the appellants submission that the chambers judge erred in failing
to require the respondents to show there was no possibility or no chance the
appellants might establish a duty of care. Moreover, whether a duty of care
exists is a question of law, not a question to be decided on evidence. The
question was to be answered summarily on the application to strike on the
assumption that the material facts pleaded were true. Given this assumption,
the appellants contention that the decision should be deferred until all the
facts are out is illogical and I would not accept it: see
Imperial Tobacco
(S.C.C.)
at paras. 23-24.

[74]

Accordingly, I would reject the appellants submission that the chambers
judge erred in his application of the test for striking claims.

CONCLUSION

[75]

On a final note, the conclusion that a food seller who suffers losses as
a result of the negligence of government authorities has no recourse to obtain
compensation in a tort action may seem contrary to the currently popular demand
for accountability of all decision-makers. In this regard, I refer to the
observations of the Chief Justice, for the Court, in
Elder Advocates
at
para. 74 that

Where the
defendant is a public body, inferring a private duty of care from statutory
duties may be difficult, and must respect the particular constitutional role of
those institutions:
Welbridge Holdings Ltd. v. Greater Winnipeg
, [1971]
S.C.R. 957,
per
Laskin J., as he then was, for the Court.
Related to this concern is the fear of virtually unlimited exposure of the
government to private claims, which may tax public resources and chill
government intervention.

In my view, these remarks reflect a recognition that the
legislative branch is better situated than the courts to decide whether
compensation should be due in cases such as this.

[76]

For the reasons I have set out, I would dismiss the appeal.

The Honourable Mr.
Justice K. Smith

I agree:

The Honourable Mr. Justice
Frankel

I agree:

The Honourable Madam Justice
Bennett