COURT OF APPEAL FOR ONTARIO

CITATION: 1688782 Ontario Inc. v. Maple Leaf Foods Inc., 2018
    ONCA 407

Date: 20180430

DOCKET: C63107

Sharpe, Rouleau and Fairburn JJ.A.

BETWEEN

1688782 Ontario Inc.

Plaintiff (Respondent)

and

Maple Leaf Foods Inc. and Maple Leaf Consumer
    Foods Inc.

Defendants (Appellants)

Steven Stieber and Elizabeth Bowker, for the appellants

Peter W. Kryworuk, Rebecca Case and Jacob Damstra, for
    the respondent

Heard: October 31, 2017

Additional Written Submissions: January 22 and February 8, 2018

On appeal from the judgment of Justice Lynne Leitch of
    the Superior Court of Justice, dated November 18, 2016.

Fairburn J.A.:

OVERVIEW

[1]

In August 2008, certain Maple Leaf brand
    ready-to-eat (RTE) meats became contaminated with listeria monocytogenes at
    dangerous levels.
[1]
Some people fell seriously ill and some died after eating the meat. Maple Leaf recalled
    meats that were produced at the production plant where the infected meat
    originated, and the plant was temporarily closed. The recall and plant closure affected
    the supply of two of the RTE meats used by the franchisees of Mr. Submarine
    Ltd. (Mr. Sub).

[2]

A class action was certified on behalf of Mr.
    Sub franchisees against Maple Leaf Foods Inc. and Maple Leaf Consumer Foods
    Inc. (collectively Maple Leaf).  The representative plaintiff, 1688782
    Ontario Inc., claims damages on the basis that Maple Leaf: (a) negligently
    manufactured and supplied potentially contaminated meat; and (b) negligently represented
    that the supplied meats were fit for human consumption. There is no evidence
    that any Mr. Sub customer was harmed by any contaminated product. However, the representative
    plaintiff alleges that the franchisees suffered economic losses arising in
    large part from the reputational harm they say they experienced from being
    publicly associated with Maple Leaf in the aftermath of the listeria outbreak.
    In particular, the representative plaintiff claims damages for loss of past and
    future sales, past and future profits, and loss of capital value and goodwill. It
    also claims damages for clean-up costs and other costs related to the disposal,
    destruction and replacement of RTE meats.

[3]

After certification of the class action, Maple
    Leaf brought a summary judgment motion seeking dismissal of certain claims on
    the basis that Maple Leaf owed no duty of care to the class. The representative
    plaintiff, in turn, asked that summary judgment be granted in its favour.

[4]

This appeal arises from the motion judges decision
    concluding that Maple Leaf owed a duty of care to the franchisees in relation
    to the production, processing, sale and distribution of the RTE Meats and a
    duty of care with respect to any representations made that the RTE Meats were
    fit for human consumption and posed no risk of harm.

[5]

The Supreme Courts decision in
Deloitte
    & Touche v. Livent Inc. (Receiver of),
2017 SCC 63, [2017] 2 S.C.R.
    855, was released after this appeal was heard. The judgment has direct
    application to this case as it clarifies the analytical approach to identifying
    a duty of care, especially in the context of negligent misrepresentation claims.
    Accordingly, the parties were provided with the opportunity to file additional
    written submissions focused on the application of
Livent
to this case.

[6]

For the reasons that follow, I would allow the
    appeal.

BACKGROUND

(1)

Facts

[7]

A franchise agreement governs the relationship
    between the franchisor, Mr. Sub, and its franchisees. The agreement requires
    the franchisees to purchase products exclusively from Mr. Sub or sources or
    suppliers approved by it. Although franchisees may purchase products not
    previously authorized by Mr. Sub, this may only be done with Mr. Subs approval.

[8]

At the time of the listeria outbreak in 2008, Maple
    Leaf was in a contractual relationship with Mr. Sub. The agreement involved an
    exclusive supplier arrangement, whereby Mr. Sub contracted for 14 core menu
    items, including the two RTE meats relevant to this appeal, to be supplied only
    by Maple Leaf. However, under the terms of the agreement, Maple Leaf had no corresponding
    obligation to supply the RTE meats to Mr. Sub or its franchisees. At any time,
    Maple Leaf could have stopped supplying any or all of the 14 core menu items.

[9]

The franchisees did not buy the RTE meats directly
    from Maple Leaf. Instead, Maple Leaf dealt with distributors who, in turn,
    dealt with the franchisees. The franchisees would place their orders with, and
    be invoiced by, the distributors. Similarly, the distributors would place their
    orders with Maple Leaf and, in turn, be invoiced by Maple Leaf.

[10]

On August 7, 2008, the CFIA warned Maple Leaf
    that there might be an issue with some meats produced at one of its production
    plants. The CFIAs warning did not relate to any of the products used by the
    franchisees.

[11]

More than a week later, on August 16, 2008 at
    10:00 p.m., Maple Leaf was informed that one of its products had tested
    positive for listeria. Within hours of notification, at 3:30 a.m. on August 17,
    2008, Maple Leaf issued a nationwide press release and notice of recall of two
    products. Neither of these were products used by the franchisees.

[12]

On August 19, 2008, additional test results
    identified a potentially broader problem at the production plant where the
    infected meat had been produced. Maple Leaf expanded the voluntary recall to
    include two of the core menu items used by the franchisees - roast beef and
    corned beef. As tests continued to come back, Maple Leaf voluntarily decided to
    expand the recall, ultimately to 191 products, and then shut down the plant
    until the problem could be resolved.

[13]

It is not in dispute that media reports dealing
    with the listeria outbreak drew an association between Maple Leaf and certain
    food sellers, including Mr. Sub and McDonalds. The CFIAs Health Hazard Alerts
    also included reference to food brands and food sellers who used Maple Leaf
    products, including Mr. Sub, Boston Pizza, Compliments, Kirkland Signature,
    McDonalds, No Name, Pizza Nova, Safeway, Shopsys, and Tim Hortons.

[14]

Maple Leaf communicated with Mr. Sub about the
    recall and sent communications to Mr. Sub intended for its franchisees. Maple
    Leaf set up a hotline to answer any questions that the franchisees may have had
    about the recall.

[15]

Maple Leaf also paid the distributors to attend
    at the franchisees restaurants to retrieve the two core menu items affected by
    the recall. Maple Leaf then credited the distributors for the retrieved products.
    Maple Leaf believed that the distributors then issued credits to the
    franchisees, although the representative plaintiff in this case maintains that it
    received no such credit.

[16]

After the plant was closed, Maple Leaf assisted Mr.
    Sub in finding a new supplier for the two recalled products. The new supplier was
    located by mid-September. By October, Maple Leaf was again producing the RTE meat
    products.

[17]

Mr. Sub sued Maple Leaf. The claim was settled
    when Maple Leaf paid Mr. Sub $250,000 and the parties entered into a Supply and
    Settlement Agreement, whereby Maple Leaf agreed to reduce the cost of the RTE
    meats sold to Mr. Sub and relieved Mr. Sub of the exclusive supply arrangement
    in certain circumstances. Maple Leaf believed that the price reductions would
    be passed on to Mr. Sub franchisees.

[18]

The representative plaintiff maintains that Mr.
    Sub was the sole submarine sandwich restaurant identified by the media as a
    purveyor of Maple Leaf RTE meats. This association with Maple Leaf is said to
    have hurt the franchisees reputations and given their competitors a
    significant competitive advantage.

[19]

The representative plaintiff suggests that
    customers did not want to come to Mr. Sub as a consequence of the listeria
    outbreak, or they would come in but then leave. In addition, in the affidavit
    evidence filed, it is suggested that it was not possible to purchase
    replacement products for the two recalled meats for six to eight weeks. In the
    meantime, the representative plaintiff had to explain to its customers why it
    did not have the requested product. It maintains that Maple Leafs negligence
    ultimately led to its demise as a viable business.

[20]

In its Amended Statement of Claim, the
    representative plaintiff pleads that it was foreseeable that negligence on the
    part of [Maple Leaf] would result in a recall of all contaminated or
    potentially contaminated RTE Meats distributed to the [franchisees], and that
    such recall would be widely publicized and result in a loss of sales, profits
    and goodwill for the [franchisees]. It was also pleaded that the franchisees
    would be required to take remedial measures including disposing or destroying
    of any contaminated or potentially contaminated RTE Meats to prevent harm to
    their customers or employees.

(2)

Decision Below

[21]

Maple Leaf moved for summary judgment on the
    basis that Maple Leaf owed the representative plaintiff no duty of care. In the
    alternative, Maple Leaf sought a dismissal of the claims for damages arising
    out of pure economic loss, namely alleged loss of past and future sales, past
    and future profits, loss of capital value of the representative plaintiffs
    franchise and business, and loss of goodwill.

[22]

The representative plaintiff requested an order
    for summary judgment on all of the issues on the defendants motion and was
    largely successful.

[23]

At para. 4 of her order, the motion judge
    ordered that Maple Leaf owed a duty of care to [the franchisees] in relation to
    the production, processing, sale and distribution of the RTE Meats. In her
    reasons, she described the duty as a duty to supply a product fit for human
    consumption: para. 40. She noted that her conclusion was consistent with three
    cases, which I will discuss in some detail below.

[24]

In support of her conclusion that Maple Leaf
    owed a duty to supply a product fit for human consumption, the motion judge found
    that Maple Leaf was under an obligation to be mindful of the [representative]
    plaintiffs legitimate interests in conducting its affairs: para. 41.

[25]

In considering proximity, she noted that Maple
    Leaf was the exclusive supplier of RTE meats and the various dealings between
    Maple Leaf and the franchisees during the recall. She also noted that RTE
    products were an integral and essential part of the business of the franchisees
    without which their business could not operate: para. 42.  The quality and
    safety of the RTE meats, she found, were essential to the maintenance of the
    franchisees good will and reputation  and if the RTE meats were contaminated
    they were potentially dangerous to consumers: para. 42.

[26]

She further found that the alleged harm was a
    reasonably foreseeable consequence of Maple Leafs conduct: para. 43.

[27]

The motion judge went on to deal with the negligent misrepresentation
    claim. At para. 5 of her order, she ordered that Maple Leaf owed a duty of
    care with respect to any representations made that the RTE meats were fit for
    human consumption and posed no risk of harm. She discussed the negligent
    misrepresentation claim, at para. 49 of her reasons:

In relation to the defendants alleged representations that the
    RTE meats were fit for human consumption and posed no risk of harm, I find
    there was a special relationship between the plaintiff and [Maple Leaf] of the
    nature described in [
R v. Imperial Tobacco Canada Ltd.
, 2011 SCC 42,
    [2011] 3 S.C.R. 45] because [Maple Leaf] ought reasonably to have foreseen that
    the plaintiff would rely on their representations and its reliance was
    reasonable in the circumstances.

[28]

She
    continued, at para. 50, as follows:

The plaintiff is within a known and readily identifiable
    category of persons. [Maple Leaf] supplied the plaintiff, an entity it had a
    close and direct relationship with as its exclusive supplier, a defective
    product dangerous to public health, knowing that the product would be offered for
    sale to consumers who could be injured from consuming the product thereby
    causing economic losses to the plaintiff. There are no policy concerns arising
    from imposing a duty of care on the defendants in favour of the plaintiff and
    the class it represents. Rather, policy considerations weigh in favour of
    imposing a duty in these circumstances to heighten accountability. I disagree
    with the defendants that indeterminate liability is a concern here considering
    my findings in relation to the proximity requirement.

[29]

Success
    on the motion was divided in that the representative plaintiff also claimed
    that Maple Leaf owed a duty to warn of the presence of listeria in its plant
    and the motion judge dismissed that claim. The representative plaintiff does
    not challenge that aspect of the motion judges order.

[30]

I note that, in her reasons at para. 54, the motion judge declined
    to strike the claim for damages to cover disposal, destruction and clean-up
    costs as the fact that the plaintiff does not have a claim for [these damages]
    does not entitle the defendants to an order striking these claims which the
    plaintiff makes on behalf of the class it represents. On appeal, Maple Leaf
    does not challenge that aspect of the decision.
[2]
Rather, the focus of this appeal is the damages claimed for loss of past and
    future sales, past and future profits, and loss of capital value and goodwill.

[31]

I also note that the parties agree that the motion judges reasons
    on the summary judgment motion must be read together with her reasons on the
    certification motion: 2016 ONSC 4233.  In her certification decision, the
    motion judge dealt with duty of care at some length in assessing whether the
    pleadings disclosed a cause of action.

[32]

With
    that background, I turn now to the grounds of appeal raised by Maple Leaf.

ANALYSIS

[33]

Maple Leaf advances numerous grounds of appeal
    that can be distilled into four broad objections. Maple Leaf maintains that the
    motion judge erred in:

1.

Finding that Maple Leaf supplied the representative plaintiff with a
    defective product dangerous to public health;

2.

Concluding that this case falls within a recognized duty of care;

3.

Failing to consider and properly apply the
Anns
/
Cooper
test; and

4.

Finding that damages for pure economic loss are recoverable in this
    case.

[34]

I will first address the factual issue and then
    turn to the duty of care analysis.

(1)

Factual Finding

[35]

Maple Leaf maintains that the motion judge made
    a key finding of fact that was unsupported by the evidence and that this error
    led to her erroneous conclusion that a duty of care was owed. In particular,
    Maple Leaf points to the motion judges comment, at para. 50, that Maple Leaf supplied
    the plaintiff  a defective product dangerous to public health. Maple Leaf emphasizes
    that there is no evidence that any RTE meats contaminated with listeria reached
    the representative plaintiffs store or that either of the two core menu items
    that were recalled ever tested positive for listeria.

[36]

The representative plaintiff says that the
    motion judge did not commit a palpable and overriding error. She did not find,
    says that representative plaintiff, that any meats provided to or recalled from
    the franchisees were contaminated. Rather, she properly found that the RTE
    meats that were provided to the franchisees were at risk of contamination and
    thus posed a risk to public health and safety.

[37]

In my view, the impugned comment must be read in
    the context of the motion judges reasons on the summary judgment motion and
    her related reasons on the certification motion. In particular, I note the comment
    at para. 40 of the motion judges certification reasons where she refers to the
    risk of danger  that could occur from consumption of the product.

[38]

I am satisfied, reading the impugned comment in
    context, that the motion judge was saying that there was a
risk
that the two core menu items
could
compromise human health, given that they had been produced at the same plant as
    the tainted products. This is how the representative plaintiff encourages this
    court to read the impugned comment and, particularly in light of the high level
    of deference owed to the motion judge on findings of fact, I am prepared to do
    so.

(2)

Duty of Care

(a)

Introduction

[39]

This appeal turns on whether the motion
    judge erred in her duty of care analysis, which brings us to the
Anns
/
Cooper
framework:
Anns
    v. Merton London Borough Council
, [1978] A.C. 728 (H.L.);

Cooper v. Hobart
, 2001 SCC 79,
    [2001] 3 S.C.R. 537.

[40]

At the first stage of the
Anns
/
Cooper
framework, the question is whether the facts disclose a relationship of
    proximity in which failure to take reasonable care might foreseeably cause loss
    or harm to the plaintiff. If this is established, a
prima facie
duty
    of care arises and the analysis proceeds to the second stage, which asks
    whether there are policy reasons why this
prima facie
duty
    of care should not be recognized
: R. v. Imperial Tobacco Canada Ltd.
,
    2011 SCC 42, [2011] 3 S.C.R. 45, at para. 39, citing
Hill v. Hamilton-Wentworth
    Regional Police Services Board
, 2007 SCC 41, [2007] 3 S.C.R. 129.

[41]

However, a full
Anns/Cooper
analysis is not required in every case. If a relationship falls
    within a previously established category, or is analogous to one, then the requisite
    close and direct relationship is shown. So long, then, as a risk of reasonably
    foreseeable injury can also be shown, or has already been shown through an analogous
    precedent, the first stage of the analysis will be complete and a duty of care
    exists:
Livent
, at para. 26.

[42]

In this case, there is some controversy as to exactly
    what the motion judge decided on the established/analogous category point.

[43]

Maple Leaf submits that the motion judge
    improperly relied on three decisions to conclude that Maple Leafs relationship
    with the representative plaintiff fell within a recognized duty to supply a
    product fit for human consumption:
Plas-Tex Canada Ltd. v. Dow
    Chemical of Canada Ltd.
, 2004 ABCA 309, 245 D.L.R. (4th)
    650, leave to appeal refused [2004] S.C.C.A. No. 542;

376599
    Alberta Inc. v. Tanshaw Products Inc.,
2005 ABQB 300, 379
    A.R. 1;
Country Style Food Services Inc. v. 1304271 Ontario Ltd.
(2005)
,
200 O.A.C. 172.

[44]

The representative plaintiff, on the other hand,
    submits that the motion judge conducted an
Anns
/
Cooper
analysis as well as stating
    that her conclusion was consistent with the reasoning and findings in
Plas-Tex
,
Tanshaw
and
Country
    Style
.
Plas-Tex
and
Tanshaw
are said to support the conclusion that a manufacturer has a
    recognized duty of care to those in its supply chain not to manufacture and
    provide a product that has become dangerous as a result of negligence.

[45]

The motion judges summary judgment reasons
    are not entirely clear on this point. While she does refer to the
Anns/Cooper
analysis, she states, at para. 40, that there was a duty to supply
    a product fit for human consumption  in other words, a product that has not
    become dangerous as a result of the defendants negligence. That conclusion
    was said to be consistent with the reasoning and findings in
Plas-Tex
,
Tanshaw,
and
Country Style
, decisions
    which she discussed at some length in her certification reasons.
However, the motion judge also went on to discuss
    proximity and reasonable foreseeability at paras. 41 - 48. As outlined above,
    she made findings in support of her conclusion on proximity.  She also dealt
    with Maple Leafs arguments on foreseeability, concluding at para. 48 that it
    was reasonable, appropriate, and foreseeable for consumers to avoid buying
    food from Mr. Sub franchisees in the circumstances.

[46]

In my view, any ambiguity as to whether the
    motion judge determined that the relationship between the parties fell within
    an established category is resolved by the motion judges costs ruling.

The motion judge concluded that the certification
    and summary judgment motions did not raise a novel issue of law, noting that
the relationship between the parties fell within a
    recognized duty of care: at para. 44.

[47]

As I read her
    reasons, the motion judge relied on the three decisions to conclude that Maple
    Leafs relationship with the representative plaintiff fell within a recognized
    duty to supply a product fit for human consumption, although she went on to
    discuss proximity and foreseeability, perhaps out of an abundance of caution.

[48]

I now turn to
    whether there is an error in finding that the relationship fell within a
    recognized duty of care to supply a product fit for human consumption and, if
    so, whether under a full
Anns
/
Cooper
analysis, Maple Leaf owed such a duty. I
    will then turn to whether the motion judge erred in concluding that Maple Leaf
    owed a separate duty of care to franchisees with respect to any
    representations made that the RTE Meats were fit for human consumption and
    posed no risk of harm.

(b)

Duty to Supply a Product Fit for Human
    Consumption

(i)

Established/Analogous Category

[49]

In my view, the motion judge, who did not have
    the benefit of
Livent
when she decided this
    case, improperly relied on
Plas-Tex
,
Tanshaw
and
Country Style
to conclude that
    Maple Leafs relationship with the representative plaintiff fell within a
    recognized duty of care to supply a product fit for human consumption.

[50]

The majority in
Livent
warned, at para. 28, that
courts should be cautious in
    finding proximity based upon a previously established or analogous category:

[W]here a party seeks to base a finding of proximity upon a
    previously established or analogous category,
a court
    should be attentive to the particular factors
which justified
    recognizing that prior category in order to determine whether the relationship
    at issue is, in fact, truly the same as or analogous to that which was
    previously recognized. And, by corollary,
courts should
    avoid identifying established categories in an overly broad manner
because, again, residual policy considerations are not considered where
    proximity is found on the basis of an established category (
Cooper
, at
    para. 39).  When, therefore, a court relies on an established category of
    proximity, it follows that there are no overriding policy considerations that
    would [negate] the duty of care (
ibid.
). A consequence of this
    approach, however, is that
a finding of proximity based
    upon a previously established or analogous category must be grounded not merely
    upon the identity of the parties, but upon examination of the particular
    relationship at issue in each case
. [Emphasis added.]

[51]

Similarly, at para. 52, the majority warned
    against an overly broad characterization of an established category of
    proximity which fails to consider the scope of the activity in respect of which
    proximity was previously recognized.

[52]

In my view, there are fundamental differences
    between this case and
Plas-Tex
,
Tanshaw
and
Country Style
.

[53]

In
Plas-Tex
,
    the plaintiffs provided pipeline systems to carry natural gas. The defendant
    sold a defective polyethylene resin to the plaintiffs for use in the pipes. The
    pipes cracked, natural gas escaped and an explosion occurred. The plaintiffs
    suffered financial hardship as a result and the defendant was held liable for damages
    for economic losses, including loss of profits due to the subsequent failure of
    the plaintiffs business.

[54]

In that case, the defendant supplied a product
    that it knew was defective. Use of the product caused property damage and
    business losses. In these circumstances, policy considerations favoured
    imposing liability to deter manufacturers from engaging in such behaviour. Here,
    in contrast to the manufacturer in
Plas-Tex
,
    which put a product into the marketplace that it knew to be dangerous, as soon
    as Maple Leaf knew its meat may be dangerous, it voluntarily recalled the
    products in order to safeguard human health. To the extent people were harmed
    by Maple Leaf meats, none of them were harmed by eating Maple Leaf meats at a
    Mr. Sub restaurant.

[55]

In
Tanshaw
, the
    plaintiff nightclub owner threw a foam party, where large quantities of
    bubbles were poured from a machine onto club patrons who were mingling about. Unfortunately,
    patrons exposed to the foam suffered serious skin and eye irritation. The
    nightclub owner sued various parties involved in the manufacture and/or supply
    of the foam to the nightclub. The nightclub claimed that it suffered economic
    loss as a result of the defendants negligence. The trial judge described the
    claim as a claim about lost drink sales, expenses associated with maintaining
    drink sales, and the loss of the opportunity to raise drink prices: para. 225.

[56]

The trial judge found that there was a
prima
    facie

duty of care. Then he went on to consider residual
    policy considerations, noting that they weigh[ed] in favour of confirming a
    duty on the part of distributors and suppliers to the users of their product to
    ensure that the product is suitable and fit for its purpose and, to the extent
    that it carries hazards, adequate warnings are conveyed: para. 153. The court
    did not differentiate between the duty of care owed to the end users of the
    product, not to cause them physical harm, and a duty owed to an intermediary in
    the supply chain for pure economic losses arising from such harm.

[57]

The situation here is different than in
Tanshaw
for a number of reasons, including that in that case the
    plaintiffs patrons were harmed by the product that was unfit for its intended
    purpose whereas here no one was harmed by eating Maple Leaf meats at a Mr. Sub
    restaurant. In
Tanshaw
, the defendants were
    aware of the potential harm and failed to act, whereas here the alleged damages
    arose in the context of a product recall.

[58]

Finally,
Country Style

involved,
    among other things, a claim for damages for negligent misrepresentation arising
    out of the redesign of a shopping mall after a lease had been signed. Despite
    the lease being between the landlord and franchisor, the landlord was found to
    owe the franchisee a duty of care. This duty was breached when the landlord
    provided inaccurate site plans when the lease was negotiated.  Unlike this
    case,
Country Style
had nothing to do with the
    supply of a product and its fitness for human consumption.

[59]

In my view, these three cases are readily distinguishable
    from this case where it is alleged that Maple Leaf should be held liable for damages
    for the reputational harm to the franchisees as a result of a recall and their public
    association with Maple Leaf. As a result, it is necessary to assess whether the
    motion judges conclusion that the relationship between Maple Leaf and the
    franchisees was such that a duty of care to supply fit meat extends to the
    damage at issue on this appeal is sustainable under a full
Anns
/
Cooper
analysis.

(ii)

Anns
/
Cooper
Analysis

[60]

In addition to relying on
Plas-Tex
,
Tanshaw
and
Country
    Style
, the motion judge provided an alternative analysis
    in that she went on to discuss proximity and foreseeability. In concluding that
    Maple Leaf owed a duty to supply a product fit for human consumption to the
    representative plaintiff, the motion judge found that the circumstances of the
    relationship between the representative plaintiff and Maple Leaf were such that
    Maple Leaf was under an obligation to be mindful of the plaintiffs legitimate
    interests in conducting its affairs.

[61]

In considering the relationship between the
    parties, she focused on the fact that Maple Leaf:

·

knew the names, addresses and contact
    information of the franchisees;

·

was the exclusive supplier of the 14 core menu
    items;

·

had direct dealings and communications with the
    franchisees around the recall and in its aftermath;

·

sent communications addressed to the franchisor
    and franchisee;

·

directed and paid the distributors to retrieve
    the recalled products from the franchisees; and

·

was aware that their products were an integral
    and essential part of the franchisees business.

[62]

I do not take any issue with the motion judges factual
    findings. In my view, however, the motion judge erred in failing to consider
    the
scope
of the proximate relationship or
    scope of any such duty arising from it. As noted in
Livent,
at para. 31, the proximity analysis not only determines the
existence
of a relationship of proximity, but also delineates the
scope
of the rights and duties which flow from that relationship
    (emphasis in original).

[63]

To the extent there may be a duty to supply meat
    fit for human consumption,
[3]
it does not extend to the franchisees damages for pure economic loss at issue
    here.

[64]

As I see it, Maple Leafs duty of care in tort to
    supply meat fit for human consumption, a duty which is aimed at protecting
    human health, was owed to the franchisees customers, not the franchisees.  The
    claim advanced against Maple Leaf in this action rests upon an alleged additional
    and quite different duty owed to franchisees to protect their reputation and
    pay for any consequent damages for pure economic losses.

[65]

As noted by the motion judge, at para. 58, the
    alleged damages are, in large part, a consequence of the public announcement of
    the recall and resulting publicity. The alleged reputational damages are said
    to arise from publicity related to the illness and death of people who did not
    eat tainted meat at a Mr. Sub, and the recall of meat.

[66]

To conclude that Maple Leaf owed a duty of care
    in tort to the franchisees to protect them against the kinds of damages at
    issue on this appeal would be to enlarge the duty to safeguard the health and
    safety of customers by supplying fit meat to include a quite different and added
    duty to franchisees to protect against reputational harm. In my view, to do so
    would constitute an unwarranted expansion of a duty owed to one class of
    plaintiffs and extend it to the fundamentally different claim advanced by the
    franchisees. In other words, the franchisees cannot bootstrap their claim for
    damages for reputational loss to the different duty owed by Maple Leaf to their
    customers.

[67]

The motion judge found that it was reasonable,
    appropriate, and foreseeable for consumers to avoid buying food from a
    restaurant where there had been a food recall arising from problems in the
    plant of its meat supplier that were not resolved for a relatively
    significant period of time: para. 48. However, this finding of reasonable
    foreseeability is not enough to give rise to a duty of care in tort to the
    franchisees which can only arise where the foreseeable harm falls within the
    scope of a proximate relationship.

[68]

Simply put, the type of injury claimed  economic
    losses arising from reputational harm  did not fall within the scope of any
    duty owed to the franchisees.

[69]

In light of these conclusions, it is unnecessary
    to address the issue of whether there are any residual policy considerations
    that would negate the imposition of a duty of care. However, one point warrants
    brief mention.

[70]

The motion judge was of the view that imposing a
    duty in the circumstances of this case would heighten accountability. I agree
    that accountability is important but question whether imposing a duty in the
    circumstances of this case would achieve that end or be consistent with
    concerns about safeguarding public health.

[71]

To the extent that the franchisees alleged
    damages relate to the recall itself, policy considerations call into question imposing
    liability. There is a strong public interest in encouraging manufacturers to act
    expeditiously in recalling products from the marketplace to avoid potential
    danger to consumers.

[72]

In summary, I conclude that the motion
    judge erred in finding that the duty to supply a product fit for human
    consumption encompassed a duty of care to protect against the economic losses at
    issue on this appeal.

(c)

Duty of Care - Negligent Misrepresentation

[73]

In concluding that there was a special relationship
    between the representative plaintiff and Maple Leaf, the motion judge referred
    to
Imperial Tobacco
in which the Supreme Court discussed the duty of
    care in the negligent misrepresentation context, at para. 42:

Proximity and foreseeability are heightened concerns in claims
    for economic loss, such as negligent misrepresentation In a claim of negligent
    misrepresentation, both these requirements for a
prima facie
duty
    of care are established if there was a special relationship between the
    parties:
Hercules Managements

Ltd. v. Ernst & Young
,
    [1997] 2 S.C.R. 165, at para. 24.  In
Hercules Managements
,
    the Court,
per
La Forest J., held that a special relationship
    will be established where: (1) the defendant ought reasonably to foresee that
    the plaintiff will rely on his or her representation; and (2) reliance by the
    plaintiff would be reasonable in the circumstances of the case (
ibid.
).
    Where such a relationship is established, the defendant may be liable for
    losses suffered by the plaintiff as a result of a negligent misstatement.

[74]

Maple Leaf maintains that the motion judge erred in her

Anns
/
Cooper
analysis
    on this issue. In particular, it argues that the claim falls outside the scope
    of the proximate relationship and the losses claimed are not reasonably
    foreseeable. It also argues that there are serious residual policy concerns,
    including indeterminacy.

[75]

In
the context of negligent misrepresentation cases, proximity is most
    usefully considered before foreseeability because [w]hat the defendant reasonably
    foresees as flowing from his or her negligence depends upon the characteristics
    of his or her relationship with the plaintiff, and specifically  the purpose
    of the defendants undertaking:
Livent,
at
    para. 24.

[76]

While
Livent
affirms that when undertaking a full proximity analysis the
    court must examine all relevant factors arising out of the relationship between
    the plaintiff and the defendant, two factors are determinative in the case of
    negligent misrepresentation - the defendants undertaking and the plaintiffs
    reliance:
Livent
, at para. 30. Where the defendant undertakes to
    provide a representation or service in circumstances that invite the
    plaintiffs reasonable reliance, the defendant becomes obligated to take
    reasonable care:
Livent
at para. 30.

[77]

According
    to
Livent
at para. 31, [a]ny reliance on the part of the plaintiff
    which falls outside of the scope of the defendants undertaking of
    responsibility  that is, of the purpose for which the representation was made
    or the service was undertaken  necessarily falls outside the scope of the
    proximate relationship and, therefore of the defendants duty of care.
A defendant cannot be liable for a risk of injury against which he
    did not undertake to protect:
Livent,
at
    para. 31.

[78]

In
    cases of negligent misrepresentation, the proximate relationship informs the
    foreseeability inquiry in that the purpose underlying [the] undertaking and
    [the] corresponding reliance limits the type of injury which could be
    reasonably foreseen to result from the defendants negligence:
Livent
,
    at para. 34.

[79]

Here
, the motion judge found that Maple Leaf
    ought reasonably to have foreseen that the representative plaintiff would rely
    on its representation  namely, that the RTE meats were fit for human
    consumption and posed no risk of harm  and its reliance was reasonable in the
    circumstances. She noted that the representative plaintiff was within a known
    and readily identifiable category of persons and that Maple Leaf was the
    representative plaintiffs exclusive supplier. Maple Leaf was aware that the
    RTE meats would be offered for sale to consumers who could be injured if it was
    unfit.

[80]

In my view, there was an error in failing to
    consider the
scope
of the proximate relationship
    between the parties, which in turn affected the foreseeability analysis. Maple
    Leaf undoubtedly undertook  in the context of its contractual relationship with
    the franchisor  to supply meat safe for human consumption by Mr. Sub customers.
    The nature or purpose of such an undertaking was to ensure that Mr. Sub
    customers who ate RTE meats would not become ill or die as result of eating the
    meats. The purpose of the undertaking was not, however, to protect the
    reputational interests of the franchisees.

[81]

The representative plaintiff maintains that it
    was reasonably foreseeable that the media would connect Mr. Sub to Maple Leafs
    listeria outbreak, causing reputational harm. As the motion judge put it at
    para. 37 of her reasons, the plaintiff alleged it was tagged as a place where
    dangerous products might have been sold prior to the recall.

[82]

The question is whether, in light of Maple Leafs undertaking, the
    representative plaintiffs alleged reputational injury was reasonably
    foreseeable. In
Livent
, the majority discussed
    reasonable foreseeability in the context of negligent misrepresentation, at
    para. 35:

[A] plaintiff has a right to rely on a defendant to act with
    reasonable care for the particular purpose of the defendants undertaking, and
    his or her reliance on the defendant for that purpose is therefore both
    reasonable and reasonably foreseeable. But a plaintiff has no right to rely on
    a defendant for any other purpose, because such reliance would fall
    outside the scope of the defendants undertaking.  As such, any consequent
    injury could not have been reasonably foreseeable.

[83]

Here, the plaintiff essentially says that, based on Maple Leafs
    representation, the franchisees relied on Maple Leaf to protect their reputations
    even in circumstances where the alleged reputational damage did not flow from
    the supply of tainted meat to Mr. Sub franchisees and harm to their customers,
    but rather from: (a) the supply of tainted meat
to others
; and (b) the
recall
of
potentially
    tainted
meat from Mr. Sub franchisees.

[84]

I
    disagree.
The reputational damage said to be sustained by the
    plaintiff, arising from Maple Leafs supply to others and from the recall
    aimed at safeguarding health and safety  falls outside the scope of Maple
    Leafs undertaking to the franchisees. Accordingly, the alleged injury was not
    reasonably foreseeable.

[85]

In light of my conclusions on stage one of the
Anns/Cooper
analysis, it is unnecessary to address residual policy
    considerations other than to note that the concern about encouraging effective recalls
    is equally applicable in this context.

[86]

In conclusion, Maple Leafs duty of care with
    respect to any representations made that the RTE meats were fit for human
    consumption and posed no risk of harm does not extend to the damages for pure
    economic loss claimed here.

(3)

Availability of Damages in Negligence for Pure Economic
    Loss

[87]

Finally, Maple Leaf argues that the motion judge
    erred in determining that the damages claimed as arising out of economic losses
    were recoverable. In particular, it says that there can be no claim in
    negligence for a defective but non-dangerous good, where no personal injury or
    damage to property was incurred. Given my conclusion that the motion judge
    erred in her duty of care analysis, it is unnecessary to consider this argument
    on appeal and I decline to do so.

DISPOSITION

[88]

I would allow the appeal and set aside paras. 4 and 5 of the motion
    judges order except as they relate to the claim for the clean-up costs and
    other costs related to the disposal, destruction and replacement of RTE meats,
    which is not at issue on this appeal.

[89]

The parties are agreed on costs for the appeal. The representative
    plaintiff shall pay costs to Maple Leaf of $30,000, inclusive of applicable
    taxes and disbursements.

[90]

As for the costs on the summary judgment motion, we will accept written
    costs submissions of no more than five pages in length. Maple Leaf shall file its
    submissions within 15 days of release of this judgment and the franchisee will
    file within seven days of receiving those submissions.

Released: PR Apr 30 2018

Fairburn J.A.
I agree. Robert J. Sharpe J.A.
I agree. Paul Rouleau J.A.

[1]
The Canadian Food Inspection Agency (CFIA) says that l
isteria
    monocytogenes often appear in food. Only when it reaches certain levels does it
    create a risk, particularly to certain segments of the population, such as the
    elderly, immunocompromised individuals and pregnant women. When I use the term
    listeria in this judgment, it should not be understood in the benign sense,
    but as a short form reference to the bacteria having reached dangerous levels,
    which may result in the illness listeriosis.

[2]

In its factum Maple Leaf acknowledges that there is also a
de
    minimus
claim for the cost of disposing or cleaning up for RTE Meats that
    actually reached the restaurant and for the costs of the RTE Meats themselves
    but says that the evidence on the motion was that Maple Leaf provided full
    credits to the Distributors for the costs of the destroyed cases of RTE Meats
    and that the plaintiff itself did not incur any disposal or cleaning costs.

[3]

Again, I note that the damages related to the disposal,
    destruction and replacement of RTE meats are not at issue on this appeal.


COURT OF APPEAL FOR ONTARIO

CITATION: 2129152 Ontario Inc. v. Pliamm, 2018 ONCA 338

DATE: 20180405

DOCKET: C64196

Pepall, Brown and Trotter JJ.A.

BETWEEN

2129152 Ontario Inc.

Plaintiff

(Appellant)

and

Sara
    Pliamm, The Quit Clinic Inc.,
Igor Pelz
,

Mila
    Kisilevsky,
Kit Guan
,
Akil Dhirani
, 2006829 Ontario Inc.,

1322784
    Ontario Inc., Luiba Grossman, Bob Grossman,

1566901 Ontario Inc.
, North York Endoscopy Centre Inc.,

John
    Phlamon, Peter Faltaous
and
Basem Ghatas,

1738889 Ontario Inc., XYZ1 Corporation, XYZ2 Corporation,

XYZ3 Corporation, XYZ4 Corporation, XYZ5 Corporation,

XYZ6 Corporation, and XYZ7 Corporation

Defendants

(Respondents)

Jordan Goldblatt and Iris Graham, for the appellant

Timothy Morgan, for the respondent

Heard: March 29, 2018

On appeal from the order of Justice R.D. Gordon of the
    Superior Court of Justice, dated July 20, 2017.

APPEAL BOOK ENDORSEMENT

[1]

The appellant landlords action against the subtenants is a separate
    action from the action by the appellant landlord against the sublandlords.  The
    appellant landlord could have sued the sublandlords and the subtenants in one
    action or moved more expeditiously for an order for consolidation or trial
    together.  They opted to proceed with a summary judgment motion in the absence
    of resolution of the issue of consolidation or trial together.

[2]

We see no merit in the appellants submission that its action against
    the subtenants should not be resolved by summary judgment in these
    circumstances.  There are obvious advantages to the subtenants in bringing that
    action to finality.  The motion judge was correct in concluding that the
    summary judgment process was appropriate in this case.

[3]

We also reject the appellants submissions on the motion judges
    treatment of unlawful act conspiracy.  The motion judge found that there was no
    privity of contract between the landlord and the subtenants and the order in
    that regard was not appealed.  No breach of the sublease was alleged by the
    sublandlords and they and the subtenants agreed that each lease was terminated
    in accordance with its terms and that there were no obligations outstanding.
    Based on his findings, there could be no unlawful conduct to ground the
    conspiracy claim.

[4]

Moreover, the motion judge was clearly satisfied that the appellant had
    failed to meet its onus in establishing that the subtenants conduct was directed
    towards the appellant.  We see no reason to interfere.

[5]

The appeal is dismissed.  Costs are fixed in the amount of $10,000 on a
    partial indemnity scale inclusive of disbursements and applicable tax.


COURT OF APPEAL
    FOR ONTARIO

CITATION: 2237446 Ontario Inc. (409 Collision Centre) v.
    Intact Insurance, 2018 ONCA 394

DATE: 20180424

DOCKET: C64682

Hourigan, Huscroft and Nordheimer JJ.A.

BETWEEN

2237446 Ontario Inc. o/a 409 Collision Centre
    (2011)

Applicant (Appellant)

and

Intact Insurance and
    Bonnie Brennan

Respondents (Respondents in appeal)

Mark A. Klaiman, for the appellant

Lisa M. Carr, for the respondents

Heard:  April 20, 2018

On appeal from the judgment of Justice Ivan Bloom of the Superior
    Court of Justice, dated December 8, 2016 with reasons reported at 2016 ONSC 7711.

REASONS FOR DECISION

[1]

The applicant appeals from the dismissal of its application to have the
    initial certificate that was obtained by the respondent, Intact Insurance,
    under s. 24(5) of the
Repair and Storage Liens Act
, R.S.O. 1990, c.
    R.25 (
RSLA
) declared null and void.  At the conclusion of the
    hearing, we dismissed the appeal with reasons to follow.  We now provide those
    reasons.

[2]

On December 20, 2015, a motor vehicle owned by the respondent, Bonnie
    Brennan, was involved in an accident.  It was towed to the storage premises
    operated by the appellant. On January 6, 2016, Brennan executed a Vehicle
    Repair and Storage Agreement in which she agreed to pay a storage rate of
    $85.00 per day.  On the previous day, Intact had advised Brennan that it would
    pay the actual cash value of the vehicle, rather than pay for the cost to
    repair it.  Brennan agreed with Intact that she would authorize the appellant
    to release the vehicle to Intact.  Under her automobile insurance policy,
    Intact was obliged to reimburse Brennan for the storage costs.

[3]

Intact and the appellant could not agree on the storage charges that
    were properly due for the storage of the vehicle.  Consequently, Intact applied
    for and received an initial certificate under s. 24 of the
RSLA
. The
    certificate was issued on February 9, 2016. As of that date, Intact had not yet
    paid Brennan for the loss of her automobile.

[4]

By virtue of s. 24(6) of the
RSLA
, once Intact gave the initial
    certificate to the appellant, the appellant was obliged, within three days of
    receiving the initial certificate, to release the article described therein to Intact
    unless, within that period, it filed a notice of objection with the court.

[5]

Rather than filing a notice of objection, the appellant brought this
    application to have the initial certificate declared null and void.  The
    appellant asserted that, since Intact had not paid Brennan for the value of the
    vehicle, Intact was not, at that time, either the owner of the vehicle, nor was
    it any other person entitled to the vehicle under s. 24(1) of the
RSLA
.
    Hence, according to the appellant, Intact was not entitled to obtain the
    initial certificate.

[6]

The application judge found that Intact had assumed liability under
    the contract of insurance and was then subrogated to the rights of its insured
    under s. 278 of the
Insurance Act
, R.S.O. 1990, c. I.8.  Section
    278(1) reads:

An insurer who makes any payment or assumes liability therefor
    under a contract is subrogated to all rights of recovery of the insured against
    any person and may bring action in the name of the insured to enforce those
    rights.

[7]

The application judge proceeded from this finding to conclude that
    Intact was a person lawfully entitled to the automobile and thus had the
    right to obtain an initial certificate under s. 24 of the
RSLA
.

[8]

We agree with the conclusion reached by the application judge.  In
    interpreting the provisions of the
RSLA
, we start with the modern
    approach to statutory interpretation, as espoused in E. A. Driedger,
Construction
    of Statutes
, 2nd ed. (Toronto: Butterworths, 1983), at p. 87 that the
    words of an Act are to be read in their entire context and in their grammatical
    and ordinary sense harmoniously with the scheme of the Act, the object of the
    Act, and the intention of Parliament:
Bell ExpressVu Ltd. Partnership v.
    Rex
, 2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26; and
Indalex Ltd.,
    Re
, 2013 SCC 6, [2013] 1 S.C.R. 271, at para. 136.

[9]

It is obvious that the intent of the
RSLA
is to provide an
    expeditious procedure for dealing with disputes over storage charges, that
    protects both the storage holder and the owner of the item stored.  The
    interpretation that the appellant argues for would effectively require insurers
    to settle all matters arising out of a motor vehicle accident with its insured,
    and make the resulting payment, before it would be able to avail itself of the
    remedies under the
RSLA
.  In the interim, storage charges would
    continue to accumulate.  That interpretation is not one that is harmonious with
    the object of the
RSLA
.  It is also not one that reflects the realities
    of the marketplace, in which this statute operates.  There will be many
    occasions where issues will arise between an insured and an insurer under an automobile
    insurance policy.  It would not be to the benefit of either the insured or the
    insurer to have charges relating to the storage of motor vehicles involved in
    accidents mount up while those issues are resolved.

[10]

The
    appellants contention that statutory condition 6(7) of the standard automobile
    insurance policy overtakes s. 278 is untenable.  The statutory condition
    operates as between insurer and insured.  Section 278 operates as between an
    insurer and third parties like the appellant.

[11]

We
    would also note that the interpretation adopted, and the conclusion reached, by
    the application judge does not visit any unfairness on the appellant.  It is
    fully protected with respect to the storage charges that it claims to be
    lawfully entitled to while the issue over the propriety of those charges is
    determined.

Conclusion

[12]

The
    appeal is dismissed.  Intact is entitled to its costs of the appeal in the agreed
    amount of $6,779.30 inclusive of disbursements and HST.

C.W. Hourigan J.A.

Grant Huscroft J.A.

I.V.B. Nordheimer J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: 2316796 Ontario Inc. v. Chetti, 2018 ONCA 336

DATE: 20180405

DOCKET: C62691

Strathy C.J.O., Roberts and Paciocco JJ.A.

BETWEEN

2316796 Ontario Inc.

Applicant
(Respondent in Appeal)

and

John Chetti

Respondent
(Appellant in Appeal)

Eric Sherkin, for the appellant

Tanya Walker and James Coristine, for the respondent

Heard and released orally: March 29, 2018

On appeal from the judgment of Justice Mario D. Faieta of
    the Superior Court of Justice, dated August 17, 2016.

REASONS FOR DECISION

[1]

The application judge found that the appellant repudiated the Agreement
    of Purchase and Sale for the respondents business. After granting
    rectification of the closing date, he found that the appellant had waived the
    deadline for closing, and for the delivery of the landlords consent to the
    assignment of the lease and had agreed to pay rent in the interim. He also
    found that the landlord ultimately delivered his consent in the form of a
    one-page handwritten document, which was signed by all parties in September
    2014.

[2]

Counsel for the appellant acknowledges that this is largely an appeal of
    the application judges findings of fact, and that the standard of review requires
    a demonstration of palpable and overriding error in the application judges
    assessment of the evidence.

[3]

He makes two submissions: first, that the application judge erred in
    finding that the appellant waived the rectified date for closing. We do not
    accept that submission. The application judge identified the correct legal test
    for waiver and made findings of fact from which waiver could be inferred. These
    included the fact that the appellant went into possession of the premises and
    carried out renovations. In addition, there was evidence that the appellant
    acknowledged an obligation to pay rent pending closing. This evidence, and the
    appellants own evidence, provided an ample basis for the application judges
    finding of waiver.

[4]

Second, the appellant argues that the one-page document signed by the
    parties was simply the landlords conditional consent to the assignment, and
    that the conditions had not been met. Again, the application judge made
    findings of fact which informed his interpretation of the handwritten document.
    The application judge accepted the evidence of Mr. Varga for the respondent
    that the landlord was prepared to consent to the assignment, provided the
    appellant paid rent as he had promised to do.

[5]

The appellant has demonstrated no error in the application judges
    conclusion on this issue.

[6]

The appellants ground of appeal relating to
Bulk Sales Act
compliance was not pursued in oral argument, and we did not call on the
    respondent to address it. In view of the appellants repudiation of the agreement,
    we see no merit to this ground in any event.

[7]

Costs to the respondent in the amount of $9,250, all inclusive.

G.R. Strathy C.J.O.

L.B. Roberts J.A.

David M. Paciocco
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Apotex Inc. v. Abbott Laboratories Limited, 2018
    ONCA 332

DATE: 20180405

DOCKET:
C63578 and C63585

Strathy C.J.O., Juriansz and Huscroft JJ.A

BETWEEN

Apotex Inc.

Plaintiff (Respondent)

and

Abbott Laboratories Limited, Takeda
    Pharmaceuticals Company Limited and Takeda Pharmaceuticals America Inc.

Defendants (Appellants)

AND BETWEEN

Abbott Laboratories Limited, Takeda
    Pharmaceuticals Company Limited and Takeda Pharmaceuticals America Inc.

Plaintiffs by counterclaim (Appellants)

and

Apotex Inc.

Defendant by counterclaim (Respondent)

Steven G. Mason and David A. Tait for the appellant
    Abbott Laboratories Ltd.

Christopher C. Van Barr and Kiernan Murphy for the
    appellant Takeda parties

Andrew R. Brodkin and Michael A. Wilson, for the
    respondent

Heard: December 6, 2017

On appeal from the order of Justice Michael G. Quigley of
    the Superior Court of Justice, dated June 5, 2017, with reasons reported at
    2017 ONSC 1348.

Huscroft J.A.:

OVERVIEW

[1]

This is the second appeal arising out of an action brought by Apotex
    against Abbott and Takeda, concerning the patented medicine
Prevacid
® and Apotexs generic drug
Apo-lansoprazole.

[2]

Apotexs action alleged losses caused by Abbott and
    Takeda arising out of steps they took to deny Apo-lansoprazole access to the
    market. Abbott and Takeda were granted partial summary judgment
dismissing
    Apotexs unjust enrichment claim,
and that decision was upheld
    by this court:
Apotex Inc. v. Abbott Laboratories, Limited
,
    2013 ONCA 555.

[3]

Apotexs claim for damages
continued.

Apotexs claimed damages for sales of Apo-lansoprazole
    that were lost during the period in which the drug could not be sold because of
    proceedings taken by Abbott and Takeda under
s. 6
of
    the
Patented Medicines (Notice of Compliance) Regulations
, SOR/93-133 (
NOC Regulations
). Those
    proceedings resulted in a stay of Apotexs application for approval to sell the
    drug, and so precluded its sale.

[4]

Abbott and Takeda brought a motion for summary
    judgment seeking to have Apotexs damages claim dismissed. That motion was
    dismissed. The motion judge concluded that, but for the proceedings taken by
    Abbott and Takeda, Apotex would have received approval from the Minister of
    Health to sell Apo-lansoprazole on April 17, 2007, and was therefore entitled
    to damages. The quantum of damages was left for determination at trial.

[5]

Abbott and Takeda appeal from the motion judges
    order dismissing their motion for summary judgment.

[6]

I would dismiss the appeal for the reasons that
    follow.

BACKGROUND

[7]

Apotex developed Apo-lansoprazole, a generic
    version of Abbott and Takedas drug, Prevacid
®
, and sought approval to sell its drug in Canada. It was required to
    obtain a Notice of Compliance (NOC) from the Minister of Health in order to do
    so, and to this end it filed an Abbreviated New Drug Submission (ANDS).

[8]

The
Food and Drug Regulations
, C.R.C., c.
    870, C.08.002.1 (1)(b)

require that generic drugs must be bioequivalent
    with the Canadian reference product, based on the pharmaceutical and, where the
    Minister considers it necessary, bioavailability characteristics.

[9]

Apotex submitted its ANDS for Apo-lansoprazole
    on February 2, 2006. It included two studies showing that it was the
    bioequivalent of Prevacid
®
: one
    study was conducted with participants eating a low-fat meal before taking the
    drug, and the other conducted with the participants fasting. Apotex served a
    Notice of Allegation (NOA) asserting that patents held by Abbott and Takeda
    were invalid or would not be infringed. In response, Abbott and Takeda
    commenced an application under s. 6 of
NOC Regulations
, which triggered
    an automatic stay prohibiting the Minister from approving Apotexs NOC for 24
    months, while the ANDS was under review.

[10]

In April 2007, a Health Canada clinical
    evaluator, Dr. Tam, concluded that the standards for bioequivalence had been
    met and recommended that a NOC be issued for the ANDS. On April 17, 2007,
    Apotex was advised by Dr. Sharma, the Acting Director General of the
    Therapeutic Products Directorate within Health Canada, that the review was
    complete and that, in accordance with the s. 6 procedure, the ANDS was placed
    on patent hold. This meant that Apo-lansoprazole would have been approved but
    for commencement of the s. 6 proceedings by Abbott and Takeda.

[11]

Later that year, on December 4, 2007, Health
    Canada informed Apotex that it no longer considered Apo-lansoprazole approvable
    and requested justification for the choice of a low-fat meal in the Apotex
    study, as opposed to a high-fat meal. On January 17, 2008 Apotex replied,
    arguing that it was clinically irrelevant to demonstrate bioequivalence with a
    high-fat meal because Prevacid
®
was itself therapeutically ineffective in these circumstances. Health Canada
    reiterated its request for a high-fat study on August 1, 2008, and Apotex sent
    the results of such a study on August 6, 2008. The study revealed that Apo-lansoprazole
    was not bioequivalent in these circumstances.

[12]

Health Canada sent Apotex a Notice of
    Non-Compliance  Withdrawal on March 6, 2009, reiterating that bioequivalence
    under both fasting and high-fat meal conditions was required. The ANDS for Apo-lansoprazole
    was considered withdrawn at that time, without prejudice to refilling.

[13]

Apotex invoked Health Canadas reconsideration
    process, pursuant to which a panel of experts reviewed the notice of
    non-compliance decision. On May 7, 2009, the panel recommended that Apo-lansoprazole
    be considered bioequivalent on the basis of the fasting and low-fat meal
    studies. As a result, on May 28, 2009 Health Canada rescinded the Notice of
    Non-Compliance  Withdrawal. The NOC for Apo-lansoprazole was issued in June,
    2009.

[14]

On their motion for summary judgment, Abbott and
    Takeda asserted that discovery revealed that Apotex could not receive and would
    not have received regulatory approval for Apo-lansoprazole in April 2007,
    because Apotexs submission to Health Canada did not comply with the regulatory
    rules in place at the time. They argued that, in light of this new information,
    Apotexs claim for damages was without foundation because it was predicated
    upon its regulatory submission for Apo-lansoprazole being approved, in the
    absence of the s. 6 proceedings, in April 2007.

THE MOTION JUDGES DECISION

[15]

The principal issue, as framed by the motion
    judge, was whether Apo-lansoprazole could not and would not have been
    approved in April 2007. If it could not or would not have been approved, Apotex
    could not claim damages under s. 8 of the
Patent Act
. If, however, it could or would have been approved but for the s. 6
    proceedings, then a trial would be required to determine the amount of damages
    due.

[16]

Abbott and Takedas core argument on the motion
    was that Dr. Sharma erred in issuing the Patent Hold letter. They submitted
    that absent this mistake, no NOC could have, would have, or should have been
    issued until final approval in June, 2009, following expiry of the two-year
    statutory stay period under s. 6. Thus, s. 8 damages could not have accrued to
    Apotex.

[17]

In a comprehensive 52-page judgment, the motion
    judge  who case-managed the litigation since 2011  found that, but for Abbott
    and Takedas s. 6 proceeding, Apotex could and would have received a NOC on
    April 17, 2007. Dr. Sharmas correspondence showed that Health Canada had
    completed its review of Apotexs ANDS and found it to be satisfactory and
    approvable, and would have issued a NOC for Apo-lansoprazole absent the s. 6
    proceedings.

[18]

The motion judge noted that the
Food
    and Drug Regulations

do not require any particular
    type of comparative study to demonstrate that a new drug is the pharmaceutical
    equivalent of the Canadian reference drug. Furthermore, the Ministers
    discretion to approve drugs is wide: the regulation requires that the ANDS
    include sufficient information and material to enable the Minister to make the
    required assessment of safety and effectiveness, and the Ministers discretion
    cannot lawfully be fettered by policy statements and/or guidance documents:
Apotex
    Inc. v. Canada (Attorney General)
(1993), 59 F.T.R. 85. Although
    the Health Canada Guidance Document reflects the Ministers preferences for the
    content of submissions, and in particular a high-fat meal test, it does not
    have the force of law and explicitly says so. It cannot preclude the Minister
    from reviewing a submission on the basis of its scientific merits. There was no
    evidence to support Abbott and Takedas theory that a high-fat study was
    required.

[19]

Accordingly, the motion judge concluded that
    there was no legal requirement that Apotex submit a high-fat study. Dr. Tam and
    the expert review panel were satisfied that bioequivalence had been established
    and it was open to Health Canada to approve Apo-lansoprazole for sale.

DISCUSSION

[20]

Abbott argues that the original approval of Apo-lansoprazole
    was based on a mistake. Approval was not granted until June 2, 2009, when
    Apotexs submission was approved in a different form.

[21]

Abbott submits that the motion judge made two
    palpable and overriding errors. First, the motion judge erred in concluding
    that the high-fat study played no part in the final review process. Second, the
    motion judge erred in concluding that because the ANDS was ultimately approved
    in the same form, the June 2, 2009 approval confirmed the April 17, 2007
    approval.

[22]

Takeda argues that the motion judge erred in
    three ways. First, the motion judge erred in finding that Apotexs April 2007
    submission was sufficient and that Apo-lansoprazole could be approved without a
    high-fat study. Second, the motion judge erred in conflating Apotexs product
    and submission; the safety and effectiveness of Apo-lansoprazole in 2007 was
    irrelevant because Apotexs submission was not sufficient to allow the Minister
    to determine whether it was. Third, the motion judge erred by substituting his
    determination as to the sufficiency of Apotexs submission for that of the
    Minister.

[23]

All of these arguments are variations on a
    theme: the motion judge erred concerning the significance of the high-fat study
    to the Ministers decision.

[24]

In my view the motion judge made no error, much
    less a palpable and overriding error, in concluding that Apotex would have
    received a NOC for Apo-lansoprazole on April 17, 2007, if the s. 6 proceedings had
    not been commenced by the appellants. On the contrary, there was ample evidence
    to support the motion judges decision. I highlight the evidence of Dr. Craig
    Simon (Associate Director of BPS) and Ms. Suzanne Picard in this regard.

[25]

Dr. Simons evidence established that Health
    Canada accepted Dr. Tams qualifications to conduct the bioequivalence
    assessments and make recommendations in his capacity as Acting Manager of the
    Bioequivalence assessment group. Dr. Simon testified unequivocally that Apotex
    would have received its NOC on April 16, 17, or 18, 2007, if s. 6 proceedings
    had not been instituted. This evidence was not challenged by Abbott and Takeda
    and, as the motion judge observed, there was no evidence to the contrary.

[26]

Ms. Picard, an expert retained by Apotex,
    prepared a lengthy and detailed affidavit in support of Apotexs position and
    was cross-examined on it. Her evidence was that Apotex would have been granted
    an NOC on or about April 17, 2007 and that, if any concern had arisen about the
    bioequivalence of a low-fat study, the NOC would not have been suspended or
    revoked because there were no exceptional circumstances justifying such a
    decision: Health Canada never questioned the safety of Apo-lansoprazole. The
    motion judge found that Ms. Picards evidence was essentially unrefuted.

[27]

There is no basis to conclude that the Ministers
    subsequent determination had the effect of voiding the initial Patent Hold
    letter or rendering it void
ab initio
. It did
    not purport to revoke the earlier determination and did not have that effect. Nor
    can it be said that the initial approval was granted in error, such that a
    later date must be picked for the start of damages. I agree with the respondent
    that the Ministers subsequent determination could be relevant only to the
    quantum of damages Apotex may have suffered, and that is an issue for trial.

[28]

Finally, the motion judge did not err in
    concluding that there was no legal requirement to follow Health Canadas
    Guidance Document. It could not preclude the Minister from exercising her
    discretion to review a submission on the basis of its scientific merits, and
    there was no evidence, expert or otherwise, to support Abbott and Takedas position
    that a high-fat study was scientifically required.

CONCLUSION

[29]

I would dismiss the appeal.

[30]

If the parties are unable to agree on costs, they may make written
    submissions. The respondent shall deliver its submissions within 15 days and
    the appellants shall deliver their submissions within 15 days of receipt of the
    respondents submissions. The submissions shall not exceed 5 pages in length,
    excluding the costs outline.

Released: April 5, 2018 (G.R.S.)

Grant Huscroft J.A.

I agree. G.R. Strathy C.J.O.

I agree. R.G. Juriansz J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Amini (Re), 2018 ONCA 373

DATE: 20180418

DOCKET: C64273

Watt, Brown and Huscroft JJ.A.

IN THE MATTER OF:  Ali Amini

AN APPEAL UNDER PART XX.1 OF THE
CRIMINAL CODE

Anita Szigeti, for the appellant Ali Amini

Susan Magotiaux, for the respondent the Attorney General of
    Ontario

Gavin S. MacKenzie, for the respondent Person-in-Charge, Centre
    for Addiction and Mental Health

Heard: February 23, 2018

On appeal against the disposition of the Ontario Review
    Board, dated August 11, 2017.

REASONS FOR DECISION

OVERVIEW

[1]

The appellant, Ali Amini, appeals the disposition of the Ontario Review
    Board (the Board) dated August 11, 2017 (the Order) that continued his
    conditional discharge on terms.

[2]

The appellant submits the Board erred in holding that the appellant was
    a significant threat to the safety of the public.

[3]

In 2006, the appellant was found not criminally responsible on account of
    mental disorder on charges of assault causing bodily harm and mischief. The incident
    involved the appellant attacking and injuring a hospital psychiatrist.

[4]

The appellants current diagnosis is schizoaffective disorder, substance
    use disorder, and antisocial personality traits. The appellant has been found
    incapable with respect to treatment.

[5]

The appellant was discharged to live in the community in October 2007.
    However, between that time and 2016 he was readmitted six times to various hospitals.

[6]

In August 2016, the Board granted the appellant a conditional discharge.
    There were no readmissions to a hospital prior to the Board hearing on August
    3, 2017.

THE 2017 REVIEW HEARING

[7]

At the appellants 2017 review hearing, the Centre for Addiction and
    Mental Health (the Hospital) recommended the continuation of the appellants
    conditional discharge, although that was not the unanimous view of his treatment
    team. Some recommended a detention order. The appellant sought an absolute
    discharge.

[8]

The Board continued the appellants conditional discharge. It found that
    the appellant remained a significant threat to the safety of the public for two
    main reasons. First, the Board concluded that a combination of factors resulted
    in the appellant presenting with a risk profile that placed public safety in
    jeopardy. Those factors were: (i) the appellant lacked insight into his mental
    illness and the need for treatment; (ii) the Board accepted the psychiatrists
    evidence that the appellant would not take medication in the absence of a Board
    order; (iii) even with his current medication, the appellant continued to
    experience residual symptoms of his illness and to hold beliefs and delusions
    as a result of his illness; and (iv) although there had not been any
    decompensation of the appellants condition during the review year as a result
    of his continued marijuana use, in the past such use had led to clinical
    worsening and readmissions to hospital.

[9]

Second, the Board accepted the evidence of the psychiatrist that were
    the appellant to discontinue medication, his symptoms could worsen and lead to
    the potential for violence of a kind seen in the 2006 index offence and in
    2015. The Board accepted that that risk can and may well be exacerbated by
    marijuana use, and there is every indication at present that [the appellant]
    will continue to use marijuana in contravention of his Disposition.

[10]

The
    2015 incidents referred to by the Board took place in March and May of that
    year. In March 2015, the appellant began leaving voicemail messages with one of
    his supervising treatment teams espousing his delusional beliefs, which led his
    then treating psychiatrist to refuse to meet alone with him. On two occasions
    in May 2015, the appellant made threatening statements to his treatment team
    and Hospital staff. On the first occasion, he said knowing howif I had to
    kill someone and then expressed aggressive thoughts towards his psychiatrist. On
    the second, he told a staff member that medications were causing him to
    experience command hallucinations to kill his psychiatrist.

[11]

The
    Board also accepted the psychiatrists evidence that the appellants risk on a
    conditional discharge could be managed under the
Mental Health Act
,
    R.S.O. 1990, c. M.7.

ANALYSIS

[12]

The
    appellant submits the Boards conclusion that he was a significant threat to
    the safety of the public was unreasonable. He submits that he has not committed
    any offence involving violence since 2006 and the 2015 incidents relied on by
    the Board did not disclose real potential for harm. The appellant argues that
    the possibility that his symptoms could worsen and lead to the potential for
    violence in the event he was granted an absolute discharge did not establish that
    he remained a significant threat to the safety of the public. He contends that
    in the absence of evidence to support the likelihood of serious criminality in
    the event of his discharge, he was entitled to an absolute discharge.

[13]

We
    are not persuaded by these submissions.

[14]

To
    find that an NCR accused is a significant threat to the safety of the public
    requires that there must be a foreseeable and substantial risk that the NCR
    accused would commit a serious criminal offence if discharged absolutely:
Winko
    v. British Columbia (Forensic Psychiatric Institute)
, [1999] 2 S.C.R. 625,
    at para. 69.

[15]

Making
    such a risk assessment is difficult yet critically important:
Winko
,
    at para. 61. The assessment concerns probabilities, not facts, and involves
    estimations based on moral, interpersonal, political and sometimes arbitrary
    criteria:
Winko
, at para. 56. It may be extremely difficult even for
    experts to predict whether a person will offend in the future, although the tendency
    to over-estimate dangerousness must also be acknowledged and resisted:
Winko
,
    at para. 58.

[16]

The
    assessment requires the Board to examine a range of evidence, including the
    circumstances of the index offence, the past and expected course of the NCR
    accuseds treatment, the present state of his medical condition, his own plans
    for the future, the support services available to him in the community, and
    perhaps most importantly, the recommendations provided by experts who have
    examined the NCR accused:
Winko
, at para. 61.

[17]

The
    Boards reasons disclose it examined a broad range of relevant evidence
    concerning the appellant in order to ascertain whether there existed a foreseeable
    and substantial risk that he would commit a serious criminal offence if
    discharged absolutely. Its conclusion that such a risk existed was a reasonable
    one on the evidence before it. The conclusion was supported by the four factors
    the Board identified as making up the appellants risk profile, as well as by the
    evidence of the serious, threatening statements he made in 2015 to psychiatrists
    and hospital staff.

[18]

Given
    that evidence, we are not persuaded that it was unreasonable for the Board to
    find that the appellant was a significant threat to the safety of the public.

DISPOSITION

[19]

The
    appeal is dismissed.

David
    Watt J.A.
David Brown J.A.
Grant Huscroft J.A.