Los Angeles Salad Co. et al. v. Canadian Food Inspection Agency et al., (2013) 334 B.C.A.C. 24 (CA)

• Judge: K. Smith, Frankel and Bennett, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: January 29, 2013
• Jurisdiction: British Columbia
• Citations: (2013), 334 B.C.A.C. 24 (CA);2013 BCCA 34

Los Angeles Salad Co. v. CFIA (2013), 334 B.C.A.C. 24 (CA);

    572 W.A.C. 24

MLB headnote and full text

Temp. Cite: [2013] B.C.A.C. TBEd. JA.045

The Los Angeles Salad Company Inc. and Los Angeles Salad International Inc. (appellants/plaintiffs) v. Canadian Food Inspection Agency and Her Majesty the Queen in Right of Canada as Represented by the Attorney General of Canada (respondents/defendants)

(CA039160; 2013 BCCA 34)

Indexed As: Los Angeles Salad Co. et al. v. Canadian Food Inspection Agency et al.

British Columbia Court of Appeal

K. Smith, Frankel and Bennett, JJ.A.

January 29, 2013.

Summary:

The plaintiffs were United States corporations that distributed carrots for retail sale by Costco in Canada and the United States. They sued the defendants, the Canadian Food Inspection Agency (CFIA) and the Attorney General of Canada, for damages for negligence in their inspection of carrots that the plaintiffs imported into Canada.

The British Columbia Supreme Court, in a decision reported at [2011] B.C.T.C. Uned. 779, concluded that the defendants owed the plaintiffs no duty of care and, therefore, the plaintiffs' statement of claim disclosed no reasonable claim. Accordingly, the court struck the statement of claim and dismissed the action. The plaintiffs appealed and also sought to amend their statement of claim to support their claim of negligent misstatement.

The British Columbia Court of Appeal stated that where it intended to dismiss the appeal, formal amendments were unnecessary and it would consider the appeal as if the statement of claim had been amended as the plaintiffs proposed. The court dismissed the appeal.

Crown - Topic 1567

Torts by and against Crown - Negligence by Crown - Negligent investigation (incl. preparation of reports, criminal prosecutions, etc.) - The plaintiffs were United States corporations that distributed carrots for retail sale by Costco in Canada and the United States (US) - They sued the defendants, the Canadian Food Inspection Agency (CFIA) and the Attorney General of Canada, for damages for negligence in their inspection of carrots that the plaintiffs imported into Canada - The plaintiffs alleged that, as a result of reports of illness by four consumers, 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 plaintiffs, Costco, the US Food and Drug Administration, and the public that the carrots might be contaminated with Shigella bacteria, and advised the public not to consume them; as a result, Costco recalled the carrots from its Canadian retail stores, the plaintiffs recalled their carrots from US retail stores, and the recalled carrots were destroyed, along with the plaintiffs' carrots in inventory and "in the ground"; the carrots were not contaminated with Shigella and did not cause the alleged Shigellosis outbreak; and the plaintiffs suffered economic losses as a result - 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 recognized"; the CFIA's duty was owed to the public at large, not to commercial food suppliers; and, although the defendants admitted reasonable foreseeability of harm, the plaintiffs had not established sufficient proximity between the parties to support the duty of care they claimed - Alternatively, if a prima facie duty of care did arise, "its existence would be negated by the overarching policy problem of indeterminate liability" - The chambers judge struck the statement of claim as disclosing no reasonable claim and dismissed the action - The plaintiffs appealed - The British Columbia Court of Appeal dismissed the appeal - The court held, inter alia, that the destruction of the carrots was pleaded in the passive voice in a context that implied that the carrots were destroyed by Costco and by the plaintiffs themselves - Thus, this claim was not within the category of directly caused foreseeable physical damage to property in which the proximity necessary to raise a duty of care had been established - The court also agreed with the chamber judge's alternative finding regarding indeterminate liability - See paragraphs 12 to 30 and 63 to 67.

Crown - Topic 1576

Torts by and against Crown - Negligence by Crown - Negligent advice or misrepresentation - The plaintiffs were United States corporations that distributed carrots for retail sale by Costco in Canada and the United States (US) - They sued the defendants, the Canadian Food Inspection Agency (CFIA) and the Attorney General of Canada, for damages for negligence in their inspection of carrots that the plaintiffs imported into Canada - The plaintiffs alleged that, as a result of reports of illness by four consumers, 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 plaintiffs, Costco, the US Food and Drug Administration, and the public that the carrots might be contaminated with Shigella bacteria, and advised the public not to consume them; as a result, Costco recalled the carrots from its Canadian retail stores, the plaintiffs recalled their carrots from US retail stores, and the recalled carrots were destroyed, along with the plaintiffs' carrots in inventory and "in the ground"; the carrots were not contaminated with Shigella and did not cause the alleged Shigellosis outbreak; and the plaintiffs suffered economic losses as a result - A chambers judge concluded that the defendants owed the plaintiffs no duty of care and, therefore, the statement of claim disclosed no reasonable claim - Accordingly, he struck the statement of claim and dismissed the action - The plaintiffs appealed - The British Columbia Court of Appeal dismissed the appeal - The court, inter alia, rejected the plaintiffs' claim, based on proposed amendments, that negligent misrepresentation was a recognized category into which their case fell - Therefore, an Anns v. Merton London Borough Council (1978 H.L.) analysis was necessary - The court held that the relationship did not lead to a prima facie duty of care - Accordingly, the claim based on negligent misrepresentation would be bound to fail - The court also rejected the plaintiffs' second submission that Costco's reliance on the CFIA's statements resulted in a contractual relational economic loss suffered by them, another category of case in which a duty of care had been recognized - The CFIA's negligent misstatements did not cause direct physical damage to Costco's carrots - As a result, the plaintiffs' claim for relational economic loss was bound to fail - The plaintiffs' third submission was that the plaintiffs suffered a "transferred loss", that is, because they were contractually obliged to indemnify Costco for Costco's loss, the plaintiffs were for purposes of tort law treated as if they were in Costco's shoes and their claim fell within the "joint" or "common venture" category recognized in Cooper v. Registrar of Mortgage Brokers (B.C.) et al. (2001 S.C.C.) - This submission also suffered from the defect that the CFIA's negligence did not directly cause foreseeable physical harm to Costco's carrots - Accordingly, this claim, too, would be bound to fail - The court also agreed with the chamber judge's alternative finding regarding indeterminate liability - See paragraphs 31 to 67.

Fraud and Misrepresentation - Topic 2512

Misrepresentation - Action for economic loss arising from misstatement - [See Crown - Topic 1576 ].

Practice - Topic 2122.2

Pleadings - Amendment of pleadings - Statement of claim - On appeal - The plaintiffs were United States corporations that distributed carrots for retail sale by Costco in Canada and the United States (US) - They sued the defendants, the Canadian Food Inspection Agency (CFIA) and the Attorney General of Canada, for damages for negligence in their inspection of carrots that the plaintiffs imported into Canada - The plaintiffs alleged that, as a result of reports of illness by four consumers, 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 plaintiffs, Costco, the US Food and Drug Administration, and the public that the carrots might be contaminated with Shigella bacteria, and advised the public not to consume them; as a result, Costco recalled the carrots from its Canadian retail stores, the plaintiffs recalled their carrots from US retail stores, and the recalled carrots were destroyed, along with the plaintiffs' carrots in inventory and "in the ground"; the carrots were not contaminated with Shigella and did not cause the alleged Shigellosis outbreak; and the plaintiffs suffered economic losses as a result - A chambers judge concluded that the defendants owed the plaintiffs no duty of care and, therefore, the statement of claim disclosed no reasonable claim - Accordingly, he struck the statement of claim and dismissed the action - The plaintiffs appealed and also sought to amend their statement of claim to plead essential elements of their negligent misstatement claim - The British Columbia Court of Appeal stated that since it intended to dismiss the appeal, formal amendments were unnecessary - It would consider the appeal as if the statement of claim had been amended as proposed - See paragraphs 10 and 11.

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - The plaintiffs sued the defendants for negligence - A chambers judge concluded that the defendants owed the plaintiffs no duty of care and, therefore, the statement of claim disclosed no reasonable claim - Accordingly, he struck the statement of claim and dismissed the action - The plaintiffs appealed - They submitted, inter alia, that the action should have been allowed to proceed to trial because it was not plain and obvious that they had pleaded no reasonable claim so long as there was a "possibility" or a "chance" that they might establish a duty of care "when all the facts are out" - They noted that because the common law was always evolving, the test should not be applied strictly so as to foreclose an opportunity to pursue novel but arguable claims - The British Columbia Court of Appeal rejected the argument - The test assumed that the facts pleaded (or that might reasonably be pleaded by amendment) were true and asked whether it was plain and obvious that the statement of claim disclosed no cause of action - Accordingly, the defendants were required to demonstrate that the plaintiffs' claim had no reasonable chance of succeeding, and the court would not accede to the plaintiffs' submission that the chambers judge erred in failing to require the defendants to show there was no possibility or no chance that the plaintiffs might establish a duty of care - Moreover, whether a duty of care existed was 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 plaintiffs' contention that the decision should be deferred until "all the facts are out" was illogical - See paragraphs 68 to 74.

Torts - Topic 77

Negligence - Duty of care - Relationship required to raise duty of care - [See Crown - Topic 1567 and Crown - Topic 1576 ].

Torts - Topic 79

Negligence - Duty of care - Factors limiting or reducing scope of duty of care - [See Crown - Topic 1567 and Crown - Topic 1576 ].

Cases Noticed:

Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), appld. [para. 4].

Cooper v. Hobart - see Cooper v. Registrar of Mortgage Brokers (B.C.) et al.

Cooper v. Registrar of Mortgage Brokers (B.C.) et al., [2001] 3 S.C.R. 537; 277 N.R. 113; 160 B.C.A.C. 268; 261 W.A.C. 268; 2001 SCC 79, refd to. [para. 4].

Hunt v. Carey Canada Inc. - see Hunt v. T & N plc et al.

Hunt v. T & N plc et al. (1990), 117 N.R. 321; 74 D.L.R.(4th) 321 (S.C.C.), refd to. [para. 6].

Childs v. Desormeaux et al., [2006] 1 S.C.R. 643; 347 N.R. 328; 210 O.A.C. 315; 2006 SCC 18, refd to. [para. 12].

Ingles v. Tutkaluk Construction Ltd. et al., [2000] 1 S.C.R. 298; 251 N.R. 63; 130 O.A.C. 201; 2000 SCC 12, refd to. [para. 14].

Manolakos v. Vernon (City) (1989), 102 N.R. 249; 63 D.L.R.(4th) 449 (S.C.C.), refd to. [para.14].

Hill et al. v. Hamilton-Wentworth Regional Police Services Board et al., [2007] 3 S.C.R. 129; 368 N.R. 1; 230 O.A.C. 260; 2007 SCC 41, refd to. [para. 14].

Adams et al. v. Borrel et al. (2008), 336 N.B.R.(2d) 223; 862 A.P.R. 223; 297 D.L.R.(4th) 400; 2008 NBCA 62, leave to appeal refused (2009), 395 N.R. 392 (S.C.C.), refd to. [para. 14].

River Valley Poultry Farm Ltd. v. Canada (Attorney General) et al. (2009), 248 O.A.C. 222; 310 D.L.R.(4th) 152; 2009 ONCA 326, leave to appeal refused (2009), 402 N.R. 399 (S.C.C.), refd to. [para. 18].

Donoghue v. Stevenson, [1932] A.C. 562 (H.L.), refd to. [para. 22].

Canadian National Railway Co. et al. v. Norsk Pacific Steamship Co. and Tug Jervis Crown et al., [1992] 1 S.C.R. 1021; 137 N.R. 241; 91 D.L.R.(4th) 289, refd to. [para. 22].

British Columbia v. Imperial Tobacco Canada Ltd. et al., [2011] 3 S.C.R. 45; 419 N.R. 1; 308 B.C.A.C. 1; 521 W.A.C. 1; 2011 SCC 42, refd to. [para. 25].

Wilson Fuel Co. v. Canada (Attorney General) et al. (2009), 280 N.S.R.(2d) 298; 891 A.P.R. 298; 2009 NSSC 215, refd to. [para. 27].

Northern Goose Processors Ltd. v. Canadian Food Inspection Agency (2006), 206 Man.R.(2d) 276; 2006 MBQB 198, refd to. [para. 32].

Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817; 243 N.R. 22; 174 D.L.R.(4th) 193, refd to. [para. 36].

Syl Apps Secure Treatment Centre v. B.D. - see B.D. et al. v. Children's Aid Society of Halton Region et al.

B.D. et al. v. Children's Aid Society of Halton Region et al. (2007), 365 N.R. 302; 227 O.A.C. 161; 2007 SCC 38, refd to. [para. 39].

Knight v. Imperial Tobacco Canada Ltd. et al. (2009), 280 B.C.A.C. 160; 474 W.A.C. 160; 2009 BCCA 541, refd to. [para. 43].

Design Services Ltd. et al. v. Canada, [2008] 1 S.C.R. 737; 374 N.R. 77; 2008 SCC 22, refd to. [para. 58].

Fullowka et al. v. Pinkerton's of Canada et al., [2010] 1 S.C.R. 132; 398 N.R. 20; 474 A.R. 1; 479 W.A.C. 1; 2010 SCC 5, refd to. [para. 63].

Bow Valley Husky (Bermuda) Ltd. et al. v. Saint John Shipbuilding Ltd. et al., [1997] 3 S.C.R. 1210; 221 N.R. 1; 158 Nfld. & P.E.I.R. 269; 490 A.P.R. 269; 153 D.L.R.(4th) 385, refd to. [para. 67].

Elder Advocates of Alberta Society et al. v. Alberta et al., [2011] 2 S.C.R. 261; 416 N.R. 198; 499 A.R. 345; 514 W.A.C. 345; 2011 SCC 24, refd to. [para. 67].

Mohl v. University of British Columbia (2006), 222 B.C.A.C. 258; 368 W.A.C. 258; 265 D.L.R.(4th) 109; 2006 BCCA 70, refd to. [para. 69].

Young v. Bella et al., [2006] 1 S.C.R. 108; 343 N.R. 360; 254 Nfld. & P.E.I.R. 26; 764 A.P.R. 26; 2006 SCC 3, refd to. [para. 70].

Minnes v. Minnes (1962), 34 D.L.R.(2d) 497; 39 W.W.R. 112 (B.C.C.A.), refd to. [para. 72].

Counsel:

Dale G. Sanderson, Q.C., and Tina Mihoc, for the appellant;

Marlon Miller and Jim Shaw, for the respondent.

This appeal was heard at Vancouver, B.C., on May 14 and 15, 2012, by K. Smith, Frankel and Bennett, JJ.A., of the British Columbia Court of Appeal. K. Smith, J.A., delivered the following reasons for judgment for the court on January 29, 2013.