Brewer Bros. et al. v. Canada (Attorney General), (1991) 129 N.R. 3 (FCA)

• Judge: Heald, Stone and Décary, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: May 21, 1991
• Jurisdiction: Canada (Federal)
• Citations: (1991), 129 N.R. 3 (FCA)

Brewer Bros. v. Can. (A.G.) (1991), 129 N.R. 3 (FCA)

MLB headnote and full text

Her Majesty the Queen in right of Canada as represented by the Attorney General (appellant/defendant) v. Brewer Bros., Howard Copeland, Elie Dorge, Donald Duffy, Gisli Eirikson, Alex Gorr & Sons, Allan Hauser, Franklin Heck, Hutterian Brethern of Erskine, Hutterian Brethern of Pleasant Valley, Thomas J. Lund, Tyrone Lund, Dan MacFadyen, Jack MacFadyen, 7M Acres Ltd., Ronald Metzger, Moran Farm Ltd., George Paul, Dale and Robert Peterson, Hazel Peterson, G.W. Pogmore, Walter Riehl and Larry Weimer (respondents/plaintiffs)

(A-160-90)

Indexed As: Brewer Bros. et al. v. Canada (Attorney General)

Federal Court of Appeal

Heald, Stone and Décary, JJ.A.

May 21, 1991.

Summary:

The Canada Grain Act provided that the Canada Grain Commission was obliged to ensure that applicants for a licence to oper­ate a grain elevator were financially stable and had posted sufficient security to meet their obligations. One licensed elevator operator (Memco Ltd.) was financially unstable and had only $600,000 in security to meet $1,430,000 owed to grain producers. Memco went into receivership. The grain producers received a pro rata share of the $600,000 bond and sued the Commission for the balance plus interest. The producers claimed the Commission's officers and employees breached their statutory duties and were negligent in failing to ensure that Memco's liabilities were fully secured. The Commission claimed that whatever it did constituted "policy" and was nonreviewable by the courts.

The Federal Court of Canada, Trial Divi­sion, in a decision reported 31 F.T.R. 190, allowed the action. The court held that the Commission's employees and officers were negligent in implementing policy decisions (operational aspect) and were, accordingly, liable to the grain producers for their fore­seeable economic losses. The Attorney General of Canada appealed respecting liability and damages and the grain pro­ducers cross-appealed respecting interest.

The Federal Court of Appeal dismissed the Attorney General's appeal and allowed the grain producers' cross-appeal.

Crown - Topic 1563

Torts by and against Crown - Negligence by Crown - Breach of statutory duty - A grain elevator operator licensed under the Canada Grain Act went into receivership and was unable to meet fully its liabilities to grain producers who had delivered grain to the elevator - The Federal Court of Appeal held that the Canada Grain Com­mission owed a duty of care to the grain producers to ensure that the licensed ele­vator operator was financially secure, that the Commission breached its standard of care in the circum­stances and the Com­mission's negligence was the cause of the losses suffered by the grain producers - See paragraphs 1 to 83.

Crown - Topic 1645

Torts by and against Crown - Actions against Crown - Bars or exclusions - "Policy" decisions - Prior to 1981 the Canadian Grain Commission used a self reporting system for those licensed to operate grain elev­ators to inform the Com­mission of their financial obligations to holders of docu­ments for the payment of money issued by the licensee - In 1981 the sys­tem was changed to a verification system where the Commission's staff was to carry out finan­cial reviews, inspections and audits - The Federal Court of Appeal held the imple­mentation of the new policy involved a number of operational deci­sions, therefore if the Commission breached its duty of care in implementing the policy, the situ­ation was reviewable by the courts - See paragraphs 63 to 66.

Crown - Topic 1712

Torts by and against Crown - Action against Crown for breach of statutory duty - Remedies - Damages - A grain elevator operator licensed under the Canada Grain Act went into receivership and was unable to fully meet its liabilities to grain pro­ducers who had delivered grain to the elevator - The Federal Court of Appeal held that the Canadian Grain Commission was negligent in failing to ensure that the licensed elevator operator was financially secure (i.e., a duty of care imposed by the Canada Grain Act) - The court held that the grain producers losses were recover­able, notwithstanding that they were purely economic, where the Commission had a specific statutory obligation to protect the producers - See paragraphs 84 to 91.

Damages - Topic 531

Limits of compensatory damages - Re­moteness - Torts - Recoverable damages - Purely economic loss - The Federal Court of Appeal held that the Canadian Grain Commission had a duty to ensure that those licensed under the Canada Grain Act to operate grain elevators were finan­cially able to carry on business and meet their liabilities to holders of documents for the payment of money issued by the licen­sees - The court held also that this duty was owed to grain producers owed money by the licen­sees - Further the court stated that "a duty of care should not be denied only because the losses claimed are purely economic ..." - See paragraph 61.

Damages - Topic 531

Limits of compensatory damages - Re­moteness - Torts - Recoverable damages - Purely economic loss - A grain elevator operator licensed under the Canada Grain Act went into receivership and was unable to fully meet its liabilities to grain pro­ducers who had delivered grain to the elevator - The Federal Court of Appeal held that the Canadian Grain Commission was negligent in failing to ensure that the licensed elevator operator was financially secure - The court held that the grain producers losses were recoverable, not­withstanding that they were purely eco­nomic, where the Commission had a spe­ci­fic statutory obligation to protect the pro­ducers - See paragraphs 84 to 91.

Interest - Topic 5148

Interest as damages (prejudgment interest) - Torts - Crown - Claims against - A grain elevator operator went into receiver­ship and was unable to fully meet its liabilities to grain producers - The grain producers sued the Canadian Grain Com­mission, alleging negligence in not ensur­ing that the licensed elevator operator was financially secure - The Federal Court of Appeal affirmed that the action should be allowed and discussed the issue of interest on the grain producers' claim - See para­graphs 101, 102.

Torts - Topic 60

Negligence - Causation - Foreseeability - A grain elevator operator licensed under the Canada Grain Act went into receiver­ship and was unable to fully meet its liabilities to grain producers who had delivered grain to the elevator - The Fed­eral Court of Appeal held that the Canada Grain Commission owed a duty of care to the grain producers to ensure that the licensed elevator operator was finan­cially secure, that the Commission breached its standard of care in the cir­cumstances and the Commission's negli­gence was the cause of the losses suffered by the grain pro­ducers (i.e., the damages were reasonably foreseeable and flowed directly from the Commission's negligence) - See para­graphs 1 to 83.

Trade Regulation - Topic 3703.1

Marketing of agricultural products - Grain - Canadian Grain Commission - Negli­gence - Duty of care - The Federal Court of Appeal held that s. 36(1)(c) of the Canada Grain Act imposed a duty on the Commission to be satisfied that those licensed under the Act to operate grain elevators were financially able to carry on business and had posted sufficient security to ensure that all obligations to holders of documents for the payment of money issued by the licensees would be met - See paragraphs 43 to 47 - Further, this duty of care was owed to grain producers who were owed money by the licensees - See paragraphs 48 to 67.

Trade Regulation - Topic 3703.1

Marketing of agricultural products - Grain - Canadian Grain Commission - Negli­gence - Duty of care - Prior to 1981 the Commission used a self reporting system for those licensed to operate grain ele-vators to inform the Commission of their finan­cial obligations to holders of docu­ments for the payment of money issued by the licensee - In 1981 the system was changed to a verification system where the Commission's staff was to carry out finan­cial reviews, inspections and audits - The Federal Court of Appeal held the imple­mentation of the new policy involved a number of operational decisions, therefore if the Commission breached its duty of care in implementing the policy, the situ­ation was reviewable by the courts - See paragraphs 63 to 66.

Trade Regulation - Topic 3703.1

Marketing of agricultural products - Grain - Canadian Grain Commission - Negli­gence - Duty of care - The Federal Court of Appeal held that the Commission had a duty to ensure that those licensed under the Canada Grain Act to operate grain elevators were financially able to carry on business and meet their liabilities to holders of documents for the payment of money issued by the licensees - The court held also that this duty was owed to grain producers owed money by the licensees - Further the court stated that "a duty of care should not be denied only because the losses claimed are purely economic ..." - See paragraph 61.

Trade Regulation - Topic 3703.1

Marketing of agricultural products - Grain - Canadian Grain Commission - Negli­gence - Standard of care - The Federal Court of Appeal held that the Commission had a duty to ensure that those licensed under the Canada Grain Act to operate grain elevators were financially able to carry on business and meet their liabilities to holders of documents for the payment of money issued by the licensees - The court held that the appropriate standard of care to be applied to determine if the Commission met its duty of care was "whether the Commission acted reasonably in the light of all of the surrounding cir­cumstances" - See paragraph 68.

Trade Regulation - Topic 3703.1

Marketing of agricultural products - Grain - Canadian Grain Commission - Negli­gence - A grain elevator operator licensed under the Canada Grain Act went into receivership and was unable to fully meet its liabilities to grain producers who had delivered grain to the elevator - The Fed­eral Court of Appeal held that the Canada Grain Commission owed a statu­tory duty of care to the grain producers to ensure that the licensed elevator operator was finan­cially secure, that the Commis­sion breached its standard of care in the cir­cumstances and the Commission's negli­gence was the cause of the losses suffered by the grain producers - See paragraphs 1 to 83 - The losses were recoverable, not­withstanding that they were purely eco-nomic - See paragraphs 84 to 91 - There was no con­tributory negligence on the part of the grain pro­ducers - See para­graphs 92 to 96.

Cases Noticed:

Stein Estate v. Ship "Kathy K", [1976] 2 S.C.R. 802; 6 N.R. 359; 62 D.L.R.(3d) 1, refd to. [para. 38].

N.V. Bocimar S.A. v. Century Insurance Co. of Canada, [1987] 1 S.C.R. 1247; 76 N.R. 212, refd to. [para. 38].

Saskatchewan Wheat Pool v. Government of Canada, [1981] 2 F.C. 212; 34 N.R. 74 (F.C.A.), refd to. [paras. 47, 58].

Saskatchewan Wheat Pool v. Government of Canada, [1983] 1 S.C.R. 205; 45 N.R. 425, refd to. [paras. 47, 54].

Le Lievre v. Gould, [1893] 1 Q.B. 491 (C.A.), refd to. [para. 48].

Donoghue v. Stevenson, [1932] A.C. 562 (H.L.), refd to. [para. 49].

Just v. British Columbia, [1989] 2 S.C.R. 1228; 103 N.R. 1, refd to. [para. 50 et seq.].

Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), refd to. [paras. 50, 51].

Murphy v. Brentwood District Council, [1990] A.C. 414; 113 N.R. 81 (H.L.), refd to. [paras. 50, 88, 89].

Manolakos v. Vernon (City), [1989] 2 S.C.R. 1259; 102 N.R. 249, refd to. [para. 51].

Yeu v. Hong Kong (Attorney General), [1988] A.C. 175; 82 N.R. 321 (P.C.), refd to. [paras. 56, 58, 59].

Davis v. Radcliffe, [1990] 2 All E.R. 536 (P.C.), refd to. [paras. 56, 58, 59, 88].

Caparo Industries Plc v. Dickman and Others, [1990] 2 A.C. 605 (H.L.), refd to. [paras. 60, 88].

Sutherland Shire Council v. Heyman (1985), 60 A.L.R. 1 (Aust. H.C.), refd to. [paras. 64, 88].

J.R. Munday Ltd. v. London County Council, [1916] 2 K.B. 331 (C.A.), refd to. [para. 74].

Snell v. Farrell, [1990] 2 S.C.R. 311; 110 N.R. 200; 107 N.B.R.(2d) 94; 267 A.P.R. 94, refd to. [paras. 78, 79].

Wilsher v. Essex Area Health Authority, [1988] 1 A.C. 1074; 87 N.R. 140 (H.L.), refd to. [para. 79].

Nielsen v. Kamloops (City) and Hughes, [1984] 2 S.C.R. 2; 54 N.R. 1, refd to. [paras. 81, 85, 87].

Canadian National Railway Co. et al. v. Norsk Pacific Steamship Co. Ltd. and Tug "Jervis Crown" et al., [1990] 3 F.C. 114; 104 N.R. 321 (F.C.A.), refd to. [para. 85].

Rivtow Marine Ltd. v. Washington Iron Works, [1974] S.C.R. 1189, refd to. [para. 87].

Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd., [1964] A.C. 465, refd to. [paras. 87, 89, 103].

Hofstrand Farms Limited v. B.D.C. Ltd., [1986] 1 S.C.R. 228; 65 N.R. 261, refd to. [para. 87].

D. & F. Estates Ltd. et al. v. Church Commissioners for England et al., [1989] A.C. 177; 94 N.R. 286 (H.L.), refd to. [para. 88].

Curran v. Northern Ireland Co-Ownership Housing Assoc., [1987] A.C. 718; 82 N.R. 332 (H.L.), refd to. [para. 88].

Peabody Donation Fund (Governors of) v. Sir Lindsay Parkinson & Co. Ltd., [1985] A.C. 210 (H.L.), refd to. [para. 88].

Junior Books Ltd. v. Veitchi Co. Ltd., [1983] 1 A.C. 520 (H.L.), refd to. [para. 88].

Bowen v. Paramount Builders (Hamilton) Ltd., [1977] 1 N.Z.L.R. 394 (C.A.), refd to. [para. 88].

Candlewood Navigation Corp. Ltd. v. Mitsui O.S.K. Lines Ltd., [1986] A.C. 1 (P.C.), refd to. [para. 88].

Leigh and Sillavan Ltd. v. Aliakmon Ship­ping Co. Ltd., [1986] A.C. 785; 66 N.R. 60 (H.L.), refd to. [para. 88].

Cummer-Yonge Investments Ltd. v. Agnew-Surpass Shoe Stores Ltd., [1976] 2 S.C.R. 221; 4 N.R. 574, refd to. [para. 87, footnote 14].

Haig v. Bamford et al., [1977] 1 S.C.R. 466; 9 N.R. 43, refd to. [para. 87, foot­note 14].

Central Trust Co. v. Rafuse and Cordon, [1986] 2 S.C.R. 147; 69 N.R. 321; 75 N.S.R.(2d) 109; 186 A.P.R. 109; 37 C.C.L.T. 117; 31 D.L.R.(4th) 481, refd to. [para. 87, footnote 14].

Morrison Steamship Co. Ltd. v. Greystoke Castle (Cargo Owners), [1947] A.C. 265 (H.L.), refd to. [para. 90].

Ross v. Caunters, [1980] Ch. 297 (Ch.D.), refd to. [para. 90].

CAE Industries Ltd. and CAE Aircraft Ltd. v. Canada, [1986] 1 F.C. 129; 61 N.R. 19 (F.C.A.), refd to. [para. 98].

Davie Shipbuilding Ltd. and Canada Steamship Lines Ltd. v. Canada and Robert Morse Corp. Ltd. and Colt In­dustries (Canada) Ltd., [1984] 1 F.C. 461; 53 N.R. 50 (F.C.A.), refd to. [para. 103].

Statutes Noticed:

Canada Grain Act, S.C. 1970-71-72, c. 7, sect. 2(19) [para. 15]; sect. 2(38) [para. 19]; sect. 3, sect. 5(1), sect. 6(2), sect. 7(1), sect. 8, sect. 10 [para. 8]; sect. 11 [para. 10]; sect. 35(1) [paras. 11, 43]; sect. 35(2), sect. 36 [para. 11]; sect. 36(1) [para. 13]; sect. 36(1)(c) [paras. 15, 43 et seq.]; sect. 36(2) [para. 43]; sect. 36(4), sect. 36(5) [para. 13]; sect. 38(1) [paras. 14, 45, 72]; sect. 38(2) [paras. 14, 15, 35, 59]; sect. 65(2), sect. 69(1) [para. 16]; sect. 77(1)(c) [paras. 16, 45]; sect. 77(2), sect. 77(3) [para. 16].

Canada Grain Act Regulations, C.R.C. 1978, c. 889, sect. 18, sect. 26(a) [para. 12]; sect. 20(c) [para. 16].

Authors and Works Noticed:

Cooke, An Impossible Distinction (1991), 107 L.Q. Rev. 46 , generally [para. 89, footnote 15].

Fleming, Requiem for Anns (1990), 106 L.Q. Rev. 525, generally [para. 89, foot­note 15].

Legal Research Foundation, University of Auckland, Negligence After Murphy v. Brentwood District Council (March 7, 1991), generally [para. 89, footnote 15].

Counsel:

Brian Hay and Karen Molle, for the appli­cant;

Roland Laing, for the respondent.

Solicitors of Record:

John C. Tait, Q.C., Deputy Attorney Gen­eral of Canada, Ottawa, Ontario, for the appellant;

Bennett, Jones, Verchere, Calgary, Alberta, for the respondent.

This appeal was heard in Winnipeg, Mani­toba, on January 14, 15 and 16, 1991, before Stone, Heald and Décary, JJ.A., of the Fed­eral Court of Appeal. The decision of the court was delivered by Stone, J.A., on May 21, 1991.