Givskud et al. v. Kavanaugh et al., (1994) 147 N.B.R.(2d) 1 (TD)

• Judge: Daigle, J.
• Court: Court of Queen's Bench of New Brunswick (Canada)
• Case Date: April 06, 1994
• Jurisdiction: New Brunswick
• Citations: (1994), 147 N.B.R.(2d) 1 (TD)

Givskud v. Kavanaugh (1994), 147 N.B.R.(2d) 1 (TD);

    147 R.N.-B.(2e) 1; 375 A.P.R. 1

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Mogens Givskud, Carmel Beaulieu, Robert Hansen and Kent Hansen (plaintiffs) v. Lawrence Kavanaugh, Edward Smith and the Attorney General of Canada (defendants) and Her Majesty The Queen in Right of the Province of New Brunswick and Clair Hill (third parties)

(E/C/247/88)

Green Acre Farms Ltd., a body corporate (plaintiff) v. Lawrence Kavanaugh, Edward Smith and the Attorney General of Canada (defendants) and Her Majesty The Queen in Right of the Province of New Brunswick and Clair Hill (third parties)

(E/C/197/88)

Ouellette Seed Farms Ltd., a body corporate (plaintiff) v. Lawrence Kavanaugh, Edward Smith, Her Majesty The Queen as represented by the Minister of Agriculture of Canada and the Attorney General of Canada (defendants) and Her Majesty The Queen in Right of the Province of New Brunswick and Clair Hill (third parties)

(E/C/226/88)

Indexed As: Givskud et al. v. Kavanaugh et al.

New Brunswick Court of Queen's Bench

Trial Division

Judicial District of Edmundston

Daigle, J.

April 6, 1994.

Summary:

Four seed potato growers and two corpo­rate seed potato farms purchased certified seed potatoes from Kavanaugh. Agriculture Canada had certified the potatoes (i.e., as disease free), following a series of visual inspections. One of the purchasers (Giv­skud), both before and after the sale, asked Agriculture Canada, to perform laboratory tests on the potatoes to ensure that they were disease free. Smith, a program officer with Agriculture Canada, refused the requests. Subsequently, the purchasers suffered sub­stantial losses when it became evident that Kavanaugh's seed potatoes were infected with bacterial ring rot. The purchasers sued Kavanaugh in contract under s. 15(a) of the Sale of Goods Act as well as in negligence. The purchasers also sued Smith and Agri­culture Canada on the ground of negligence. Kavanaugh also cross-claimed against Smith and Agriculture Canada. Smith and Agricul­ture Canada cross-claimed against Kava­naugh.

The New Brunswick Court of Queen's Bench, Trial Division, allowed the actions and gave judgment for the purchasers. The court allowed Kavanaugh's cross-claim against Smith and Agriculture Canada and dismissed their cross-claim against Kava­naugh.

Civil Rights - Topic 1646

Property - Search and seizure - Unrea­sonable search and seizure defined - Under the Seeds Act, an inspector from Agricul­ture Canada had the power to enter prem­ises and obtain samples for testing - However, in the absence of visible disease, Agriculture Canada would obtain and test potatoes only when the grower consented - Givskud purchased potatoes which Agri­culture Canada refused to test without the grower's consent - The pota­toes were diseased - Givskud sued Agri­culture Canada in negligence - Agriculture Canada submitted that the requirement for consent was based on the premise that to do otherwise would breach the s. 8 Charter right against unreasonable search and seizure - The New Brunswick Court of Queen's Bench, Trial Division, observed that obtaining samples for testing without the growers consent would not breach s. 8 of the Charter - See paragraphs 151 to 153.

Crown - Topic 1563

Torts by and against Crown - Negligence by Crown - Breach of statutory duty - Proximity - Agriculture Canada was tasked with ensuring that seed potatoes produced in New Brunswick were disease free - Should a visual inspection indicate disease, the suspect potatoes were sent for a laboratory examination - Smith, a pro­gram officer with Agriculture Canada, decided which potatoes would be tested - Smith refused to test certain seed potatoes when requested by a purchaser - The potatoes were diseased and the purchaser sued Smith and Agriculture Canada in negligence - The New Brunswick Court of Queen's Bench, Trial Division, held that there was such a close relationship be­tween Smith and the purchaser and the grower that, in the rea­sonable contempla­tion of Smith, "negli­gence on his part could cause damage to the" purchaser and the grower - See para­graphs 97 to 101.

Crown - Topic 1563

Torts by and against Crown - Negligence by Crown - Breach of statutory duty - Reliance - Agriculture Canada was tasked with ensuring that seed potatoes produced in New Brunswick were disease free - Givskud, a purchaser, asked to have certain potatoes tested - Agriculture Canada re­fused - The potatoes were diseased and Givskud sued Agriculture Canada in negli­gence - Certain other purchasers also sued - Agriculture Canada submitted that the other purchasers could not recover because they had not even been aware of Givskud's request to test - The New Brunswick Court of Queen's Bench, Trial Division, held that if reli­ance was an element of the action, the other purchasers showed a sufficient level of general reliance upon Agriculture Canada as to establish a duty of care - See paragraphs 132 to 143.

Crown - Topic 1563

Torts by and against Crown - Negligence by Crown - Breach of statutory duty - Reliance - Agriculture Canada was tasked with ensuring that seed potatoes produced in New Brunswick were disease free - Givskud purchased seed potatoes from Kavanaugh - Givskud asked to have the potatoes tested - Agriculture Canada re­fused - The potatoes were diseased and Givskud sued Agriculture Canada in negli­gence - Kavanaugh had also planted some of those potatoes and suffered losses - Kavanaugh also sued - Agriculture Canada submitted that Kavanaugh could not re­cover because he did not specifically rely on Agriculture Canada in this instance - The New Brunswick Court of Queen's Bench, Trial Division, held that if reliance was an element of the action, Kavanaugh showed a suffi­cient level of general reli­ance upon Agri­culture Canada as to estab­lish a duty of care - See paragraphs 132 to 143.

Crown - Topic 1563

Torts by and against Crown - Negligence by Crown - Breach of statutory duty - Agriculture Canada was tasked with en­suring that seed potatoes produced in New Brunswick were disease free - Givskud purchased seed potatoes from Kavanaugh - Givskud asked to have the potatoes tested - Agriculture Canada refused - The potatoes were diseased and Givskud sued Agriculture Canada in negligence - Kava­naugh had also planted some of those potatoes and suffered losses - Kavanaugh cross-claimed against Agriculture Canada - The New Brunswick Court of Queen's Bench, Trial Division, held that Kavanaugh was "entitled to recover his own damages and indemnity or contribution for the damages he may be liable to pay from those de­fendants [Agri­culture Canada et al.], joint­ly and sev­erally" - See paragraph 205.

Crown - Topic 1563

Torts by and against Crown - Negligence by Crown - Breach of statutory duty - Agriculture Canada was tasked with en­suring that seed potatoes produced in New Brunswick were disease free - Inspectors had the power to take samples from grow­ers for inspection - Givskud purchased seed potatoes from Kavanaugh - Givskud asked to have the potatoes laboratory tested - Agriculture Canada refused to test unless Kavanaugh consented - Givskud was reluctant to ask for Kavanaugh's per­mission - The potatoes were diseased - Givskud sued Agriculture Canada in negli­gence - Kavanaugh as well as others who had purchased his potatoes also sued - The New Brunswick Court of Queen's Bench, Trial Division, held that Agricul­ture Canada breached its duty to exercise reasonable care in exercising its functions by refusing to test without permission - See paragraphs 147 to 168.

Crown - Topic 1563

Torts by and against Crown - Negligence by Crown - Breach of statutory duty - Causation - Agriculture Canada was tasked with ensuring that seed potatoes produced in New Brunswick were disease free - Givskud purchased seed potatoes from Kavanaugh - Givskud asked to have the potatoes laboratory tested - Agriculture Canada refused to test - The potatoes were diseased - Givskud sued Agriculture Canada in negligence - Agriculture Canada submitted that it was not respon­sible for the loss on the balance of prob­abilities because there was only a 32% chance that the test would detect the dis­ease - However, there was also evidence that in over 900 tests, only one negative finding had proved to be wrong - The New Brunswick Court of Queen's Bench, Trial Division, held that the failure to test caused the loss - See paragraphs 169 to 194.

Crown - Topic 1645

Torts by and against Crown - Actions against Crown, defences, bars or exclu­sions - "Policy" decisions - The Seeds Act gave Agriculture Canada's field in­spectors the power to enter property to obtain samples of seed potatoes for lab­oratory inspection - A prospective pur­chaser asked Agriculture Canada's program officer to laboratory test certain seed pota­toes - Because there was no evidence of disease, Agriculture Canada refused to test without the vendor's permission - Follow­ing the purchase, the potatoes proved to be diseased - The purchaser sued the officer and Agriculture Canada for negligence - The officer claimed immunity on the ground that the decision not to test without the vendor's permission was a policy deci­sion - The New Brunswick Court of Queen's Bench, Trial Division, held the decision not to test was an operational decision - See paragraphs 105 to 125.

Crown - Topic 1701

Torts by and against Crown - Actions against Crown for breach of statutory duty - General - Agriculture Canada was charged under the Seeds Act with eradi­cating bacterial ring rot from seed potatoes - A purchaser of certain certified seed potatoes asked Agriculture Canada to have the potatoes laboratory tested - The legis­lation granted the power to conduct such tests - Nevertheless, Agriculture Canada declined to do so unless the purchaser first obtained permission from the vendor - The potatoes were diseased - The pur­chaser sued Agriculture Canada - The New Brunswick Court of Queen's Bench, Trial Division, stated that "the ordinary principles of the law of negligence govern the liability in negligence for omissions (nonfeasance) as well as for acts of com­mission (misfeasance) if [Agriculture Canada's] decision is found to be oper­ational negligence" - See paragraphs 86 to 96.

Damages - Topic 531

Limits of compensatory damages - Re­moteness - Torts - Recoverable damages, purely economic loss - A farmer was going to purchase certified (i.e., disease free) seed potatoes from a grower - The pur­chaser asked Agriculture Canada to con­duct a laboratory test to ensure the pota­toes were disease free - Agriculture Canada declined to test without the con­sent of the grower - The purchaser com­pleted the transaction without the test - The potatoes proved to be diseased - The potatoes lost their certification as disease free and most were destroyed - The pur­chaser sued Agriculture Canada for negli­gence - Agriculture Canada submitted, inter alia, that there was no liability for purely economic loss - The New Bruns­wick Court of Queen's Bench, Trial Divi­sion, held that the loss was a combination of physical and economic loss - See para­graphs 127 to 129.

Damages - Topic 531

Limits of compensatory damages - Re­moteness - Torts - Recoverable damages, purely economic loss - A farmer was going to purchase certified seed potatoes from a grower - The purchaser asked Agriculture Canada to conduct a laboratory test to ensure the potatoes were disease free - Agriculture Canada declined to test without the grower's consent - The pur­chaser completed the transaction without the test - The potatoes proved to be dis­eased and most were destroyed - The purchaser sued Agriculture Canada for negligence - Agriculture Canada submitted there was no liability for purely economic loss - The New Brunswick Court of Queen's Bench, Trial Division, observed that "it is well settled that in view of the issues usually raised in public authority negligence cases, the fact that the loss is purely economic should be largely irrel­evant" - See paragraph 130.

Fraud and Misrepresentation - Topic 2508

Misrepresentation - General principles - Negligent misrepresentation - On the basis of visual inspections, Agriculture Canada allowed Kavanaugh to sell seed potatoes certified as disease free - Givskud asked Agriculture Canada to do a laboratory test before he purchased certified seed potatoes from Kavanaugh - Agriculture Canada refused - The seed potatoes were diseased and were later destroyed - Givskud and other purchasers sued Agriculture Canada in negligence - One purchaser submitted that the certification constituted negligent misrepresentation on the basis of Hedley Byrne v. Heller - The New Brunswick Court of Queen's Bench, Trial Division, declined to find liability on the basis of negligent misrepresentation - See para­graph 199.

Practice - Topic 2134

Pleadings - Amendment of pleadings - At trial - After evidence taken - Prior to their sale, Agriculture Canada certified certain seed potatoes as disease free - The potatoes proved to be diseased - The purchasers sued Agriculture Canada in negligence - At the end of the 19 day trial which spanned a period of 11 months, one of the purchasers applied for leave to amend its statement of claim to include two new instances of negligence - The new information had been disclosed earlier in the trial - Agriculture Canada opposed the application on the ground the purchaser failed to act when the new information was disclosed and because it did not relate to anything that had been pleaded earlier - The New Brunswick Court of Queen's Bench, Trial Division, dismissed the appli­cation to amend - See paragraphs 13 to 25.

Sale of Goods - Topic 4110

Conditions and warranties - Implied or statutory terms as to quality or fitness - Buyer relying on seller's skill - Certain seed potato growers purchased seed pota­toes from Kavanaugh - Agriculture Canada erroneously certified the potatoes as disease free - The growers suffered financial loss - The growers sued Kava­naugh in contract under s. 15(a) of the Sale of Goods Act - Kavanaugh submitted that he was not liable because the growers did not rely on his skill or judgment - Instead, they relied upon Agriculture Can­ada's certification - The growers submitted that the reputation of the producer was an important factor in deciding where to purchase - No one wanted to deal with a "sloppy or dirty" producer - The New Brunswick Court of Queen's Bench, Trial Division, found Kavanaugh liable for the growers' losses - See paragraphs 21 to 38.

Torts - Topic 165

Negligence - Evidence - Presumption of negligence res ipsa loquitur - Res ipsa loquitur - General - On the basis of visual inspections, Agriculture Canada allowed Kavanaugh to sell seed potatoes certified as disease free - Givskud asked Agricul­ture Canada to do a laboratory test before he purchased seed potatoes from Kava­naugh - Agriculture Canada refused to test without Kavanaugh's consent - The seed potatoes were diseased and were later destroyed - Givskud and other purchasers sued Agriculture Canada in negligence - One purchaser pleaded res ipsa loquitur - The New Brunswick Court of Queen's Bench, Trial Division, held that res ipsa loquitur was not applicable in this case - See paragraph 198.

Torts - Topic 4361

Suppliers of goods - Negligence, retailers and wholesalers - Duty - General - Kavanaugh supplied certified seed potatoes to certain growers - On the basis of visual inspections, the potatoes were certified disease free by Agriculture Canada - However, the potatoes were diseased which resulted in financial losses to the pur­chasers - Kavanaugh planted part of the same diseased lot of potatoes and also suffered losses - The purchasers sued Kavanaugh in negligence on the grounds, inter alia, that he failed to inform the purchasers that he suspected the potatoes were infected and because he failed to have the potatoes tested in a laboratory before selling and delivering them - The New Brunswick Court of Queen's Bench, Trial Division, held that Kavanaugh was not negligent - See paragraphs 39 and 40.

Torts - Topic 4361

Suppliers of goods - Negligence, retailers and wholesalers - Duty - General - Kavanaugh supplied certified (i.e., disease free) seed potatoes to certain growers - How­ever, the potatoes were diseased which resulted in financial losses to the pur­chasers - Kavanaugh planted part of the same diseased lot and also suffered losses - The purchasers sued Kavanaugh in negligence on the ground that he failed to inform them that the potatoes had been stored in the same warehouse as a lot of potatoes that had been exposed to bacterial ring rot (B.R.R.) - Kavanaugh submitted that he was not told that the stored lot had been rejected for certification because of poss­ible B.R.R. contamination until after the losses were incurred - The New Bruns­wick Court of Queen's Bench, Trial Divi­sion, dis­missed the claim for negli­gence - See paragraphs 41 to 49.

Torts - Topic 4361

Suppliers of goods - Negligence, retailers and wholesalers - Duty - General - Kavanaugh supplied certified seed potatoes to certain growers - On the basis of visual inspections, the potatoes had been certified disease free by Agriculture Canada - A request by one of the purchasers to have the potatoes laboratory inspected was denied by Agriculture Canada - The pota­toes were diseased and were later des­troyed - The purchasers sued Kava­naugh in contract and negligence and Agriculture Canada in negligence - Agri­culture Canada cross-claimed against Kavanaugh on the ground of negligence on the basis of, inter alia, failing to use good seed potato farming practices - The New Brunswick Court of Queen's Bench, Trial Division, held that Kavanaugh was not negligent - See para­graphs 200 to 203.

Torts - Topic 7375

Joint and concurrent tortfeasors - Contri­bution between tortfeasors - General prin­ciples - Kavanaugh supplied certified seed potatoes to certain growers - On the basis of visual inspections, the potatoes had been certified disease free by Agriculture Canada - A request by one of the pur­chasers to have the potatoes laboratory inspected was denied by Agriculture Canada - The potatoes were diseased and later were destroyed - The purchasers sued Kavanaugh in contract and in negligence and Agriculture Canada in negligence - Agri­culture Canada cross-claimed against Kavanaugh - The New Brunswick Court of Queen's Bench, Trial Division, found Kavanaugh liable in contract and Agricul­ture Canada liable in negligence - On the matter of apportionment, the court stated that the issue did not arise because one was liable in contract and the other liable in tort - See paragraph 203.

Cases Noticed:

Pic Realty Canada Ltd. and Rocca Group Ltd. v. Disher (1982), 42 N.B.R.(2d) 41; 110 A.P.R. 41 (C.A.), appld. [para. 24].

Cammell Laird & Co. v. Manganese Bronze & Brass Co., [1934] A.C. 402 (H.L.), refd to. [para. 37].

Connop v. Canadian Car Division Hawker Siddeley Canada Ltd. (1978), 24 O.R.(2d) 593 (C.A.), refd to. [para. 37].

Anns v. Merton London Borough Council, [1977] 2 All E.R. 492; [1978] A.C. 728 (H.L.), consd. [para. 81].

Donoghue v. Stevenson, [1932] All E.R. Rep. 1; [1932] A.C. 562 (H.L.), refd to. [paras. 81, 136].

McAlister (Donoghue) v. Stevenson - see Donoghue v. Stevenson.

Nielsen v. Kamloops (City) and Hughes, [1984] 2 S.C.R. 2; 54 N.R. 1; [1984] 5 W.W.R. 1; 10 D.L.R.(4th) 641; 29 C.C.L.T. 97; 8 C.L.R. 1, refd to. [para. 82].

Just v. British Columbia, [1989] 2 S.C.R. 1228; 103 N.R. 1; [1990] 1 W.W.R. 385; 64 D.L.R.(4th) 689; 41 B.C.L.R.(2d) 350, consd. [para. 82].

East Suffolk Rivers Catchment Board v. Kent, [1941] A.C. 74; [1940] 4 All E.R. 527 (H.L.), not folld. [para. 90].

Sutherland Shire Council v. Heyman, [1985] 60 A.L.R. 1 (H.C.), not folld. [para. 90].

Swanson and Peever v. Canada, [1992] 1 F.C. 408; 124 N.R. 218 (F.C.A.), consd. [para. 111].

Barratt v. North Vancouver (Municipality), [1980] 2 S.C.R. 418; 33 N.R. 293; 27 B.C.L.R. 182; 8 M.V.R. 294; 14 C.C.L.T. 169; 13 M.P.L.R. 116, refd to. [para. 112].

Laurentide Motels Ltd. et al. v. Beauport (Ville) et al., [1989] 1 S.C.R. 705; 94 N.R. 1; 23 Q.A.C. 1, refd to. [para. 112].

Manolakos v. Vernon (City) et al., [1989] 2 S.C.R. 1259; 102 N.R. 249, refd to. [para. 112].

Rothfield v. Manolakos - see Manolakos v. Vernon (City) et al.

Brewer Brothers et al. v. Canada (Attorney General), [1992] 1 F.C. 25; 129 N.R. 3; 8 C.C.L.T.(2d) 45 (F.C.A.), refd to. [para. 112].

Devloo v. Canada (1991), 129 N.R. 39; 8 C.C.L.T.(2d) 93 (F.C.A.), refd to. [para. 112].

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, refd to. [para. 131].

Hedley Byrne & Co. v. Heller & Partners Ltd., [1964] A.C. 465; [1963] 2 All E.R. 575 (H.L.), refd to. [para. 133].

Hofstrand Farms Ltd. v. B.D.C. Ltd., [1986] 1 S.C.R. 228; 65 N.R. 261, refd to. [para. 133].

Miller (Bertram S.) Ltd. v. Canada (1986), 69 N.R. 1 (F.C.A.), refd to. [para. 153].

Snell v. Farrell (1990), 110 N.R. 200; 107 N.B.R.(2d) 94; 267 A.P.R. 94 (S.C.C.), consd. [para. 182].

McGhee v. National Coal Board, [1972] 3 All E.R. 1008 (H.L.), refd to. [para. 182].

Wilsher v. Essex Area Health Authority, [1988] 1 All E.R. 871 (H.L.), refd to. [para. 182].

Haag v. Marshall (1989), 1 C.C.L.T.(2d) 99 (B.C.C.A.), consd. [para. 183].

Caisse populaire d'Inkerman Ltée v. Doiron (1985), 61 N.B.R.(2d) 123; 158 A.P.R. 123 (C.A.), folld. [para. 203].

Statutes Noticed:

Canadian Charter of Rights and Freedoms, 1982, sect. 8 [paras. 151, 152, 153].

Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50, sect. 3 [paras. 5, 207]; sect. 3(1)(a) [para. 50]; sect. 10 [para. 5].

Potato Disease Eradication Act, An Act to Amend the, S.N.B. 1989, c. 30, gen­erally [para. 157].

Rules of Court (N.B.), rule 27.06(1) [para. 15]; rule 27.10(1) [para. 14].

Sale of Goods Act, R.S.N.B. 1973, c. S-1, sect. 15 [para. 8]; sect. 15(a) [para. 27].

Seeds Act, R.S.C. 1985, c. S-8, sect. 4(1), sect. 4(1)(g) [para. 57]; sect. 6(1), sect. 6(2) [para. 58]; sect. 8(1) [para. 59].

Seeds Act Regulations (Can.), Seeds Reg­ulations, C.R.C. 1978, c. 1400, Part II, sect. 47, sect. 48, sect. 49, sect. 50, sect. 51, sect. 52 [para. 60]; sect. 52(2)(d) [paras. 60, 97]; sect. 52(2)(e) [paras. 60, 63, 198]; Schedule IV [para. 60]; Schedule IV, sect. 1, sect. 4(3) [para. 63]; Schedule VI [paras. 60, 97].

Authors and Works Noticed:

Canada, Agriculture Canada, Inspection Manual, Seed Potatoes (1987), p. 27, para. 2.5.3(4) [para. 165].

Feldthusen, Economic Negligence (2nd Ed. 1989), pp. 282, 362 [para. 131].

Fleming, John G., Probabilistic Causation in Tort Law: A Postscript (1991), 70 Can. Bar Rev. 136 [para. 178].

Fridman, G.H.L., The Sale of Goods in Canada (2nd Ed. 1979), pp. 203 to 204 [para. 28].

Linden, Allen M., Canadian Tort Law (5th Ed. 1993), p. 587 [para. 91].

New Brunswick, Department of Agricul­ture, Potato Division, Brochure (1983), p. 6 [para. 140].

Reid, A.D., and Allison Harvision Young, Administrative Search and Seizure Under the Charter (1985), Queen's L.J. 392 [para. 153].

Reynolds, Larry A., and David A. Hicks, New Directions for the Civil Liability of Public Authorities in Canada, 71 Can. Bar Rev. 1 [para. 113].

Counsel:

D.M. Gillis, Q.C., and Paulette Garnett, Q.C., for the plaintiffs, Mogens Givskud, Carmel Beaulieu, Robert Hansen and Kent Hansen;

John C. Friel, Q.C., for the plain­tiff, Green Acre Farms Ltd.;

Jean-Paul Ouellette, for the plaintiff, Ouellette Seed Farms Ltd.;

Julian A.G. Dickson and Terrence Morri­son, for the defendant, Law­rence Kava­naugh;

John D. Townsend and Howard T. Myatt, for the defendants, Edward Smith and the Attorney General of Canada.

This matter was heard in Edmundston, New Brunswick, on January 6, 7, 8, 11, 12, 13, 14, 15 and 18, 1993; April 19, 20, 21, 22 and 23, 1993; October 25, 26 and 27, 1993, and November 8 and 9, 1993, by Daigle, J., of the New Brunswick Court of Queen's Bench, Trial Division, who delivered the following decision on April 6, 1994.