Multi Pork Inc. v. Penner (A.G.) Farm Services Ltd. et al., 2008 MBCA 119

• Judge: Scott, C.J.M., Freedman and MacInnes, JJ.A.
• Court: Court of Appeal (Manitoba)
• Case Date: June 11, 2008
• Jurisdiction: Manitoba
• Citations: 2008 MBCA 119;(2008), 231 Man.R.(2d) 162 (CA)

Multi Pork v. Penner Farm Services (2008), 231 Man.R.(2d) 162 (CA);

      437 W.A.C. 162

MLB headnote and full text

Temp. Cite: [2008] Man.R.(2d) TBEd. OC.032

Multi Pork Inc. (plaintiff/appellant) v. A.G. Penner Farm Services Ltd. and Monitrol Inc. (defendants/respondents) and The Agway Group Inc. (third party/respondent)

(AI 07-30-06825; 2008 MBCA 119)

Indexed As: Multi Pork Inc. v. Penner (A.G.) Farm Services Ltd. et al.

Manitoba Court of Appeal

Scott, C.J.M., Freedman and MacInnes, JJ.A.

October 27, 2008.

Summary:

In 1994, Multi Pork Inc. built a large integrated hog barn. Between 1995 and 1999 several exhaust fans (electronic Varifan control devices) to regulate conditions in the barn were installed. On April 25, 2001, the hog barn was totally destroyed by fire, with damage to the barn and equipment of $1,792,000, together with loss of livestock and substantial profits. Multi Pork issued a statement of claim on April 23, 2003, naming the manufacturer and supplier of the Varifans as defendants. In December 2005, Multi Pork moved to add Elite (construction manager) and Riverside (fan installer) as party defendants to assert negligence claims against those parties.

The Senior Master of the Manitoba Court of Queen's Bench held that Multi Pork was entitled to add Riverside, but not Elite. The Master held that the proposed claim against Elite was for pure economic loss, but the issue whether Riverside negligently performed a service (a claim for economic loss) or negligently supplied goods (considered to be direct damage) should go to trial. Multi Pork and Riverside appealed.

The Manitoba Court of Queen's Bench, in a decision reported at [2007] Man.R.(2d) Uned. 89, dismissed Multi Pork's appeal but allowed that of Riverside. In the result, Multi Pork's application was dismissed against both defendants. The court held that with respect to both Elite and Riverside, the claim as framed was one for "negligent service" and hence for pure economic loss such that both claims were statute-barred. Multi Pork appealed, arguing that the motions judge erred in characterizing its cause of action as one for pure economic loss, rather its causes of action were based on simple property damage, namely the destruction of its barn by fire directly caused by the malfunctioning and dangerous fans. Thus, the operative damage, which started the "limitation time clock" running, was the fire itself as opposed to the creation, years before, of a latent dangerous situation when the fans were recommended by Elite and installed by Riverside.

The Manitoba Court of Appeal allowed the appeal and granted the motion to add Elite and Riverside as party defendants. The court held that it was premature at the pleadings stage to determine the precise nature of Multi Pork's claim, whether for direct damage or economic loss, and the corresponding limitation period issues. These issues, could only be satisfactorily dealt with after all relevant facts were established at trial.

Actions - Topic 1502

Cause of action - General principles - When cause of actions arises - Tort - [See Practice - Topic 672 ].

Damages - Topic 531

Limits of compensatory damages - Remoteness - Torts - Recoverable damages - Purely economic loss - [See Practice - Topic 672 ].

Damages - Topic 531

Limits of compensatory damages - Remoteness - Torts - Recoverable damages - Purely economic loss - The Manitoba Court of Appeal reviewed what constituted pure economic loss - See paragraphs 38 to 67.

Limitation of Actions - Topic 208

Practice - Time for determination of compliance with limitation period - [See Practice - Topic 672 ].

Practice - Topic 672

Parties - Adding or substituting parties - Adding or substituting defendants - Circumstances when allowed - In 1994, Multi Pork Inc. built a hog barn - Between 1995 and 1999 several exhaust fans were installed - In 2001, the barn burned, with damage of $1,792,000, plus loss of livestock and substantial profits - In 2003, Multi Pork issued a statement of claim against the manufacturer of the fans, alleging a "dangerous" defect - In 2005, Multi Pork moved to add Elite (construction manager) and Riverside (fan installer) as party defendants against which to assert negligence claims - Limitation period issues arose - Elite and Riverside argued that the Multi Pork claim was for pure economic loss which it sustained when the fans were installed thus starting the limitation period running at that time - Multi Pork claimed that its cause of action was not one for pure economic loss, but was a traditional negligence action for property damage, and thus the operative damage starting the limitation time clock running was the fire itself, as opposed to the creation, years before, of a latent dangerous situation - The Manitoba Court of Appeal granted the motion to add Elite and Riverside as party defendants - The court held that it was premature at the pleadings stage to resolve the issues raised by Elite and Riverside - The precise nature of Multi Pork's claim, whether for direct damage or economic loss, and the corresponding limitation period issues, could only be satisfactorily dealt with after all relevant facts were established at trial - See paragraphs 32 to 67.

Torts - Topic 80

Negligence - Duty of care - Concurrent liability - Multi Pork's barn burned - Multi Pork sued the manufacturer and supplier of exhaust fans installed in the barn - Some two years later, Multi Pork moved to add Elite (the construction manager of the ban when the fans were installed) and Riverside (subcontractor who installed the fans) as party defendants - Multi Pork sought to claim that Riverside negligently installed the fans and Elite was negligent in recommending the fans and failing to adequately supervise Riverside - Elite and Riverside argued that there could be no liability in tort if the basis of that liability depended on the specific terms of the contract - Elite asserted that there was no independent duty of care upon it, outside its contractual duties, to supervise the actions of an independent contractor such as Riverside - The Manitoba Court of Appeal opined that this argument was "plainly wrong" - The court stated that it was a fundamental principle of the law of negligence that a common law duty of care had to be grounded in a relationship of proximity - Here, it was manifest that there was sufficient proximity to create an independent duty of care flowing from Elite to Multi Pork - The fact that there was also a contractual duty imposed on Elite had no impact on Elite's common law duty of care, where there was no specific contractual term that unequivocally negated the duty of care created by virtue of proximity - Elite's concurrent liability argument could not prevail - See paragraphs 20 to 31.

Torts - Topic 4115

Suppliers of services - Duties of suppliers - Installer or disconnecter of equipment - [See Practice - Topic 672 and Torts - Topic 80 ].

Torts - Topic 4137

Suppliers of services - Negligence - Management company (incl. construction manager) - [See Practice - Topic 672 and Torts - Topic 80 ].

Cases Noticed:

Winnipeg Condominium Corp. No. 36 v. Bird Construction Co. et al., [1995] 1 S.C.R. 85; 176 N.R. 321; 100 Man.R.(2d) 241; 91 W.A.C. 241, refd to. [para. 1].

Kozak v. Dauphin (Town) (1993), 86 Man.R.(2d) 1 (Q.B.), refd to. [para. 11].

D'Amato et al. v. Badger et al., [1996] 2 S.C.R. 1071; 199 N.R. 341; 79 B.C.A.C. 110; 129 W.A.C. 110, refd to. [para. 12].

BG Checo International Ltd. v. British Columbia Hydro and Power Authority, [1993] 1 S.C.R. 12; 147 N.R. 81; 20 B.C.A.C. 241; 35 W.A.C. 241, refd to. [para. 13].

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, refd to. [para. 14].

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. 14].

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

Murphy v. Brentwood District Council, [1990] 2 All E.R. 908; 113 N.R. 81 (H.L.), refd to. [para. 16].

Sentinel Self-Storage Corp. v. Dyregrov et al. (2003), 180 Man.R.(2d) 85; 310 W.A.C. 85; 2003 MBCA 136, refd to. [para. 17].

Hercules Management Ltd. et al. v. Ernst & Young et al., [1997] 2 S.C.R. 165; 211 N.R. 352; 115 Man.R.(2d) 241; 139 W.A.C. 241, refd to. [para. 22].

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, refd to. [para. 23].

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. 24].

Canadian Western Natural Gas Co. v. Pathfinder Surveys Ltd. (1980), 21 A.R. 459; 12 Alta. L.R.(2d) 135 (C.A.), refd to. [para. 28].

Ontario v. Fatehi, [1984] 2 S.C.R. 536; 56 N.R. 62; 6 O.A.C. 270, refd to. [para. 38].

Valley Agricultural Society v. Behlen Industries Inc. et al. (2004), 184 Man.R.(2d) 263; 318 W.A.C. 263; 2004 MBCA 80, refd to. [para. 51].

Rosenau v. New Brunswick (City) (1968), 238 A.2d 169 (N.J. Sup. Ct.), refd to. [para. 53].

Cooke v. Gill (1873), L.R. 8 C.P. 107, refd to. [para. 55].

Letang v. Cooper, [1964] 2 All E.R. 929 (C.A.), refd to. [para. 56].

Domco Industries Ltd. v. Mannington Mills Inc. and Congoleum Corp. (1990), 107 N.R. 198; 29 C.P.R.(3d) 481 (F.C.A.), refd to. [para. 57].

Consumers' Glass Co. v. Foundation Co. of Canada Ltd. (1985), 9 O.A.C. 193; 1 C.P.C.(2d) 208 (C.A.), refd to. [para. 57].

Ramirez v. Amsted Industries Inc. (1979), 408 A.2d 818 (N.J. Super. Ct. App. Div.), refd to. [para. 59].

Cloud v. Kit Manufacturing Co. (1977), 563 P.2d 248 (Alaska Sup. Ct.), refd to. [para. 60].

M.M. v. Roman Catholic Church of Canada et al. (2001), 160 Man.R.(2d) 265; 262 W.A.C. 265; 2001 MBCA 148, refd to. [para. 61].

Burke et al. v. Heaton et al. (2003), 177 Man.R.(2d) 213; 304 W.A.C. 213; 2003 MBCA 104, refd to. [para. 63].

Winnipeg Condominium Corp. No. 36 v. Bird Construction Co. et al. (1999), 131 Man.R.(2d) 283; 187 W.A.C. 283 (C.A.), refd to. [para. 64].

Authors and Works Noticed:

Cherniak, Earl A., and How, Elissa, Policy and Predictability: Pure Economic Loss in the Supreme Court of Canada (1999), 31 Can. Bus. L.J. 209, p. 210 [para. 39].

Feldthusen, Bruce, Economic Negligence: The Recovery of Pure Economic Loss (5th Ed. 2008), pp. 1 [para. 40]; 1, footnote 3 [para. 49]; 166, footnote 207 [para. 53].

Linden, Allen M., and Feldthusen, Bruce, Canadian Tort Law (8th Ed. 2006), p. 441 [para. 41].

Morton, James C., Limitation of Civil Actions (1988), generally [para. 13].

Williams, Jeremy S., Limitation of Actions in Canada (2nd Ed. 1980), generally [para. 13]; pp. 7, 8 [para. 58].

Counsel:

G.A. McKinnon, for the appellant;

L.M. French, for the proposed defendant, Elite Swine Inc.;

M.G. Finlayson, for the proposed defendant, Riverside Electric Inc.

This appeal was heard on June 11, 2008, before Scott, C.J.M., Freedman and MacInnes, JJ.A., of the Manitoba Court of Appeal. Scott, C.J.M., delivered the following judgment for the court on October 27, 2008.