Rainbow Industrial Caterers Ltd. et al. v. Canadian National Railway Co. et al., (1991) 126 N.R. 354 (SCC)

• Judge: Gonthier, McLachlin, Stevenson and Iacobucci, JJ.
• Court: Supreme Court (Canada)
• Case Date: September 26, 1991
• Jurisdiction: Canada (Federal)
• Citations: (1991), 126 N.R. 354 (SCC);59 BCLR (2d) 129;29 ACWS (3d) 181;[1991] 3 SCR 3;1991 CanLII 27 (SCC);[1991] RRA 850;3 BCAC 1;8 CCLT (2d) 225;126 NR 354;[1991] CarswellBC 214;7 WAC 1;84 DLR (4th) 291;[1991] ACS no 67;[1991] 6 WWR 385;[1991] SCJ No 67 (QL)

Rainbow Ind. Caterers Ltd. v. CNR (1991), 126 N.R. 354 (SCC)

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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Canadian National Railway Company (appellant) v. Rainbow Industrial Caterers Ltd. and MacCormac Camp Caterers Ltd. (respondents) and Michael Doroshenko (defendant)

(21873)

Indexed As: Rainbow Industrial Caterers Ltd. et al. v. Canadian National Railway Co. et al.

Supreme Court of Canada

La Forest, L'Heureux-Dubé, Sopinka,

Gonthier, McLachlin, Stevenson and Iacobucci, JJ.

September 26, 1991.

Summary:

The Canadian National Railway (CN) called for tenders for the catering of meals for its track crews for a one year period. Rainbow was the successful tenderer. How­ever, CN's estimate of the number of meals required was too high. Rainbow withdrew from the contract after six months and losses in excess of one million dollars. Rainbow sued CN for fraud, breach of contract, negli­gent misrepresentation and interference with contract.

The British Columbia Supreme Court, in an unreported decision digested at [1987] B.C.W.L.D. 2838, held that CN had misrep­resented the number of meals that would be required. The court assessed damages on the basis that Rainbow's entire loss could be attributed to the misrepresentation because without it, Rainbow would not have bid on the contract. The court dismissed the claim based on interference with contract and deemed it unnecessary to deal with the breach of contract claim. CN appealed.

The British Columbia Court of Appeal (Craig, J.A., dissenting), in a decision re­ported at 30 B.C.L.R.(2d) 273, allowed the appeal in part. While the finding of fraud was set aside, the finding of negligence on CN's part was affirmed. The Court of Appeal remitted the matter to the trial judge for determination of the breach of contract claim and for reassessment of damages for the misrepresentation claim.

The British Columbia Supreme Court, in a decision reported at [1989] 1 W.W.R. 714, calculated damages on the basis of Rain­bow's actual loss. The court declined to adopt CN's submission that not all of the loss was attributable to the misrepresenta­tion. CN claimed that Rainbow would still have bid on the contract and suffered some loss even if there had been no misrepresen­tation. In CN's view, the measure of the loss should be calculated not on the basis of Rainbow's actual loss but on the difference in the price that Rainbow bid on the contract and the hypothetical price it would have bid had there been no misrepresentation. CN appealed.

The British Columbia Court of Appeal (Southin, J.A., dissenting), in a decision reported at [1990] 3 W.W.R. 413; 67 D.L.R.(4th) 348; 43 B.C.L.R.(2d) 1; dis­missed the appeal. The Court of Appeal found that in the absence of proof that Rain­bow would still have entered into the con­tract had there been no misrepresentation, there was no ground for calculating damages on the basis of the difference between the actual and a hypothetical contract price as apposed to basing it simply on the actual loss. CN appealed. CN submitted that the trial judge was bound by a finding in the first judgment of the Court of Appeal that, had there been no misrepresentation, Rain­bow would still have entered into the con­tract, albeit at a higher price. Alternatively, CN claimed that the courts below erred in the way they calculated the damages.

The Supreme Court of Canada (McLachlin, J., dissenting), dismissed the appeal.

Damages - Topic 3630

Deceit and misrepresentation - Negligent misrepresentation - Assessment of dam­ages - As a result of the defendant's neg­ligent misrepresentation, the plaintiff con­tracted with the defendant - The plaintiff suffered a loss and sued - The plaintiff wanted to recover its full loss on the basis that it would not have entered into the contract had there been no misrepresenta­tion - The defendant claimed that not all of the loss was recoverable because the plaintiff would still have contracted with the defendant and incurred some loss even if there had been no misrepresentation - The Supreme Court of Canada allowed the plaintiff to recover all of its loss on the ground that the defendant failed to prove that the plaintiff would still have entered into the contract had there been no mis­representation - See paragraphs 20 to 26.

Damages - Topic 3630

Deceit and misrepresentation - Negligent misrepresentation - Assessment of dam­ages - As a result of the defendant's neg­ligent misrepresentation, the plaintiff con­tracted with the defendant - The plaintiff suffered a loss and sued - The defendant submitted that not all of the loss was recoverable in the misrepresentation action because part was attributable to the actions of third parties during the term of the contract and could only be recovered in an action for breach of contract - The Supreme Court of Canada allowed the plaintiff to recover all of the loss in the misrepresentation action - The court found that the execution of the contract was directly linked to the misrepresentation and that the losses were the direct consequence of the contract - Therefore, all of the losses were the result of the misrepresen­tation - See paragraphs 27 and 28.

Cases Noticed:

Doyle v. Olby (Ironmongers) Ltd., [1969] 2 Q.B. 158 (C.A.), refd to. [paras. 12, 46].

Esso Petroleum v. Mardon, [1976] Q.B. 801; [1976] 2 All E.R. 5 (C.A.), refd to. [paras. 12, 34, 46].

Friesen v. Berta (1979), 100 D.L.R.(3d) 91 (B.C.S.C.), refd to. [para. 22].

Irving Oil Ltd. v. Adams (1984), 46 Nfld. & P.E.I.R. 234; 135 A.P.R. 234 (Nfld. C.A.), refd to. [para. 22].

Wooldridge v. H.B. Nickerson & Sons Ltd. and Canso Seafoods Ltd. (1980), 40 N.S.R.(2d) 388; 73 A.P.R. 388 (C.A.), refd to. [para. 22].

Steer v. Aerovox Inc. et al. (1984), 65 N.S.R.(2d) 91; 147 A.P.R. 91 (T.D.), refd to. [para. 22].

National Trust Co. v. Wong Aviation Ltd., [1969] S.C.R. 481, refd to. [para. 24].

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. [para. 24].

National Bank of Canada v. Corbeil, [1991] 1 S.C.R. 117; 121 N.R. 134; 35 Q.A.C. 300, refd to. [para. 25].

Banque Provinciale du Canada v. Gagnon, Lalonde, Woods and Air-Tech Refriger­ation Inc., [1981] 2 S.C.R. 98; 40 N.R. 40, refd to. [para. 25].

Authors and Works Noticed:

Fridman, G.H.L., The Law of Torts in Canada (1988), vol. 2, p. 136 [para. 20].

McLauchlan, D.W., Assessment of Dam­ages for Misrepresentations Inducing Contracts (1987), 6 Otago L.R. 370, p. 388 [para. 21].

Treitel, G.H., The Law of Contract (7th Ed. 1987), pp. 263-264 [para. 34].

Counsel:

Edward C. Chiasson, Q.C., and Patrick G. Foy, for the appellant;

Darrell W. Roberts, Q.C., and Leslie J. Muir, for the respondents.

Solicitors of Record:

Ladner, Downs, Vancouver, British Col­umbia, for the appellant;

Roberts, Muir & Griffin, Vancouver, Brit­ish Columbia, for the respondents.

This appeal was heard on May 8, 1991, before La Forest, L'Heureux-Dubé, Sopinka, Gonthier, McLachlin, Stevenson and Iacobucci, JJ., of the Supreme Court of Canada.

On September 26, 1991, the judg­ment of the Supreme Court of Canada was delivered in both official languages and the following opinions were filed:

Sopinka, J. (La Forest, L'Heureux-Dubé, Gonthier, Iacobucci and Stevenson, JJ., concurring) - see paragraphs 1 to 29;

McLachlin, J. (dissenting) - see para­graphs 30 to 47.