Fabian Power First Plaintiff And: R & S Cranberries Inc. Second Plaintiff And: Her Majesty the Queen in Right of Newfoundland v. Labrador, 2022 NLSC 13

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Power v. Newfoundland and Labrador , 2022 NLSC 13 Date : January 26, 2022 Docket : 201801G1162 Between: Fabian Power First Plaintiff And: R & S Cranberries Inc. Second Plaintiff And: Her Majesty the Queen in Right of Newfoundland and Labrador First Defendant And: The Town of Grand Falls-Windsor Second Defendant Before: Justice James P. Adams Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: November 22, 2021

Summary:

The Plaintiffs allege negligence and negligent misrepresentation against the Defendants respecting a failed cranberry farm undertaken bythe Plaintiffs in the Grand Falls-Windsor area of the Province. The Defendants applied pursuant to Rule 14.24 to have the Plaintiffs’claim dismissed as not disclosing a reasonable cause of action. The applications are dismissed. The Plaintiffs have pleaded sufficient material facts if accepted as true to make out the elements of each of the alleged causes of action. It is premature to dismiss the Plaintiffs’ claim without a full record at trial.

However, the Defendants are at liberty to file Notices of Demands for particulars to seek further information from the Plaintiffsrespecting the claims. Appearances: Darren D. O'Keefe Appearing on behalf of the Plaintiffs Suzanne M. Orsborn Appearing on behalf of the First Defendant Joseph J. Thorne Appearing on behalf of the Second Defendant Authorities Cited: CASES CONSIDERED: Andrews v. Canada (Attorney General), 2014 NLCA 32; Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC19; Hunt v. Carey Canada Inc., (SCC), [1990] 2 S.C.R. 959; R. v. Imperial Tobacco, 2011 SCC 42; Shelley v.

Noël,2020 NLSC 54; Montreal Trust Co. of Canada v. Hickman, 2001 NFCA 42; Ontario Inc. v. Maple Leaf Foods Inc., 2020 SCC 35;Chiasson v. Nalcor Energy, 2021 NLCA 34; Queen v. Cognos Inc., (SCC), [1993] 1 S.C.R. 87; Deloitte & Touche v.Livent Inc. (Receiver of), 2017 SCC 63; Charlesfort Developments Limited v. Ottawa (City), 2021 ONCA 410; Clements (LitigationGuardian of) v. Clements, 2012 SCC 32 RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch.

D REASONS FOR JUDGMENT Adams, J.: INTRODUCTION [1] The First Defendant, Her Majesty the Queen, variously referred to in these reasons as (“HMQ”, the “government” and the“Province”) and the Second Defendant, the Town of Grand Falls-Windsor (the “Town”), respectively applied to have the Plaintiffs’Amended Statement of Claim struck pursuant to Rule 14.24(1)(

a) of the Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D asnot disclosing a reasonable cause of action. [2] The procedural history of this proceeding is as follows:

a) On 15 February 2018 the Plaintiffs’ Statement of Claim was issued;

b) On or about 22 February 2018 the Town filed its Statement of Defence;

c) On or about 18 April 2018 HMQ filed its Statement of Defence;

d) On or about 15 June 2021 the Plaintiffs filed an Amended Statement of Claim; and

e) On or about 30 June 2021 HMQ filed an Amended Statement of Defence. [ 3 ] It is the Amended Statement of Claim the Applicants ask to have struck. background [ 4 ] The Plaintiffs’ claim arises out of a failed cranberry farming operation undertaken by them in the central part of the Province of Newfoundland and Labrador. The Plaintiffs allege negligence and negligent misrepresentation against HMQ and the Town arising out of a government initiative to establish a cranberry farming industry within the Province in or about 2009.

This initiative was preceded by a number of years of activity by the government in experimentation with various sites to determine which might be suitable for a cranberry farming industry.

This resulted in an announcement by the government that it was establishing an approximately $3 million Cranberry Industry Development Program (the “CIDP”). positions of the parties [ 5 ] HMQ takes the position that, since this is a claim for pure economic loss, this is an appropriate case for the Court to exercise its discretion to strike the Plaintiff’s Amended Statement of Claim on the basis of judicial economy in that the claims put forward by the Plaintiffs engage questions of law that can be decided at this initial stage based on the facts pleaded.

HMQ takes the position that on a review of the Amended Statement of Claim the Plaintiffs have not pleaded sufficient material facts to justify the matter going to trial. It says that the facts as pleaded do not establish that the Province owed a duty of care to the Plaintiffs nor do they disclose the essential elements of a claim in negligence or in negligent misrepresentation.

Additionally, HMQ submitted that even if the facts disclose a reasonable cause of action, the Court should determine that policy considerations should insulate the Province against liability which might lead to a conclusion that the Province is a guarantor of a profitable venture for the Plaintiff and create a chilling effect on the government establishing such programs in the future. [ 6 ] The Town puts forward similar arguments. It states that the facts alleged do not constitute all of the elements of a claim in either negligence or negligent misrepresentation.

It claims that the Plaintiffs and the Town were never in a sufficiently proximate relationship to establish that the Town owed a duty of care to the Plaintiffs or that it was foreseeable that the relationship would lead to the damages claimed.

On this basis, the Town submitted that the Court should, at this initial stage, strike the Plaintiffs’ Amended Statement of Claim. [ 7 ] The Town, like the Province, also submitted that, even if a sufficiently close relationship and foreseeability can be established on the facts alleged, residual policy reasons should negate the imposition of a duty of care, for example, the Town could be saddled with indeterminate liability among other undesirable policy-based outcomes. [ 8 ] Finally, the Defendants also submitted that, even if a duty of care is found to exist on the facts, the Defendants breached their respective duty, and policy considerations do not override their potential liability, the Plaintiffs’ claims as alleged nevertheless fail on the issue of causation.

The Defendants submitted that the Plaintiffs’ claim fails the “but for” test of causation and that the Plaintiffs would have suffered the alleged damages claimed irrespective of any alleged negligent actions or misrepresentations of the Defendants. [ 9 ] For their parts, the Plaintiffs submit that the facts alleged, if accepted as proven, meet the test to defend an application to strike pursuant to Rule 14.24(1) (a).

They say that, based on the authorities, unless it is “plain and obvious” that a claim cannot succeed, not that it may not succeed, a claim ought not to be struck at this initial stage. [ 10 ] The Plaintiffs submit that the facts pleaded establish all of the elements of the torts of negligence and negligent misrepresentation and that this is not an appropriate case on which to make these detailed technical determinations without a full record which can only be obtained following a trial on the merits.

They submit that an application to strike is discretionary and should be used with care. [ 11 ] In any event, the Plaintiffs submitted that in an application under Rule 14.24 the Court is not left with the only option being to strike the pleading if it is shown to be defective.

The Court has a wide discretion to order amendments to the pleadings or the provision of particulars to remedy the defect. [ 12 ] For the following reasons the applications to strike the Plaintiffs’ Amended Statement of Claim are dismissed. analysis [ 13 ] I will refer principally to the arguments of HMQ as those of the Town in large part echo those of HMQ. However, I will address a few arguments specifically raised by the Town as well. Both HMQ and the Town rely on Rule 14.24(1) (

a) to ground their application. As already stated, that Rule provides that a Statement of Claim may be dismissed if it discloses no reasonable cause of action. The Law Rule 14.24(1)(a) [ 14 ] The Rule states: 14.24.

(1) The Court may at any stage of a proceeding order any pleading, affidavit or statement of facts, or anything therein, to be struck

out or amended on the ground that (

a) it discloses no reasonable cause of action or defence; [15] The application of the Rule is well understood in our Court. No evidence is admissible on an application under the Rule (Rule14.24(2)). The Court must accept as true the facts alleged in the Statement of Claim for the purposes of the application. A Statement ofClaim must contain in

summary form the material facts upon which the Plaintiff relies to establish its claim (Rule 14.03) and shallcontain the necessary particulars of the claim (Rule 14.11(1)). [16] The test to be applied has been variously described as whether it is “plain and obvious that the claim is … bound to fail”(Andrews v. Canada (Attorney General), 2014 NLCA 32); or that the claim has no reasonable prospect of success or it is “doomed tofail” (Atlantic Lottery Corp. Inc. v.

Babstock, 2020 SCC 19). [17] HMQ and the Town submit that the complex questions of liability based on negligence and negligent misrepresentation can beresolved at this preliminary stage as the Plaintiffs have not pleaded sufficient material facts (even if taken as true) to make out eitherclaim. [18] In Hunt v. Carey Canada Inc., (SCC), [1990] 2 S.C.R. 959 [cited in Andrews, supra] the Court held that even acomplex case that is “fit to be tried” should be allowed to proceed provided the Plaintiff has “some chance of success”. As noted inAndrews, the Court ought to be cautious to strike out claims (paragraph 12).

In R. v. Imperial Tobacco, 2011 SCC 42, McLachlin, CJCnoted at paragraph 21: “valuable as it is [to weed out hopeless claims], the motion to strike is a tool that must be used with care.” [19] Of course, these principles must be tempered by the more recent statement of the law by the majority in the Atlantic Lotterycase. At paragraph 18 of that case, Justice Brown alludes to a culture shift to promote “timely and affordable access to the civil justicesystem”.

He states further in that paragraph: 18. … Where possible, therefore, courts should resolve legal disputes promptly, rather than referring them to a full trial (paras. 24-25and 32). This includes resolving questions of law by striking claims that have no reasonable chance of success. … [20] He stated further at paragraph 19: 19. … It is beneficial, and indeed critical to the viability of civil justice and public access thereto that claims, including novel claims,which are doomed to fail be disposed of at an early stage in the proceedings.

This is because such claims present "no legal justificationfor a protracted and expensive trial". … In making this determination, it is not uncommon for courts to resolve complex questions of lawand policy … [21] Simply because a statement of claim as presented does not contain sufficient material facts as pleaded to support a cause ofaction, however, does not mean that it should be struck on a Rule 14.24(1)(

a) application. The Rule requires the Court to first considerwhether the pleading is curable by an amendment: Shelley v. Noël, 2020 NLSC 54 at paras. 27 and 28, per Boone, J. [22] Additionally, any deficiency in the pleading may also be cured short of striking the claim by ordering the Plaintiff to fileparticulars. This may be particularly important in a case such as this, where the Plaintiff is making a claim against multiple Defendants. Simply because a Plaintiff’s claim is poorly drafted is no reason to strike it. As stated by Green, C. J. in Montreal Trust Co. of Canadav.

Hickman, 2001 NFCA 42 at paragraph 12: 12. There will be many situations where a cause of action cannot be said to exist on the material facts as pleaded but it will beapparent what the intent of the pleader is and that by the addition of omitted material facts upon which the claimant will be relying or thevariation of existing pleaded material, a cause of action known to the law would be said to exist.

It would be unfair to the pleader in suchcircumstances, and a violation of the principle that cases should, if possible, be disposed of on their merits, to strike the claim withoutallowing the pleader an opportunity to attempt to cure the defect (but with, perhaps, appropriate penalties in costs). [23] And then at paragraph 15: 15. Furthermore, a statement of claim should not generally be struck out where the deficiency lies in the lack of particulars of a claimthat is otherwise supported by a "bare bones" plea of appropriate material facts.

In this situation, the problem lies not in any failure toidentify a potentially applicable cause of action but in the failure to demonstrate how the identified cause of action is specificallyapplicable to the specific claims against the particular defendant.

Thus, if the types of particulars that are specifically required by therules as, for example in Rule 14.11, are not given or it is apparent that other particulars are necessary to enable the other side to know thecase he or she has to meet or to properly respond to the claim, the remedy is to order further and better particulars, not the striking of theclaim. [24] And then later at paragraph 53: 53. ...So long as it discloses an intention to assert a skeleton, or even a ghost of a claim known to the law (even though all of theconstituent elements may not be properly pleaded), then the court may, if it is of the opinion that the claim can be properly described andfairly asserted without irremediable prejudice to the other side, allow the claimant to put flesh on the skeleton (and maybe even supply afew missing bones), by permitting or ordering amendments and/or particulars to ensure, amongst other things, that: (

i) the pleadingclearly indicates which of the facts alleged relate to which cause of action against which defendant; and (ii) sufficient particulars aregiven to enable the defendant to know what particular factual scenarios are being alleged that, if proven, will constitute each cause ofaction and will justify each of the remedies sought.

[ 25 ] I do not consider the comments of Brown, J. in Atlantic Lottery to have overruled these principles but he exhorts trial courts to not hesitate (in the name of access to justice) to strike out claims that truly are “doomed to fail”. This, in my respectful view, is not one of those cases. Negligence [ 26 ] For the Plaintiffs’ claim to succeed in negligence, they must prove all the following elements of the tort: 1. That the Defendants owed a duty of care to the Plaintiffs; 2. That the Defendants breached that duty; 3. That the Plaintiffs sustained damage; and 4.

That the damage was caused in fact and in law by the Defendants’ breach. Ontario Inc. v. Maple Leaf Foods Inc ., 2020 SCC 35 (“ Maple Leaf Foods ”), at para. 18 [ 27 ] In Chiasson v. Nalcor Energy , 2021 NLCA 34 [1] , the Court of Appeal set out the applicable framework to use in considering whether a claim in negligence may succeed against the government. The Court described the analysis to be undertaken at stage one of the inquiry - duty of care - at paragraphs 15-19: 15. To succeed in a claim for negligence, the Class must first establish that a duty of care was owed by the Province.

The applicable analytical framework is discussed in Imperial Tobacco : [39] At the first stage of this test, the question is whether the facts disclose a relationship of proximity in which failure to take reasonable care might foreseeably cause loss or harm to the plaintiff. If this is established, a prima facie duty of care arises and the analysis proceeds to the second stage, which asks whether there are policy reasons why this prima facie duty of care should not be recognized: Hill v. Hamilton Wentworth Regional Police Services Board , 2007 SCC 41 , [2007] 3 S.C.R. 129 . 16.

As discussed in Deloitte & Touche v. Livent Inc. , 2017 SCC 63 , [2017] 2 S.C.R. 855 , the first stage of the analysis has two components: proximity and reasonable foreseeability.

Gascon and Brown JJ., for the majority, explained: [25] Assessing proximity in the prima facie duty of care analysis entails asking whether the parties are in such a "close and direct" relationship that it would be "just and fair having regard to that relationship to impose a duty of care in law" ( Cooper [2001 SCC 79], at paras. 32 and 34 ). . . . [32] Assessing reasonable foreseeability in the prima facie duty of care analysis entails asking whether an injury to the plaintiff was a reasonably foreseeable consequence of the defendant's negligence ( Cooper , at para. 30). 17.

Where a claim is made against government, two scenarios are identified in Imperial Tobacco : [43] ... The first is the situation where the alleged duty of care is said to arise explicitly or by implication from the statutory scheme. The second is the situation where the duty of care is alleged to arise from interactions between the claimant and the government, and is not negated by the statute. The second scenario is sometimes referred to as a private law duty of care. 18. Legislation may be relevant to the analysis in either situation: [44] ...

Some statutes may impose duties on state actors with respect to particular claimants. However, more often, statutes are aimed at public goods, like regulating an industry ( Cooper ), or removing children from harmful environments ( Syl Apps ). ...

19. Where there is specific interaction between the claimant and government: [45] ... The argument in these cases is that the government has, through its conduct, entered into a special relationship with the plaintiffsufficient to establish the necessary proximity for a duty of care.

In these cases, the governing statutes are still relevant to the analysis. ...However, the factor that gives rise to a duty of care in these types of cases is the specific interaction between the government actor andthe claimant. [28] The Court then set out the analysis to be undertaken at stage two of the inquiry – policy considerations - at paragraphs 26 to 28: 26.

Regarding stage two of the analysis which engages public policy considerations, in Deloitte & Touche, Gascon and Brown JJ.,explained: [37] Where a prima facie duty of care is recognized on the basis of proximity and reasonable foreseeability, the analysis advances tostage two of the Anns/Cooper framework.

Here, the question is whether there are "residual policy considerations" outside therelationship of the parties that may negate the imposition of a duty of care (Cooper, at para. 30; Edwards [2001 SCC 80], at para. 10;Odhavji [2003 SCC 69], at para. 51). [38] By "residual", we mean that such considerations "are not concerned with the relationship between the parties [already considered atstage one], but with the effect of recognizing a duty of care on other legal obligations, the legal system and society more generally"(Cooper, at para. 37; see also Edwards, at para. 10)... . . . [40] ...

In Cooper, this Court identified factors which are external to the relationship between the parties, including (1) whether the lawalready provides a remedy; (2) whether recognition of the duty of care creates "the spectre of unlimited liability to an unlimited class"and (3) whether there are "other reasons of broad policy that suggest that the duty of care should not be recognized" (para. 37). In thisway, the residual policy inquiry is a normative inquiry.

It asks whether it would be better, for reasons relating to legal or doctrinal order,or reasons arising from other societal concerns, not to recognize a duty of care in a given case. 27. In Imperial Tobacco, McLachlin C.J.C. explained: [90] I conclude that "core policy" government decisions protected from suit are decisions as to a course or principle of action that arebased on public policy considerations, such as economic, social and political factors, provided they are neither irrational nor taken in badfaith. ... (Emphasis added.) 28.

This approach "emphasizes positive features of policy decisions, instead of relying exclusively on the quality of being "non-operational"" (Imperial Tobacco, at paragraph 90). Finally: [91] Applying this approach to motions to strike, we may conclude that where it is "plain and obvious" that an impugned governmentdecision is a policy decision, the claim may properly be struck on the ground that it cannot ground an action in tort. If it is not plain andobvious, the matter must be allowed to go to trial.

Pure Economic Loss [29] The elements of a claim for a pure economic loss were set out by the Supreme Court of Canada in Queen v. Cognos Inc., (SCC), [1993] 1 S.C.R. 87 at paragraph 34: 34. The required elements for a successful Hedley Byrne, supra, claim have been stated in many authorities, sometimes in varyingforms.

The decisions of this court cited above suggest five general requirements: (1) there must be a duty of care based on a "specialrelationship" between the representor and the representee; (2) the representation in question must be untrue, inaccurate, or misleading;(3) the representor must have acted negligently in making said misrepresentation; (4) the representee must have relied, in a reasonablemanner, on said negligent misrepresentation; and (5) the reliance must have been detrimental to the representee in the sense thatdamages resulted.

In the case at bar, the trial judge found that all elements were present and allowed the appellant's claim.

[ 30 ] The Plaintiffs’ claim in economic loss does not allege any direct damage caused to a person or property belonging to the Plaintiffs. The Supreme Court of Canada defined “pure economic loss” in Maple Leaf Foods at paragraph 17 as “l oss that is unconnected to a physical or mental injury to the plaintiff's person, or to physical damage to property.” And while the common law has been slow to recognize claims for pure economic loss, the Supreme Court of Canada has recognized that such claims may be recoverable in certain circumstances.

At paragraph 21 of Maple Leaf Foods , Brown and Martin, JJ for the majority stated that the courts have recognized 3 categories of loss [2] : 21. The current categories of pure economic loss incurred between private parties are, therefore: (1) negligent misrepresentation or performance of a service; (2) negligent supply of shoddy goods or structures; and (3) relational economic loss. The distinguishing feature among each of these categories is that they describe how the loss occurred.

Focussing exclusively upon how the loss occurs can, however, put strain on the analysis by obfuscating both fundamental differences and similarities among cases of pure economic loss (J. Stapleton, "Duty of Care and Economic Loss: A Wider Agenda" (1991), 107 Law Q. Rev. 249, at pp. 262 and 284). Further, it obscures the starting point in a principled analysis of an action in negligence, which is to identify what rights are at stake and whether a reciprocal duty of care exists ( Livent Inc. (Receiver of) , at para. 30 ).

It is proximity, and not a template of how a loss factually occurred, that remains a "controlling concept" and a "foundation of the modern law of negligence" ( Norsk Pacific Steamship Co. , at p. 1152; Design Services Ltd. v.

R. , 2008 SCC 22 , [2008] 1 S.C.R. 737 (S.C.C.), at para. 25 ). [ 31 ] In Imperial Tobacco the Court held that it is possible for a special relationship to arise between a claimant and the government through the conduct of the government (paragraph 45) and that both proximity and foreseeability are established to give rise to a prima facie duty of care if the special relationship is found to exist. (paragraph 42) [ 32 ] The Court went on to say in paragraph 42: 42. … In Hercules Management , the Court, per La Forest J., held that a special relationship will be established where: (1) the defendant ought reasonably to foresee that the plaintiff will rely on his or her representation; and (2) reliance by the plaintiff would be reasonable in the circumstances of the case (para. 24).

Where such a relationship is established, the defendant may be liable for loss suffered by the plaintiff as a result of a negligent misstatement. [ 33 ] The Supreme Court of Canada further refined the test for finding a duty of care in a claim for negligent misrepresentation in Deloitte & Touche v. Livent Inc. (Receiver of) , 2017 SCC 63 . The Court held that it is more useful to consider the proximity question before that of foreseeability (paragraph 24). The analysis requires a consideration of the “purpose of the defendant’s undertaking”. At paragraph 30, the Court stated: 30.

In cases of pure economic loss arising from negligent misrepresentation or performance of a service, two factors are determinative in the proximity analysis: the defendant's undertaking and the plaintiff's reliance. Where the defendant undertakes to provide a representation or service in circumstances that invite the plaintiff's reasonable reliance, the defendant becomes obligated to take reasonable care.

And, the plaintiff has a right to rely on the defendant's undertaking to do so … These corollary rights and obligations create a relationship of proximity … The Pleadings [ 34 ] In order to determine whether the Amended Statement of Claim sets out sufficient material facts to establish a reasonable cause of action it is necessary to consider the actual claims contained in it in reference to each cause of action specifically pleaded or which are reasonably disclosed by the pleading.

I will turn now to a consideration of the Plaintiffs’ claim as it relates to each cause of action identified as against each Defendant: specifically, negligence and negligent misrepresentation. [ 35 ] The Amended Statement of Claim identifies the parties in paragraphs 1 to 4. There is no issue about the description of the parties, although the government reserves the right to take issue with any alleged liability of the Province respecting the Second Plaintiff, R & S Cranberries Inc. (“R & S”), based on its date of incorporation in reference to the allegations against HMQ.

But that matter was not raised on this application. [ 36 ] In a

section entitled “Background” encompassing paragraphs 5 to 8, the Plaintiffs allege that in the late 1990s the government began exploring the possibility of establishing a cranberry growing industry in Newfoundland and Labrador. The government identified certain sites at which pilot projects could be undertaken and that one was maintained by the government as a research site. [ 37 ] The Plaintiffs allege that by 2006 a total of 32 cranberry farms had been developed under this research program and the government then turned its focus to whether the industry had commercial viability.

In 2008, the Department of Natural Resources (“DNR”), on behalf of HMQ, announced the five-year multimillion-dollar CIDP. [ 38 ] In March 2009, the Plaintiffs allege that the Town became integrally involved in promoting the establishment of the cranberry industry as a way to stimulate economic growth in its area. The Town circulated an “Expression of Interest” (“EOI”) in the local newspaper to test local interest. Responses to the EOI would be used to create a list of potential participants in a proposal the Town

intended to submit to various levels of government for funding (the “Cranberry Project”). [ 39 ] At paragraph 8 the Plaintiffs allege: 8. The Proposal describes DNR as, “the primary drivers (sic) behind the development of the cranberry industry”. Further, the Proposal identified the Town as the primary proponent of the Cranberry Project, responsible for virtually all aspects of the operation and supervision of the proposed program, including the supervision of all engineering and other activities required.

The Cranberry Project would be run by a Project Steering Committee, which included two nominees from DNR, Richard Carey (“Carey”) and Richard Oram (“Oram”). Given these individuals were at all material times employees of DNR, the Government remained an integral proponent and manager of the Cranberry Project at all material times through their involvement, as well as through its continued funding and promotion of the Cranberry Program. [ 40 ] In a

section of the Amended Statement of Claim entitled “Fabian Power, R & S Cranberries and the Site Selection Process”, encompassing paragraphs 9 to 16, the Plaintiffs outline how they became involved in the cranberry farming industry and the Cranberry Project in particular. [ 41 ] The Plaintiffs allege that Oram acted on behalf of the government in making representations respecting the “promising future” of the cranberry farming industry and the government’s high level of commitment to it. [ 42 ] Power alleges that Oram assisted him in preparing his response to the Town’s EOI issued in May of 2009.

He alleges that the Town’s EOI required applicants to show that they had applied to Crown Lands for sites “suitable for cranberry development”. He alleges Oram provided him with a “Site Binder” prepared by agents of the government, containing sites suitable for cranberry farming. [ 43 ] Power alleges in paragraph 10 of the Amended Statement of Claim that Oram indicated that if he were to choose a site from the Site Binder, he could be fast tracked into the cranberry program which would obviate the need for further site inspection.

Power further alleges that HMQ and the Town representative advised him that choosing a site from the Site Binder was the only realistic chance of securing land that was compatible for cranberry farming in advance of the deadline set out in the EOI. [ 44 ] In paragraph 11, Power alleges that Oram represented to him that all the bogs in the Site Binder had been inspected by HMQ and had been pre-approved as “good cranberry bogs”.

Power alleges that Oram also represented to him that all engineering work had been done to ensure the sites were suitable for cranberry farming. [ 45 ] In paragraph 12, Power alleges that Oram’s representations were “negligent and misleading”.

He alleges that since no one had actually informed Oram that the engineering work had been completed or that the sites in the Site Binder had been pre-approved, Oram had actively misrepresented to Power that the sites had been “pre-approved”. [ 46 ] In paragraph 13, Power alleges that the government knowingly or negligently misrepresented the suitability of the sites in the Site Binder as being suitable for cranberry farming and that no further investigations of the sites would be required.

In paragraph 14, Power alleges that, due to the tight timeframe for application and approval for participation in the cranberry program, Power reasonably relied on the government’s representations that the sites in the Site Binder presented pre-approved sites and that the government, through Oram, “actively encouraged participants, including Power, to choose sites from the Site Binder.” [ 47 ] In paragraphs 15 and 16, Power alleges that, based on the representations of government and the Town, he selected three sites from the Site Binder, one of which was Site #11 for which he sought a license to occupy from Crown Lands.

When the Town submitted its proposal in May 2009, it included Site #11 and refers to it as having “good potential for cranberry farming development.” Power incorporated R & S in August 2009. Power alleges that R & S was selected to participate in the Cranberry Project and approved to develop Site #11 as a cranberry farm.

Power alleges that between 2010 and 2016 R & S developed the original 12 acres on Site #11 by 2013 and 13 of an additional 21 acres by November 2016. [ 48 ] In paragraphs 18 to 20, Power outlined that a large “sinkhole” had been discovered on R & S’s farm which resulted in substantial damage due to the disappearance of a large quantity of “winter flooding water”. Power outlined how the presence and extensiveness of the sinkhole was investigated. Power alleges that he was forced to stop all farming activity at Site #11.

He alleges that he later learned that the government had recognized the potential problems respecting Site #11 from the outset but had failed to advised Power or R & S of the potential problems with Site #11 which could detrimentally affect its suitability for cranberry farming. [ 49 ] In a

section of the Amended Statement of Claim comprising paragraphs 23 to 32 the Plaintiffs set out their allegations of liability against the government and the Town. They allege that the government and the Town solicited interest from inexperienced members of the public and had a direct financial interest in the Cranberry Project.

In respect of the government, the Plaintiffs allege that the “Defendants” owed the Plaintiffs a duty of care to ensure that the information they were providing to the Plaintiffs was correct and not misleading, particularly as it related to sites identified in the Site Binder as suitable locations for which licenses to occupy could be readily obtained.

The Plaintiffs state in paragraph 24 that they reasonably relied on the government to have thoroughly investigated the sites identified in the Site Binder and that they were never advised to undertake independent investigations of the sites before applying for the license to occupy and undertake their farming operation. The Plaintiffs allege in paragraph 25 that the Defendants breached the applicable standard of care by “providing untrue, incorrect and misleading information” to the Plaintiffs.

They allege that it was foreseeable on the part of the Defendants that the Plaintiffs could suffer damages if the bogs listed in the Site Binder as suitable for cranberry farming turned out not to be so.

The Plaintiffs allege that the Town acted as the “lead proponent” of the Cranberry Project and was responsible for “all technical matters related to the project, including a review of site engineering reports.” [ 50 ] In respect of the Town, the Plaintiffs allege that the Town represented Oram and Carey, who worked for the government, as experts who could be relied on for “primary independent technical input” on all aspects of the Cranberry Project and that they had the ability and expertise to provide such advice.

The Plaintiffs allege that these representations were false as neither Oram nor Carey had the requisite knowledge or expertise represented. [ 51 ] The Plaintiffs allege that the Town failed to oversee or review the technical aspects of the project and actively misrepresented

the level of work done on the sites and that it represented that an experienced “cranberry engineer” had visited the sites to determine their suitability for cranberry farming.

The Plaintiffs allege that Power relied on the Town’s misrepresentations respecting its function as the overall supervisor of the Cranberry Project and had the Town fulfilled its advertised function, the Plaintiffs could have chosen alternate sites and avoided the damages it suffered. [ 52 ] In paragraph 31, the Plaintiffs outline 13 specific allegations of negligence committed by the Defendants and individualize the allegations against each of them. [ 53 ] The Plaintiffs outline in paragraph 32 the damages they incurred as a result of the alleged negligence of the Defendants: 32.

The Plaintiffs repeats (sic) the foregoing and state that, as a result of the Defendants’ negligence, the Plaintiffs have incurred, and will continue to incur, substantial losses, special and general damages and expenses for which the Defendants are liable. AND the Plaintiffs therefore claim against the Defendants, jointly and severally, as follows:

a) Special damages in an amount to be determined, including indemnity for all claims, liabilities, obligations, losses, costs and expenses sustained, suffered or incurred by the Plaintiffs as a result of the Defendants’ negligence;

b) Loss of opportunity and loss of profits in an amount to be determined;

c) General damages in an amount to be determined;

d) Pre-judgment and Post-judgment interest pursuant to the Judgment Interest Act ;

e) Costs; and

f) Such other relief as this Honourable Court deems just. [ 54 ] As already stated, the analysis as to whether a duty of care arises in any case requires a consideration of the purpose of the Defendants’ undertaking. HMQ submitted that the government cannot be held liable in negligent misrepresentation for failing to tell Power that further site investigation should be undertaken before applying for a grant for one of the sites in the Site Binder. HMQ relies on the recent decision of the Ontario Court of Appeal in Charlesfort Developments Limited v.

Ottawa (City) , 2021 ONCA 410 (it should be noted that an application for leave to appeal has been filed with the Supreme Court of Canada but not yet been dealt with). [ 55 ] In Charlesfort , the Plaintiff was a property developer which had applied to the City of Ottawa to rezone certain property on which it intended to develop a condominium project on a certain parcel of land which included an underground parking garage going right up to the northern lot line. The City’s officials advised Charlesfort that there was an easement on the adjacent property on the north lot line which contained a trunk sewer.

As it turned out, the easement actually contained a water main through which millions of gallons of water flowed every hour. [ 56 ] Following approval of the rezoning application, Charlesfort applied for a development permit for its building. It was at that time that the City realized that the easement actually contained the water main which would be affected by the construction of the Plaintiff’s building, particularly the underground parking garage.

This resulted ultimately in the Plaintiff having to alter its development plans which resulted in increased costs. [ 57 ] Charlesfort sued the City for negligent misrepresentation.

The action was allowed at trial but was overturned at the Court of Appeal on the basis that the Trial Judge had erred in her analysis of the scope of the City’s undertaking and whether the City had “manifested an intention to induce or deliberately solicited Charlesfort’s reliance on the City’s representations.” The Court held that this was simply a rezoning application and any representations by the City had to be considered in the context and purpose of that process and whether the Plaintiff’s reliance fell within or outside of the purpose of the City’s undertaking of responsibility.

The Court held that the City did not owe Charlesfort a duty of care during the rezoning process such that the City could be held liable for Charlesfort’s “pure economic loss” and on that basis dismissed Charlesfort’s claim. [ 58 ] While the Charlesfort decision is interesting, in my view it is not of great assistance on this application. I note that the Court in Charlesfort had a full record from a trial before the Supreme Court of Ontario. It was not dealing with an application to dismiss the Plaintiff’s claim for not disclosing a reasonable cause of action.

It will be for the Plaintiffs in this case to demonstrate on the evidence the measure of the undertaking (if any) of the government and the Town in making the alleged misrepresentations contained in the Amended Statement of Claim. In my view, it is not appropriate at this early stage, without a full record, to make a determination of the “purpose of the Defendant’s undertaking.” [ 59 ] HMQ submitted that since the legislation governing the establishment of farms (including berries) is so broad in scope it does

not support the imposition of a private law duty of care owed by the government to the Plaintiffs in relation to the alleged representations made to them. HMQ submitted that the Plaintiff’s claim should be dismissed on public policy grounds, even if a duty of care can be discerned from the pleadings. [ 60 ] In Imperial Tobacco , the Court held that “core policy” decisions of government are protected from suit if they are based on such considerations as “economic, social and political factors.” At paragraph 91 the Court stated: 91.

Applying this approach to motions to strike, we may conclude that where it is "plain and obvious" that an impugned government decision is a policy decision, the claim may properly be struck on the ground that it cannot ground an action in tort.

If it is not plain and obvious, the matter must be allowed to go to trial. [ 61 ] HMQ also submitted that even if the CIDP and the Cranberry Program are found not to be a core policy decision, the Court should nevertheless decline to recognize a duty of care in this case on residual policy grounds, as it would “create an ad hoc taxpayer funded insurance scheme” for farmers who experience difficulty in establishing their farms on Crown land and this would have a negative impact on the exercise of discretion by the Minister responsible for Crown Lands in issuing licenses, grants and other land titles and imposing terms and conditions on such licenses, etc.

The Town made similar submissions in respect of its involvement, suggesting that the Plaintiffs’ claims, if recognized, would “create a chilling effect on the willingness of [t]owns to participate in other economic stimulus projects.” [ 62 ] Had the Minister simply established the policy framework and then left it up to individuals to determine for themselves what sites to apply for, the Minister may likely have been immune from liability. I make no definitive ruling on that.

But having allegedly created the Site Binder and represented to the Plaintiffs that specific sites identified in it were suitable for cranberry farming and that all engineering work to confirm this had been done, and because of the tight timeframe established in which to participate in the Town’s program and that an applicant need not do any further site inspection, can it be truly said that this was simply a policy decision in all of the circumstances? In other words, was it “plain and obvious” that the Minister was making a purely policy decision.

Or was this the failed or flawed implementation of a policy decision. This is better answered by the Trial Judge following a full record before the Court. The same analysis applies to the Town’s involvement through its EOI, its Cranberry Project and its reliance on and alleged promotion of Oram and Carey as experts in cranberry farming on whom the Plaintiffs it allegedly represented could rely. The Town also allegedly failed in its duty to supervise the Project, including the engineering necessary to develop a successful cranberry farm, among other things. [ 63 ] Both Defendants raised the issue of causation.

They say that the damages claimed by the Plaintiffs cannot flow from the allegations set forth in the Amended Statement of Claim. They submit that it is unreasonable to conclude that representations made in 2009 could lead to damages which did not occur until 2014. I disagree. [ 64 ] The test for determination of causation is the “but for” test. McLachlin C.J.C. discusses this in Clements (Litigation Guardian of) v. Clements , 2012 SCC 32 at paragraphs 8 and 11 : 8 The test for showing causation is the "but for" test.

The plaintiff must show on a balance of probabilities that "but for" the defendant's negligent act, the injury would not have occurred. Inherent in the phrase "but for" is the requirement that the defendant's negligence was necessary to bring about the injury — in other words that the injury would not have occurred without the defendant's negligence. This is a factual inquiry .

If the plaintiff does not establish this on a balance of probabilities, having regard to all the evidence, her action against the defendant fails. 11 Where "but for" causation is established by inference only, it is open to the defendant to argue or call evidence that the accident would have happened without the defendant's negligence, i.e. that the negligence was not a necessary cause of the injury, which was, in any event, inevitable. … [emphasis added] [ 65 ] It is possible that the Plaintiffs may be able to prove that their alleged reliance on the Defendants’ alleged representations led to the losses claimed.

I know nothing about cranberry farming. But it may be possible for the Plaintiffs to establish that it takes years to develop a cranberry farm. The pleadings imply as much. I am not prepared to dismiss the Plaintiff’s claim on this basis without a full record which would flesh out in the evidence the requirements for establishing a cranberry farm, the length of time it takes to prepare the bogs, plant the vines, flood the fields and so on. All of this requires evidence which may answer the question of causation.

The Plaintiffs should not be deprived at this early stage of the opportunity to present that evidence. conclusion [ 66 ] I am of the view that the Plaintiffs have pleaded sufficient material facts to establish the elements of the torts of negligence and negligent misrepresentation against each of the Defendants, albeit arguably in a bare bones fashion. [ 67 ] In respect of negligence, among other things, they allege that the government negligently managed the Cranberry Project. They allege further that the government failed to adequately investigate the bogs listed in the Site Binder.

They allege that the government was negligent in encouraging inexperienced persons (in particular the Plaintiffs) to rely on the Site Binder despite having failed to properly investigate the sites listed. They allege that the government failed to adequately investigate Site #11 despite knowing that its depth was greater than would normally be used for cranberry farming and it was negligent in including it in the Site Binder without advising the Plaintiffs of the potential problems with it.

The Plaintiffs allege that the Town was negligent in failing to carry out its advertised supervisory role it committed to in the proposal. They allege that the Defendants breached the standard of care by providing “untrue, incorrect and misleading” information in respect of the sites contained in the Site Binder and in encouraging the Plaintiffs to rely on it. [ 68 ] In respect of negligent misrepresentation, I am satisfied the Plaintiffs have established the potentiality of the special

relationship required to ground a cause of action in negligent misrepresentation. There were a limited number of persons who would be in a position to participate in the Cranberry Project. The full scope of HMQ’s undertaking will require fleshing out through the evidence at trial. I am satisfied that the pleadings set out sufficient material facts, if accepted as true, to meet the test at this stage in the proceedings. [ 69 ] The Plaintiffs allege that HMQ, through its representatives, misrepresented the true conditions of the sites in the Site Binder.

They allege that the Defendants misrepresented the qualifications of Carey and Oram and encouraged the Plaintiffs to rely on them for technical expertise. The Plaintiffs allege that they reasonably relied on the representations of HMQ and the Town and, as a result, suffered damages. [ 70 ] However, HMQ and the Town are entitled to further particulars of the allegations made by the Plaintiffs.

This can be accomplished by the Defendants filing a Demand for Particulars, pursuant to Rule 14.13 setting out the areas where they require further information and they are at liberty to do so. [ 71 ] For the above reasons, the applications to dismiss the Amended Statement of Claim as not disclosing a reasonable cause of action are dismissed. Since the Plaintiffs/Respondents were largely successful on this application, they are entitled to their costs under Column 3 against both Defendants/Applicants. _____________________________ James P. Adams Justice