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This Week at the SCC (20/08/2013)

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

Posted in This Week at the SCC
Martin Boodman

The Supreme Court of Canada has dismissed an application for leave to appeal the decision of the B.C. Court of Appeal in The Los Angeles Salad Company Inc. v. Canadian Food Inspection Agency 2013 BCCA 34, thereby confirming the reluctance of Canadian Common law courts to impose a private law tort duty upon regulators acting in the public interest.

The appellants exported carrots from the U.S. to Canadian retailors. As a result of a negligent inspection by the Canadian Food Inspection Agency (“CFIA”), the CFIA erroneously concluded that the carrots might be contaminated which caused the appellants to recall the carrots from retail stores and to destroy their inventory. The appellants sued the CFIA for the resulting economic losses.

The B.C. Court of Appeal confirmed the first instance judgment to the effect that the CFIA did not owe a private law duty of care to the sellers of food products. Applying the Anns/Cooper proximity analysis, the B.C. Court of Appeal indicated that the food inspection regulatory regime was intended to protect the public, rather than the economic interests of food suppliers whom they inspect. Neither the legislative scheme nor the conduct of the CFIA created a relationship of sufficient proximity to create a private law duty of care. In particular, the CFIA was merely acting in accordance with its statutory powers to protect the public when inspecting, albeit negligently, the appellants’ produce. Further, the conduct of the CFIA did not fall within the recognized categories in which a private law duty of care had previously been recognized.

While the B.C. Court of Appeal decision does not really clarify the notion of “proximity”, dismissal of the application for leave to appeal to the Supreme Court of Canada confirms that a private law tort duty will not be imposed on a public regulator such as the CFIA merely on the basis of negligence. A claimant must establish that the regulatory scheme was intended to protect its interests, rather than those of the public at large, or that the conduct of the regulator exceeded mere interaction in carrying out its statutory mandate so as to create a close and direct relationship required for a duty of care.

The McCarthy Tétrault Opinions Group consists of members of the firm’s litigation department whose practices focus on written advocacy and the provision of strategic advice and opinions in the context of complex business disputes and transactions.  The members of the Opinions Group are Anthony Alexander, Martin Boodman, Brandon Kain, Hovsep Afarian and Kirsten Thompson.