Out Of Scope – The Court Of Appeal Finds That The Duty To Supply Product Fit For Human Consumption Does Not Extend To Franchisees' Pure Economic Loss

On April 30, 2018, the Court of Appeal for Ontario released its decision in 1688782 Ontario Inc. v Maple Leaf Foods Inc., 2018 ONCA 407, reversing a decision granting summary judgment (in part) in favour of Mr. Sub franchisees in a class action commenced against Maple Leaf Foods Inc. following the listeria contamination of certain Maple Leaf ready-to-eat meats in 2008. The Court of Appeal's decision makes numerous references to the Supreme Court's decision in Deloitte & Touche v Livent (Receiver of), 2017 SCC 63, and highlights the importance of properly defining the scope of any duty of care arising from a relationship between parties.

The class action commenced on behalf of Mr. Sub franchisees alleged that Maple Leaf had: (a) negligently manufactured and supplied potentially contaminated meats; and (b) negligently represented that the supplied meats were fit for human consumption. While there was no evidence that any Mr. Sub customer was harmed by any contaminated product, the Mr. Sub franchisees alleged that they suffered economic loss arising from the reputational harm that they experienced from being publicly associated with Maple Leaf after the listeria outbreak. They claimed damages for loss of past...