



COURT OF APPEAL FOR ONTARIO

CITATION: 2460907 Ontario Inc. v. 1521476
    Ontario Inc., 2021 ONCA 682

DATE: 20211006

DOCKET: C69130

Lauwers, Harvison Young and
    Sossin JJ.A.

BETWEEN

2460907
    Ontario Inc.

Plaintiff/Appellant

and

1521476 Ontario Inc.

Defendant/Respondent

Paul Starkman and Calvin Zhang, for the
    appellants

Elliot Birnboim and Michael Crampton,
    for the respondent

Heard: September 27, 2021 by video conference

On appeal from the order of Justice M.G.
    Ellies of the Superior Court of Justice, dated January 26, 2021

striking the appellants claim, with reasons reported at
    2021 ONSC 634.

REASONS FOR DECISION

[1]

The appellant 2460907 Ontario Inc. (246) appeals from an order
    striking its claim under r.
21.01(1)(b)

of
    the
Rules of Civil Procedure
, R.R.O. 1990,
    Reg. 194,

for pure
economic loss arising from the respondent 1521476 Ontario Inc.s (152)
    exercise of re-entry against 152s tenant, 2456787 Ontario Inc. (245).

[2]

The underlying facts are straightforward. 152
    had entered into a lease with 245. The lease was subsequently amended to allow
    for renovations, for which 152 was to obtain a building permit. The building
    permit was delayed. 245 was unable to afford the rent, stopped paying it, and
    asked 152 to waive or reduce the rent, a request 152 refused. 245 then wrote to
    152 advising that a new restaurant to be located in the premises would be
    operated by 246 and requested that the original lease and the amending
    agreement both be changed to reflect that the tenant would now be 246. 152
    responded by re-entering the premises and distraining the chattels of 245. 245
    commenced an action for wrongful distraint, to which 246 was not a party.

[3]

Over a year later, 246 commenced its own action
    against 152 for pure economic loss damages for the profits it was going to earn
    by operating a restaurant in the premises formerly occupied by 245. 246 claimed
    to have possessory or proprietary interest in the property. 152 brought a motion
    under r. 21.01(1)(b) of the
Rules of Civil Procedure
, R.R.O. 1990,
    Reg. 194 and was successful.

[4]

The motion judge found that, as a third party,
246 did not have possessory or proprietary interests in the premises. 152 had not
    consented to an assignment of the lease and refused to enter into any new
    agreement with 246, and 246 could therefore not have acquired possessory or
    proprietary interest in the property. The motion judge also denied 246 the
    opportunity to amend its claim because (1) it had already been given that
    opportunity and (2) no amount of amendment would save 246s claim.

[5]

The appellant argues that the trial judge incorrectly applied the
    test set out
under r. 21.01(1)(b) by not accepting the facts
    pleaded in the statement of claim as true, and that he erred in his
    consideration of its tort claim for pure economic loss. Both arguments must
    fail.

[6]

First, we see no error in the motion judges
    finding that 152 did not consent to the assignment of the lease and that 246
    therefore had no possessory or proprietary interest in the property. This
    finding was well grounded in the record before the motion judge and was open to
    him. The motion judge was aware that 152 failed or refused to allow 246 to
    occupy the premises. The precise mechanism through which 246 did not obtain
    possessory or proprietary interest is not vital.

[7]

Second, there is no merit to the appellants
    argument that 152 owed it a duty of care arising from its possessory or
    proprietary interest in 152s property.  Without such an interest there could
    not be an entitlement on the part of 246 to claim possessory or proprietary
    interest in 152s property and thus a duty of care that could entitle it to economic
    loss. This was not a case like
Canadian National
    Railway Co. v. Norsk Pacific Steamship Co.
, [1992]
    1 S.C.R. 1021, which remains the leading case on relational economic loss and
    upon which the appellant relied. In that case, a barge owned by Norsk Pacific
    Steamship collided with a bridge owned by Public Works Canada. Although CN did
    not have any leasehold estate or interest in the bridge, it was,
pursuant
    to a contract
with Public Works Canada, its primary user. Nothing about
    this case is analogous to
Norsk.
246 did not have any relationship
    with 152, contractual or otherwise, that would entitle it to claim possessory
    or proprietary interest in 152s property.

[8]

Given the motion judges finding that 152 had
    not consented to any assignment of the lease, there was nothing to ground the
    necessary finding of proximity. As the Supreme Court of Canada stressed in
1688782
    Ontario Inc. v. Maple Leaf Foods Inc.
, 2020 SCC 35, 450 D.L.R. (4th) 181,
    at para. 21,
per
Brown and Martin JJ. writing for the majority, 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: see
    also,
Norsk
, at
p.1152.

[9]

The motion judges decision to not allow 246 to
    amend its claim further is owed deference.

[10]

Appeal is dismissed with costs in the amount of
    $5,000, as agreed by the parties, awarded to the respondent.

P.
    Lauwers J.A.

A.
    Harvison Young J.A.

L.
    Sossin J.A.


