



COURT OF APPEAL FOR ONTARIO

CITATION: Darmar Farms Inc. v. Syngenta
    Canada Inc., 2019 ONCA 789

DATE: 20191004

DOCKET: C66365

Huscroft, Trotter and Zarnett
    JJ.A.

BETWEEN

Darmar Farms Inc.

Plaintiff
(Appellant)

and

Syngenta Canada Inc. and Syngenta
    AG

Defendants
(Respondents)

Michael J. Peerless, Matthew D. Baer
    and Emily Assini, for the appellant

Brandon Kain, Eric S. Block and
    Stephanie Sugar, for the respondents

Heard: June 25, 2019

On appeal from the judgment of Justice Helen
    A. Rady of the Superior Court of Justice dated November 28, 2018, with reasons
    reported at 2018 ONSC 7129, 143 O.R. (3d) 774.

Zarnett J.A.:



I.

INTRODUCTION

[1]

Commencing in 2010, the respondents, Syngenta
    Canada Inc. and Syngenta AG (collectively Syngenta), sold, to North American
    corn growers, Agrisure corn seed, which contained a genetically modified trait
    known as MIR 162.
[1]
Agrisure had been approved for sale in North America by Canadian and American
    regulators. However, it had not been approved by regulatory authorities in
    China, a large and growing export market for North American corn. Such approval
    was not obtained until December 2014.

[2]

In December 2015, the appellant, Darmar Farms
    Inc. (Darmar), an Ontario corn grower, which neither purchased nor planted
    Agrisure, commenced a proposed class action against Syngenta on behalf of
    itself and others similarly situated in Canada.

[3]

In the action, Darmar alleges that the North
    American corn industry is interconnected and interdependent. The traits of genetically
    modified seeds such as Agrisure inevitably commingle with other corn. Syngenta
    undertook not to cause damage to the corn market by introducing its product without
    the necessary global approvals, but then negligently commercialized Agrisure
    prematurely, without important foreign approvals in place. Syngenta also made negligent
    misrepresentations about the timing and substance of its application for
    approval of Agrisure in China.

[4]

The commercialization of Agrisure by Syngenta,
    when it had not been approved for import by Chinese regulators, led to all
    North American corn being barred from the Chinese market because it had
    intermingled with Agrisure and its MIR 162 trait. That in turn led to a glut of
    corn that could be sold only in the North American market, a fall in the price
    of corn, and losses to Darmar and prospective class members. Darmar alleges the
    losses are the result of Syngentas negligence in prematurely commercializing
    Agrisure, its negligent misrepresentations, as well as conduct that was in breach
    of the
Competition Act
, R.S.C.
    1985, c. C-34
.

[5]

Syngenta moved successfully under r. 21.01(1)(b)
    of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194,
to dismiss the action on the basis that the
    statement of claim did not disclose a reasonable cause of action. The motion
    judge characterized Darmars claim as one for pure economic loss. She concluded
    it was plain and obvious the claims based in negligence could not succeed. And
    she held the conclusions that underpinned her analysis of the negligence claims
    were equally dispositive of the
Competition Act
claim.

[6]

Darmar argues that the motion judge made errors
    in her application of the law relating to claims for negligence causing economic
    loss and the law relating to the proper approach on a r. 21 motion. Its principal
    arguments are that the categories of claims for economic loss are not closedits
    negligence claims for premature commercialization of, and misrepresentations
    about, a product in the interdependent and interconnected corn market are novel
    and should be allowed to proceed; the statutory claim under the
Competition
    Act
was not properly analysed by the motion judge; the motion judge
    incorrectly ignored the particulars Darmar had delivered and the documents in
    it, which should have been viewed as part of its pleading; and the motion judge
    failed to view the claim from the perspective of potential class members such
    as Quebec residents.

[7]

For the reasons which follow I would allow the
    appeal in part.

[8]

Whether the pleading discloses a reasonable cause
    of action must be assessed by reference to the claim of Darmar, not of potential
    members of a proposed class. Viewed from that perspective, the key issue in the
    negligence claims is whether Syngenta owed a duty of care to Darmar, which
    never purchased Agrisure.

[9]

On the facts alleged the misrepresentation claim
    does not have a reasonable prospect of success, as any reliance by Darmar on
    the alleged misrepresentations about the timing and substance of Syngentas
    application for approvals in China was for a purpose outside the pleaded purpose
    of those representations, and therefore outside the scope of any duty of care.
    In a claim for misrepresentation, the purpose of the representation is
    determinative of the scope of the relationship of proximity necessary to found
    a duty of care. Nor on the facts alleged does Darmar have a reasonable prospect
    of successfully establishing that the civil remedy in the
Competition Act
is available to it. Those claims were properly dismissed.

[10]

However, I reach a different result in respect
    to the claim for premature commercialization. In light of this courts decision
    in
Sauer v. Canada (Attorney General)
, 2007 ONCA 454, 225 O.A.C. 143, it
    cannot be said on the facts alleged that Darmar has no reasonable prospect of successfully
    establishing that Syngenta owed it a duty of care not to negligently prematurely
    commercialize Agrisure. The motion judge erred in dismissing that claim.


II.

The Facts and the decision below

(i)

Darmars Allegations

[11]

Syngentas motion to dismiss was brought under
    r. 21.01(1)(b) of the
Rules of Civil Procedure
which provides that a
    pleading may be struck if it discloses no reasonable cause of action. On such a
    motion, the facts pleaded are assumed to be true unless they are patently
    ridiculous or incapable of proof:
Nash v. Ontario
(1995)
, 27 O.R. (3d) 1 (C.A.), at p. 6.
    However, bald conclusory statements of fact and allegations of legal
    conclusions unsupported by material facts are not assumed to be true:
Das
    v. George Weston Ltd.
, 2018 ONCA 1053, 43 E.T.R. (4th) 173, at para. 74.

[12]

The summary below is extracted from Darmars second
    amended statement of claim. In the
Analysis
section of my reasons, I
    discuss the effect of the particulars and the documents referred to in the
    particulars.

[13]

North America is the largest producer and
    exporter of corn in the world. At the relevant time, China was a large and
    growing export market for North American corn.

[14]

The North American corn industry is
    interconnected and mutually interdependent. Genetically modified seeds
    inevitably commingle with other seeds.

[15]

Approvals are required before commingled crops
    can be sold. Major industry associations, of which Syngenta is a member, have publicly
    recognized that there is a potential for major trade disruptions if approvals
    in major international markets are not obtained before a product is commercialized.

[16]

After being warned by industry associations not
    to introduce another MIR genetic trait without approval in export markets
    because of the detrimental consequences that can result from premature
    commercialization, Syngenta undertook not to cause damage to the corn market by
    introducing such a product without necessary global approvals. Darmar and other
    class members are alleged to have reasonably relied on this undertaking.

[17]

In 2010, Syngentas Agrisure Viptera product
    containing MIR 162 was approved for use in North America by the relevant
    American and Canadian regulators. However, in 2010 China had not approved the
    product. Syngenta only started the approval process in China in 2010, knowing
    it would take two to three years for approval, or longer if its application was
    incomplete or incorrect, which it was.

[18]

Even though China had not approved Agrisure,
    Syngenta brought Agrisure to market in North America for the 2011 crop year. As
    was inevitable, and foreseeable and foreseen by Syngenta, Agrisure
    contaminated the corn supply from the North American market through cross-pollination
    and commingling.

[19]

In November 2013, North American corn exports to
    China were found to be contaminated with Agrisure resulting in Chinas
    rejection of all corn from North America. This led to a glut of corn available
    for sale in North America and a drop in corn prices. This continued until after
    December 2014, when Agrisure was finally approved in China.

[20]

Syngenta is alleged to have been negligent in
    commercializing its product when it knew or should have known that doing so
    before approvals in China had been obtained would have the effect of
    contaminating the entire North American corn supply with a genetic trait that
    would lead to the closing of that export market and a corresponding drop in
    prices.

[21]

Syngenta is alleged to have made negligent
    misrepresentations about the importance of the Chinese market; the timing and
    substance of its application for Agrisure approval in China  in particular,
    the timing of when China was likely to approve Agrisure; its ability to channel
    Agrisure to non-Chinese markets; and its ability to contain the infiltration of
    Agrisure to the North American corn supply. The alleged misrepresentations were
    made in commercial advertising and/or promotion for MIR 162 corn products,
    including Agrisure Viptera and Agrisure Duracade.

[22]

Darmar and class members relied on Syngentas representations
    regarding the market in China and the status of regulatory approvals for
    Agrisure in China in deciding to plant corn; had they known the true facts they
    would have planted alternate crops or made other uses of their lands. Such
    reliance is alleged to have been reasonable on the part of Darmar and class
    members, as well as foreseeable to Syngenta.

[23]

Syngenta is alleged to owe a duty because: (i)
    the interdependence and interconnectedness of the corn market where genetically
    modified crops and seeds are sold made Darmar and class members vulnerable, and
    made the risk of harm from premature commercialization or negligent
    misrepresentations foreseeable; and (ii) Syngentas membership in industry associations,
    their warnings to Syngenta, and Syngentas undertaking in response gave rise to
    an expectation in Darmar and other class members that Syngenta would not
    release incorrect information and would refrain from selling and distributing
    Agrisure in a manner that would foreseeably cause harm.

[24]

Darmar also alleges that Syngentas false or
    misleading representations were contrary to s. 52 of the
Competition Act
.

[25]

Darmar planted corn in increasing quantities in
    2013, 2014, and 2015. It did not purchase or plant any Agrisure. The claim
    alleges that corn growers who did not purchase Agrisure (such as Darmar), and
    those who did, were all damaged by the conduct of Syngenta.

(ii)

The Motion Judges Decision

[26]

The motion judge identified the claim as one for
    pure economic loss: at para. 20. She reviewed categories of permitted claims
    for pure economic loss that have been recognized, noting that one such category
    was a claim for negligent misrepresentation: at para. 21. She stated that the
    claim for premature commercialization was a misnomer and considered that the
    claim is framed in only one previously recognized category of compensable
    economic loss, namely misrepresentation: at para. 73.

[27]

The motion judge concluded that the claim
    foundered because: the reference to the undefined term stakeholders as
    describing persons similarly situated to Darmar gave rise to the spectre of
    indeterminate liability to an indeterminate class, and it was illogical that
    Syngenta would give an undertaking it could not fulfill to a huge swath of the
    North American corn market; Syngenta could not be faulted for failing to
    prevent commingling when the statement of claim pled it was inevitable due to
    the interconnectedness of the North American industry and the peculiarities of
    genetically modified seeds;
[2]
and giving effect to the claim would elevate the importance of foreign
    approvals over domestic approvals, since the product had been approved for sale
    in Canada and the United States: at paras. 82-87. She held that these
    conclusions are equally dispositive of the
Competition Act
claim:
    para. 89.

[28]

In reaching her conclusions, the motion judge
    decided that she could not look at documents referred to in Darmars response
    to a demand for particulars: paras 18-19.

[29]

The motion judge also noted that a parallel
    claim in the United States had been allowed to proceed:
In re
Syngenta AG MIR 162 Corn Litigation
(2015)
, 131 F. Supp. 3d
    1177 (D. Kan.). However,

she had
    misgivings in relying on it because it was not clear that the test the U.S.
    court applied was the same or similar to that under r. 21, or that Canadian and
    American law in the area of pure economic loss claims were the same or similar:
    para. 63.

III.

analysis

A.

The Standard of Review

[30]

A motion judges determination that a claim
    discloses no reasonable cause of action is a determination of law reviewable on
    a standard of correctness:
Kang v
.
Sun Life Assurance Co. of
    Canada
, 2013 ONCA 118, 303 O.A.C. 64, at para. 27. However, a decision denying
    leave to amend is a discretionary one entitled to deference on appeal:
Mortazavi
    v
.
University of Toronto
, 2013 ONCA 655, leave to appeal refused,
    2014 S.C.C.A. No. 190, at para. 3.

B.

The Appellants Arguments

[31]

Darmar advances the following two main
    submissions:

A.

It was not plain and obvious that either branch of
    the negligence claim could not succeedthe claim is novel, the jurisprudence is
    still developing, and the decision in the parallel U.S. claim should have been treated
    as instructive.

B.

The
Competition Act
claim was
    improperly struck as the motion judge did not undertake any analysis of it.

[32]

Darmar adds the following two arguments which
    are important to the consideration of its main submissions: the motion judge
    erred in her failure to consider the documents in the response to the demand
    for particulars, and the motion judge failed to consider the impact of striking
    the claim on potential class members such as Quebec residents.

[33]

Finally, Darmar argues that the motion judge
    ought in any event to have granted it leave to amend the claim rather than
    striking it completely.

[34]

I first consider the arguments of Darmar about
    whose cause of action is to be considered, and then the arguments about what,
    beyond the statement of claim, is to be looked at, since they set a framework
    for consideration of the main submissions Darmar makes, to which I then turn.

C.

Darmar Must Have A Cause of Action

[35]

The argument that the motion judge failed to
    consider the effect of striking the claim on residents of Quebec posits that
    although Darmar is not a Quebec resident, there may be class members who are.
    Darmar argues that the restrictions on claims for pure economic loss, which are
    set up as an obstacle to Darmars ability to sue, exist in common law provinces
    only, and not under the law of Quebec.

[36]

Underlying Darmars submission is the broader premise
    that when a court considers whether a statement of claim in a proposed class
    action discloses a reasonable cause of action, the relevant question is whether
    any potential class member has a cause of action, rather than solely whether
    the representative plaintiff does.

[37]

I do not accept that submission. As this court
    noted in
Taylor v. Canada (Attorney General)
, 2012 ONCA 479, 111 O.R.
    (3d) 161, at para. 21:

...[T]he statement of claim must disclose that
    the representative plaintiff...has a reasonable cause of action against [the
    defendant]. In the context of a negligence claim, this requirement means that
    the pleadings must provide a basis upon which [the defendant] could be said to
    owe a private law duty of care to [the representative plaintiff]. It is not
    enough that on the pleadings some other member or members of the class may have
    a cause of action in negligence against [the defendant]

[38]

The adequacy of the statement of claim here must
    be assessed from the standpoint of whether it discloses that Darmar has a
    reasonable cause of action. If Darmar does not, it does not matter that other
    potential class members may.

D.

Looking Beyond the Statement of Claim

[39]

The motion judge refused to consider documents
    referred to in a response Darmar had delivered to Syngentas demand for
    particulars. She relied on
Pearson v. Inco Ltd.
, [2001] O.T.C. 919, 16
    C.P.C. (5th) 151. In that decision Nordheimer J. (as he then was) explained
    that a document, such as an agreement, referred to in a pleading may be looked
    at on a r. 21 motion, because the full terms of it are essentially incorporated
    into the pleading. But, he noted, the situation is different when a party
    attempts to pick out a statement in a document referred to in a response to
    demand for particulars, rely on the statement as though it was a material fact
    alleged in the pleading, and in that way fill a gap otherwise existing in the
    pleading.

[40]

In oral argument, Darmar further submitted that
    the motion judge, in refusing to look at the documents attached to the
    particulars, did not look at the particulars themselves.

[41]

Darmar argues that ignoring the particulars and
    the documents attached to them was wrong. In
Gaur v. Datta
, 2015 ONCA
    151, at para. 5, this court held that [i]n determining whether a cause of
    action is disclosed, particulars can be considered as part of the pleading. And
    in
Best v. Ranking
, 2015 ONSC 6269, Heeney J.
held
    that since a motion judge is entitled to consider any document specifically
    referred to and which forms an integral part of the statement of claim, 
[i]t stands to reason that the same principle would apply to
    documents referred to in a reply to demand for particulars:
at para. 126.

[42]

For its part, Syngenta also submits that
    particulars and documents provided by Darmar in response to Syngentas demand
    for particulars may be referred to on a motion by a defendant to strike a
    claim, but that such reference may only be made by the defendant, here Syngenta
    itself.

[43]

Consistently with their positions, in their
    facta and oral arguments before us, both parties referred to the particulars
    and certain documents referred to in them.

[44]

The question of what may be looked at beyond the
    statement of claim on a r. 21.01(1)(b) motion to strike is informed by the rule
    that no evidence is admissible on such a motion: r. 21.01(2)(b). Instead, the
    facts alleged in the pleading are the basis for the determination to be made.
    Treating a fact alleged in particulars of a pleading as being part of the
    pleading is not inconsistent with the prohibition on evidence. Particulars are
    not evidence:
Janssen-Ortho Inc.

v
.
Amgen Canada Inc.
(2005), 256 D.L.R. (4th) 407, at paras. 89-92. Nor is the rule offended by
    treating a document, incorporated by reference expressly or impliedly into the
    pleading, as part of the pleading itself, because documents incorporated this way
    are not evidence:
Web Offset Publications Ltd. v. Vickery
(1999), 43
    (O.R.) (3d) 802, leave to appeal refused, (2000) 43 O.R. (3d) 802, at p. 803. I
    agree that if a document is incorporated by reference into a response to a
    demand for particulars it can be treated as part of the particulars and
    therefore part of the pleading.

[45]

But this does not completely deal with the
    concern that was expressed in
Pearson
. It is one thing to treat a
    document as incorporated into particulars when it is clear that the particulars
    are asserting and incorporating the whole document, such as an agreement, but
    doing so in a summary fashion. It may be quite another to pick out one
    statement, but not others, from a different kind of document referred to in
    particulars, and treat that statement as a fact alleged in the particulars, and
    therefore in the pleading, while not treating other statements in the same
    document the same way. The situation becomes more complicated when a statement
    in a document is subject to interpretative issues that cannot be resolved on a r.
    21 motion.

[46]

We were taken to documents by both parties
    essentially for the purpose of emphasizing points in the pleading and
    particulars. Darmar pointed to documents that it asserted showed that Syngenta
    made the representations alleged about the timing of Chinese approval for the
    purpose of stopping the return of Agrisure seeds it had sold. Syngenta pointed
    to documents it said underscored that Syngentas representations were made for
    its own commercial purposes, that is, selling its product. But what we were
    pointed to in documents made those points no more obviously than already made in
    the pleading and particulars. And in some cases the documents contained other
    statements that would require interpretation beyond the purview of a r. 21
    motion to fully understand the statements in them to which the parties did direct
    us.

[47]

The issues here can be determined by reference
    to the pleading and particulars. Given that the documents appended to the particulars
    were advanced for points already appearing in the pleading and particulars, it
    is not necessary to further consider the propriety of using them:
Janssen-Ortho
,
    at para. 92.

[48]

I turn now to the main submissions that Darmar
    raises.

E.

The Relevance of Darmars Claim Being Novel

[49]

Darmar emphasizes that its claim is novel,
    stressing, as the key feature, that it is a claim about the behaviour of
    participants in an interconnected and interdependent market.

[50]

The assessment of whether Darmar has a
    reasonable cause of action takes place against the standard applicable to a r.
    21 motion. A claim will be struck if it has no reasonable prospect of success.
    Striking such claims is a valuable measure essential to fair and effective
    litigation. But it is a tool to be used with care, as the law is not static. It
    is not determinative that the law has not yet recognized the particular claim;
    the question is whether there is a reasonable prospect that the claim will
    succeed, erring on the side of permitting a novel but arguable claim to
    proceed:
R. v. Imperial Tobacco Canada Ltd.,
2011 SCC 42, [2011] 3
    S.C.R. 45, at paras. 17-21.

[51]

Darmar puts considerable emphasis on this latter
    point. The fact that a claim is novel is not a sufficient reason to strike it. But
    the fact that a claim is novel is also not a sufficient reason to allow it to
    proceed; a novel claim must also be arguable. There must be a reasonable
    prospect that the claim will succeed:
Imperial Tobacco
, at para. 21;
George
    Weston
, at para 75. Whether there is a reasonable prospect that a
    plaintiff will succeed in establishing that a duty of care exists on the facts
    as pleaded can, in an appropriate case, be assessed on a r. 21 motion.
Imperial
    Tobacco
is but one example of where that has occurred: at para. 60.

F.

Does Darmar have a reasonable prospect of
    establishing that Syngenta owed it a duty of care?

(a)

The Competing Positions

[52]

Darmar argues that its claims are arguable and
    should be allowed to proceed. It submits that the interconnected and
    interdependent nature of the corn market provide the necessary proximity. All
    corn producers are vulnerable to misrepresentations and to premature
    commercialization; the damage that occurred was reasonably foreseeable.
    Accordingly, the requirements for a duty of care are present. Indeterminate
    liability does not result even though large or extensive liability may. The
    duty should not be restricted on policy grounds, at least not at this stage of
    the proceedings.

[53]

Syngenta argues that the pleadings do not
    disclose a reasonable prospect that Darmar will succeed in establishing a duty
    of care for either aspect of its negligence claim. Syngentas representations
    about the timing of approval in China are expressly alleged to have been made
    for a specific purpose, namely to promote the sale of Agrisure, and any duty in
    respect of those representations could only have been owed to purchasers of
    Agrisure. Darmar did not rely on them for that purpose as it did not purchase
    Agrisure. Reliance by Darmar on Syngentas representations to purchase and
    plant other corn was for a purpose beyond the purpose of Syngentas representations,
    and therefore outside of any relationship of proximity that could give rise to
    a duty of care owed by Syngenta to Darmar to use reasonable care in making
    representations. Syngenta argues the same analysis should apply to the
    premature commercialization claim. The timing of commercialization could not
    involve a duty to non-purchasers of that product. Delimiting the duty in this way
    is necessary to avoid indeterminate liability, something the law in the area of
    pure economic loss seeks to avoid.

(b)

The Principles Applicable to Determining a Duty
    of Care in a Claim for Pure Economic Loss

[54]

In
Deloitte & Touche

v
.
Livent
    Inc. (Receiver of),
2017 SCC 63, [2017] 2 S.C.R. 855, the Supreme Court
    reviewed the approach applicable to determining the existence and extent of a
    duty of care in a claim for economic loss. I summarize the principles that are
    relevant to the analysis here.

·

The approach to determining a duty of care in
    cases of pure economic loss should be the same whether the claim is one for
    negligent misrepresentation or other cases of negligence.

·

The approach is the modified
Anns/Cooper
test, which addresses the question of whether a duty of care exists in two
    stages, first, whether a prima facie duty exists and if so, second, whether
    residual policy considerations should negate or limit the duty.

·

At the first stage the court considers: (i) proximity,
    namely, whether the parties are in such a close and direct relationship that it
    would be just and fair to impose a duty of care in law; and (ii) foreseeability
    of harm, namely, whether an injury to the plaintiff was a reasonably foreseeable
    consequence of negligence of the defendant. A properly conducted stage one
    analysis will rarely, if ever, find a
prima facie
duty of care that
    could give rise to indeterminate liability.

·

At the second stage the court considers whether,
    despite the reasonably foreseeable quality of the plaintiffs injury and the proximity
    of the relationship, the defendant should nonetheless be insulated from
    liability. This policy analysis is something which should be relied on narrowly,
    and rarely if ever due to concerns about indeterminate liability which ought
    not to persist after a proper stage one analysis.

see
Deloitte
, at paras. 16, 22-23, 25, 32 and 41-42.

[55]

I note here two points that arise from the
    foregoing. First, the approach described above applies to both of Darmars negligence
    claims  that in misrepresentation and that for premature commercialization:
    Lewis Klar, Duty of Care for Negligent Misrepresentationand Beyond? (2018)
    48 The Advocates Quarterly 235 at 238. However, this does not mean that applying
    the same approach will yield the same result for both of Darmars negligence
    claims. Second, the parties arguments about whether recognizing a duty in this
    case will or will not give rise to indeterminate liability are largely subsumed
    in the considerations that go into the question of whether a
prima facie
duty of care exists for either of the misrepresentation or premature
    commercialization claims in the first stage of the

analysis.

[56]

Because the two factors relating to the
    existence of a
prima facie
duty of care, proximity and foreseeability,
    are central to this appeal, I discuss them further below.

(i)

Proximity

[57]

In
Deloitte
, two routes to establishing
    proximity were discussed.

[58]

The first route is where a party seeks to base a finding of
    proximity upon a category established by prior case law to be proximate, or a
    category analogous thereto: para. 28.

As the motion judge noted, where a claim is for pure economic loss,
    courts have previously recognized certain categories of proximate
    relationships, one of which is in claims for negligent misrepresentation:
Design Services Ltd.

v.

Canada
, 2008 SCC 22,

[
2008] 1 S.C.R. 737, at paras. 30-31.

[59]

The second route is where a previously established proximate
    relationship cannot be found. This does not end the proximity inquiry; the
    existence of recognized categories does not foreclose finding new categories:
Martel
    Buildings Ltd. v. Canada
, 2000 SCC 60, [2000] 2 S.C.R. 860, at paras. 38-39.
    In such cases courts must undertake a full proximity analysis
. To determine whether the close and direct relationship which is
    the hallmark of the common law duty of care existscourts must examine all
    relevant factors arising from the
relationship

between the plaintiff and the defendantWhile
    these factors are diverse and depend on the circumstances of each casethis
    Court has maintained that they include expectations, representations,
    reliance, and the property or other interests involvedas well as any
    statutory obligations:
Deloitte
, at para. 29 (internal citations omitted, emphasis in the original).

[60]

A further point made in
Deloitte
is that it is not simply the existence
    of a
category
of proximate relationship that matters; the
scope
of that
    proximate relationship must also be considered. This is illustrated by the
    following passages from
Deloitte
, which make it clear that conduct that
    falls outside the scope of the proximate relationship falls outside the scope
    of the defendants duty of care
:

[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
    defendants undertaking and the plaintiffs reliance.
Where the
    defendant undertakes to provide a representation or service in circumstances
    that invite the plaintiffs reasonable reliance, the defendant becomes
    obligated to take reasonable care. And, the plaintiff has a right to rely on
    the defendants undertaking to do so (W. N. Hohfeld, Some Fundamental Legal
    Conceptions as Applied in Judicial Reasoning (1913), 23
Yale L.J.
16,
    at pp. 49-50). These corollary rights and obligations create a relationship of
    proximity (
Haig
, at p. 477;
Caparo Industries plc. v. Dickman
,

[1990] 1 All E.R. 568 (H.L.), at pp. 637-38;
Glanzer v. Shepard
,
    135 N.E. 275 (N.Y. 1922) at pp. 275-76;
Ultramares

Corp. v. Touche
,

174 N.E. 441 (N.Y. 1931), at pp. 445-46; E. J. Weinrib, The
    Disintegration of Duty (2006), 31
Adv. Q.
212,
    at p. 230).

[31]
Rights, like duties, are, however, not limitless. Any reliance on
    the part of the plaintiff which falls outside of the scope of the defendants
    undertaking of responsibility  that is, of the purpose for which the
    representation was made or the service was undertaken  necessarily falls
    outside the scope of the proximate relationship and, therefore, of the
    defendants duty of care
(Weinrib; A. Beever,
Rediscovering the Law of Negligence
(2007), at pp. 293-94). This principle, also referred to as the end and aim
    rule, properly limits liability on the basis that the defendant cannot be
    liable for a risk of injury against which he did not undertake to protect (
Glanzer
,
    at pp. 275 and 277;
Ultramares
, at pp. 445-46;
Haig
, at p.
    482). By assessing all relevant factors arising from the relationship between
    the parties, the proximity analysis not only determines the
existence
of a relationship of proximity, but also delineates the
scope
of the
    rights and duties which flow from that relationship. In short, it furnishes not
    only a principled basis upon which to draw the line between those to whom the
    duty is owed and those to whom it is not (
Fullowka
, at para. 70), but also a principled delineation of the scope of such
    duty, based upon the purpose for which the defendant undertakes responsibility.
    As we will explain, these principled limits are essential to determining the
    type of injury that was a reasonably foreseeable consequence of the defendants
    negligence. [Emphasis added.]

(ii)

Reasonable Foreseeability

[61]

As noted above, this part of the inquiry asks whether an injury to
    the plaintiff was a reasonably foreseeable consequence of negligence of the
    defendant:
Deloitte
, at para. 32. The scope of proximity also affects
    the analysis of reasonable foreseeability. As the court in
Deloitte
explained
    at para. 35:

Both the reasonableness and the reasonable
    foreseeability of the plaintiffs reliance will be determined by the
    relationship of proximity between the parties; a plaintiff has a right to rely
    on a defendant to act with reasonable care for the particular purpose of the
    defendants undertaking, and his or her reliance on the defendant for that
    purpose is therefore both reasonable and reasonably foreseeable.
But a plaintiff has no right to rely on a
    defendant for any

other purpose, because such reliance would fall
    outside the scope of the defendants undertaking.  As such, any consequent
    injury could not have been reasonably foreseeable.
[Emphasis added.]

G.

Application of the Principles
    to the Misrepresentation Claim

[62]

I begin with an analysis of the negligent misrepresentation claim. This
    claim involves alleged representations that Syngenta made about the importance
    of the Chinese corn market, the timing and substance of its application for
    approval of Agrisure in China, as well as about its ability to contain the infiltration
    of Agrisure to the North American corn supply. It is alleged such
    representations were misleading, negligently made by Syngenta, and relied on by
    Darmar.

[63]

But unless Darmar relied on the representations within the
scope
of a
    proximate relationship with Syngenta, Sygenta did not owe it a duty of care in
    respect of those representations. The scope of proximity and of reasonable foreseeability
    in a misrepresentation case is defined by the purpose for which the
    representation was made:
Deloitte
, at paras. 24, 31 and 34. In
Deloitte
,

that purpose was
    derived from the scope or purpose of the undertakings that were given to
    provide the representations there in issue.

[64]

Darmar argues that
Deloitte
is limited in its application to misrepresentations by auditors
    pursuant to specific prior undertakings to give representations. Because Darmars
    case does not involve a representation made by an auditor pursuant to an
    undertaking, it argues that the analysis in
Deloitte
does not apply. I do not accept that argument. In my view the
    principle set out in
Deloitte
, that the purpose for which a representation is given determines the
    scope of the proximate relationship, applies to the misrepresentation claim
    here.

[65]

In
Deloitte
, the
    undertaking the auditors gave, pursuant to which they performed their services
    and made representations, defined the purpose for which their representations
    were given and thus the scope of proximity and of reasonable foreseeability. However,
    nothing in
Deloitte
suggests that the purpose of the representations is any less important when
    they are not given pursuant to an undertaking, but the purpose nonetheless can be
    determined. The purpose of the representation remains determinative in the
    proximity and foreseeability analysis even where the representation is not the
    result of a specific prior undertaking to provide it. As long as the purpose
    for which the representation is given is clear, that purpose defines what is within
    and what is outside the scope of responsibility, that is, the duty of care
    relating to the representation.

[66]

As the majority stated in
Deloitte
,

the
purpose
of the
    representation is critical: para. 15 (emphasis in the original). The ultimate
    question is the purpose of the representation; [a]ny reliance on the part of
    the plaintiff which falls outside of the scope of the defendants undertaking
    of responsibility
that is, of the
    purpose for which the representation was made or the service was undertaken
necessarily falls outside the scope of the proximate relationship and,
    therefore, of the defendants duty of care (emphasis added): para. 31.

[67]

Here there is no allegation that Syngenta undertook to provide the specific
    representations it is alleged to have given and about which Darmar complains. However,
    the pleading and the particulars expressly state that the representations that
    Syngenta made about the timing of approvals in China, etc. were for the purpose
    of selling its own product. The statement of claim alleges that the
    representations were made in commercial advertising and/or promotion for MIR
    162 corn products, including Agrisure Viptera and Agrisure Duracade. The
    particulars make the point even more specifically. In them Darmar alleges that the
    representations it complains of were made by Syngenta for the purpose of
    facilitating, promoting and inducing the commercial sale of its products
    containing MIR 162 maize: para 1(l); and that representations were made [i]n order
    to encourage further sales and planting of Agrisure Viptera: para 1(o).

[68]

Darmars allegation is that it relied on the representations to plant
    corn, but not to purchase and plant Agrisure. Darmars allegation is therefore
    of reliance for a purpose beyond the purpose of the Syngentas representations.
    This is beyond the scope of any relationship of proximity. The purpose of the
    representation delineates the
scope
of the rights and duties which flow from that relationship:
Deloitte
,
at para. 31. And although reliance on the representation for a purpose
    other than the one for which it was given may lead to an injury, it does not
    lead to injury that would be reasonably foreseeable:
Deloitte
, at para. 36.

[69]

In my view, this result is not affected by Darmars allegations that
    the corn market is interdependent and interconnected. In
Deloitte
, the representations were made to
    the auditors own client, Livent. Yet Livent could not rely on the
    representations for a different purpose than that for which they were given.

[70]

It follows that even in an interconnected and interdependent market, a
    representors duty does not extend to reliance on its representations by a
    market member for purposes other than those for which the representations were
    made. Accordingly, on the facts alleged by Darmar, its reliance on Syngentas
    representations was outside the scope of any proximity between it and Syngenta;
    reliance by Darmar was for purposes other than that for which the representations
    were made. Nor could injury resulting from such reliance be reasonably foreseeable.
    Darmar has no reasonable prospect of establishing a duty of care to support its
    misrepresentation claims.

[71]

In light of those conclusions it is unnecessary to
    consider Syngentas argument that the timing of Darmars planting of corn does
    not indicate reliance on Syngentas representations. For the reasons above, there
    is no reasonable prospect that the claim in negligent misrepresentation could
    succeed. The motion judge reached the correct result in respect of this claim.

H.

Application of the Principles to the Premature
    Commercialization Claim

[72]

I reach a different result with respect to the premature
    commercialization claim. I disagree with the motion judges characterization of
    the premature commercialization claim as a misnomer. It was not determinative
    that the claim does not fall within a category of claim for pure economic loss
    which has previously been recognized. In my view the motion judge did not
    correctly consider this aspect of Darmars claim because she did not consider
    whether a full proximity analysis and a consideration of reasonable
    foreseeability here would reveal a reasonable prospect of success in
    establishing a duty of care sufficient to support the premature
    commercialization claim.

[73]

I also do not accept Syngentas argument that this claim is so closely
    related to the misrepresentation claim as to stand or fall with it. The
    premature commercialization claim is based on alleged facts that do not
    completely overlap with those on which the misrepresentation claim is brought,
    and it is therefore analytically distinct. Darmar could have been damaged by
    the commercialization of Agrisure and its timing even if no misrepresentations
    had been made that it could rely upon.

[74]

The claim for premature commercialization requires the establishment of
    a duty of care that is somewhat different than the duty that would support its misrepresentation
    claims. Darmar characterizes the duty it contends for as a duty of reasonable
    care with respect to the timing, manner, and scope of Syngentas commercialization
    of its Viptera and Duracade products, adopting that description from the U.S.
    Decision.

[75]

The U.S. Decision held that the assertion of such a duty passed the test
    at a pleadings stage of a claim that was plausible and that rose above a
    speculative level: at p. 1187. Darmar concedes that the law the U.S. Court
    applied is not identical to Canadian law but argues that, especially as it concerns
    a novel claim at the pleading stage, the decision of the U.S. Court is
    instructive. I agree that some guidance can be gleaned from the U.S. Decision.
    Although the U.S. Court did not precisely apply the
Anns/Cooper
test, what it did apply bears some
    similarity to it. It cited as relevant factors, among others, the foreseeability
    of injury by Syngenta, and the existence of an interconnected market that gave
    rise to expectations among growers and sellers that they would act at least in
    part for the mutual benefit of all: at p. 1189. The U.S. Court was not
    persuaded that policy considerations precluded the recognition of a duty: at p.
    1189.

[76]

More importantly though, there are several factors that Darmar pleads that,
    under the
Anns/Cooper
test, as it has been applied in this court, arguably support a relationship of
    proximity:

(a)

Syngenta gave an
    undertaking in response to concerns from industry associations
.
The industry associations to which
    Syngenta belonged were allegedly formed for the purpose of protecting the
    public and participants in the corn market. Those industry associations had
    warned Syngenta of harm in the form of trade disruptions if a product were
    commercialized without appropriate steps toward global approvals. In response,
    Syngenta is alleged to have undertaken not to cause harm to the corn market by
    commercializing a product with MIR 162 without global approvals. It is not
    alleged that this undertaking was given for the limited purpose of inducing
    customers to buy Agrisure, but rather to respond to concerns of those
    interested in the protection of the public and corn market participants. Darmar
    alleges it relied on that undertaking, and alleges it had an expectation based
    on that undertaking that premature commercialization would not occur. Although
    a bare allegation of
reasonable
reliance or expectations may qualify as a conclusory statement of
    fact, here the reliance and expectations are alleged to have arisen from a
    statement made in response to concerns from industry associations about the
    prospect of the very harm that is alleged to have occurred here. Some factual
    basis for the conclusions is therefore present. Reliance and expectations are important
    factors in a full proximity analysis:
Deloitte
, at para. 29.

(b)

The
    interconnectedness and interdependency of the corn market.

Syngenta is alleged to have known that
    upon commercialization its genetically modified product would impart its
    characteristics on all corn so that even corn not purchased from Syngenta would
    be vulnerable to be treated by export markets in the same way as Syngentas
    products. Proximity is about the nature of the relationship between plaintiff
    and defendant. The alleged fact that Syngentas product would inevitably
    commingle with all other producers corn, including Darmars, imparting traits
    that affect the markets in which it could be sold, and that Syngenta knew this,
    arguably put Syngenta in a relationship with Darmar, even if Darmar did not
    purchase Agrisure.

[77]

The conclusion that these facts could arguably support a finding of
    the requisite proximity is supported by this courts decision in
Sauer v.
    Canada (Attorney General)
, 2007 ONCA
    454, 225 O.A.C. 143
. In
Sauer
, the claim alleged that a
    manufacturer, who supplied seed contaminated with mad cow disease to an
    Alberta farmer resulting in the closing of foreign markets to all Canadian
    cattle and beef products, owed a duty of care to an Ontario farmer who had not
    purchased the defendants feed.

This
    court upheld a decision allowing that claim to proceed.

[78]

Goudge J.A. noted that the relationship between, on the one hand, a
    defendant manufacturer of feed, and on the other, the plaintiff Ontario farmer
    who did not purchase the defendants feed, fell outside of any previously
    recognized category of relationship in which proximity was established. But applying
    the
Anns/Cooper
test, he
    found it was not plain and obvious that proximity, and therefore a duty of care
    could not be established. The defendant and plaintiff were part of an
    integrated industry, the feed component was regulated nationally in the
    interests of the public and participants in the industry, and most
    importantly the economic effects of a single contaminated cow would be shared
    by all cattle farmers because foreign sales would be eliminated for all: at
    paras. 35-39. These factors are similar to what Darmar here alleges.

[79]

Goudge J.A. also noted, citing
Donoghue v. Stevenson
, [1932]
    A.C. 562, at p. 596, that the nature of the product soldits dangerousness or
    lack of itis to be taken into account in determining the range of persons to
    whom a duty was owed:
Sauer
,

at para. 43.
    Syngenta seeks to distinguish
Sauer
on the basis that the
    manufacturers feed was contaminated with a disease and was therefore dangerous,
    while here Syngentas product had regulatory approval for sale in North America
    and there is no allegation either it or the genetic trait it imparted to other
    corn was unsafe.

[80]

I am not satisfied that this distinguishes
Sauer
so as to render Darmars claim one with no
    reasonable prospect of success. In
Sauer
, the plaintiff did not buy the defendants feed, and neither that feed
    or the diseased cow of the Alberta farmer interacted with the plaintiffs
    cattle. The only negative effect the plaintiff in
Sauer
would suffer from the provision of contaminated feed
    to others was the economic effect of the closing of the foreign markets to all
    Canadian cattle. The defendants product in
Sauer
was dangerous to the plaintiff in the sense that it could have that
    effect. In this case, Darmars corn was imbued with a trait by Syngentas
    product, but more importantly, the alleged effect of prematurely
    commercializing Agrisure, when it would commingle with other corn and impart
    that trait, was exactly the kind of effect present in
Sauer
the closing of foreign markets. Syngentas
    product was dangerous to Darmar, a non-purchaser of it, in the same way as the
    defendants feed was dangerous to the plaintiff, a non-purchaser of it, in
Sauer
.

[81]

The range of persons to whom a duty is owed (in other words the
    existence and scope of a relationship of proximity) was determined, in
Sauer
, to arguably include cattle farmers
    who did not purchase the defendants feed when that feed contained an attribute
    that could affect the plaintiff and its product by closing foreign markets with
    consequential economic effects. Applying the same analysis, Syngentas product
    contained and imparted an attribute that would affect Darmar and its product in
    the same fashion by causing the closing of an important foreign market with
    consequential economic effects. Darmar would arguably fall within the range of
    persons to whom a duty is owed.

[82]

In the proximity analysis, the key question is whether it is just and
    fair to impose a duty of care on the defendant given the relationship. In my
    view, especially in light of
Sauer
, it cannot be concluded at this stage that there is no reasonable
    prospect that Darmar could succeed in establishing that it would be just and fair
    to impose a duty of care on Syngenta.

[83]

Foreseeability of the type of injury that occurred is expressly alleged.
    If Darmar is within the range of persons to whom a duty is owed, or in other
    words, if a relationship of proximity exists, nothing alleged takes Darmar
    outside the scope of the relationship of proximity. The injury that was
    allegedly foreseeable to Syngenta would thus be reasonably foreseeable. A
prima facie
duty of care therefore
    arguably existed.

[84]

Syngenta relies on
Hoffman v. Monsanto
, 2005 SKQB 225, 15 C.E.L.R. (3d) 42, affd

2007 SKCA 47, 284 D.L.R. (4th) 190 to counter this conclusion. In my
    view
Monsanto
, which was
    distinguished in
Sauer
,
    does not assist Syngenta at this stage.

[85]

In
Monsanto
, one
    ground of the claim in a proposed class action was that the defendant, a
    producer of genetically modified canola, had undertaken to develop export rules
    to ensure its product did not enter the export market due to its lack of
    approval in Japan and Europe. The claim alleged that the defendant abandoned
    those rules negligently leading to the loss of the European market to the
    plaintiff class of organic canola farmers, with whose products the defendants
    product intermingled depriving them of their organic status. The court determined
    that this claim was not a reasonable cause of action within the meaning of
    Saskatchewans class proceedings legislation because: (i) it was inconsistent
    with the claims principal allegations on the basis of which the export rules
    would have made no difference to whether the plaintiffs suffered harm; and (ii)
    the defendants alleged undertaking was gratuitous and was not alleged to have
    been relied on by or even known to the plaintiffs: at paras. 83-84 and 88.

[86]

This case is different from
Monsanto
. First, there is no inconsistency with Darmars principal allegation. Second,
    unlike in
Monsanto
where
    the plaintiffs were neither aware of nor relied on the defendants undertaking,
    Darmar alleges that it was aware of and reasonably relied on the undertaking by
    Syngenta. Moreover, Darmar pleads not only the undertaking, but other facts,
    including the interdependency and interconnectedness of the corn market, in
    support of its claim of a duty of care. As well, as Goudge J.A. noted in
Sauer
in distinguishing
Monsanto
, the test the Saskatchewan court applied
    in determining whether there was a reasonable cause of action for the purpose
    of Saskatchewan class proceedings legislation was different from the test for
    striking a pleading under r. 21.01(1)(b):
Sauer
,

at para. 42.

[87]

The arguments of Syngenta that indeterminate liability concerns should prevent
    the finding of a duty of care not to negligently commercialize prematurely,
    either at the first stage of the
Anns/Cooper
test
or as a residual policy concern at the
    second stage, are not persuasive at this point. In
Deloitte
, the majority said that where a first stage analysis results in a
    finding of a
prima facie
duty of care it will rarely be negated by indeterminate liability concerns at
    the second stage, because the finding of a proximate relationship and of
    reasonable foreseeability of injury
determine

in
    important ways the very matters that must be
indeterminate
for the concerns to
    persist: at para. 44. And even if indeterminacy concerns do persist after a
    first stage analysis, they will not necessarily negate a duty of care: at para.
    45.

[88]

Courts should be reluctant to determine at the pleadings phase of an
    action that indeterminate liability concerns justify negating a duty of care:
Sauer
, at para. 45. Syngenta is alleged to
    have undertaken not to harm the corn market by prematurely commercializing its
    product, after receiving warning of the very risks to market
    participantscommingling and trade disruptionsthat are alleged to have
    actually occurred and to have harmed Darmar. At the pleading phase of this action
    Darmar has a reasonable prospect of showing that a duty of care arose that did
    not give rise to indeterminacy concerns, or that even if it did, any
    indeterminacy arose from the risk which Syngenta undertook to protect the
    industry against and thus may justly and fairly result in liability:
Deloitte
,
at para. 45.

I.

The
Competition Act
Claim

[89]

Darmar argues that the motion judge erred in reaching no conclusion and
    providing no reason why the
Competition Act
claim could not proceed, other than stating that her conclusions on
    the negligence claims disposed of the
Competition
    Act
claim as well. Darmar argues the
Competition Act
creates a distinct cause
    of action.

[90]

The statement of claim does not identify why a
Competition Act

cause
    of action under s. 36 would apply here. Indeed s. 36, which provides a civil
    cause of action in some circumstances, is not mentioned. The only section
    mentioned is s. 52, which does not itself create a civil cause of action.

[91]

Nor did Darmar, in its factum or oral argument, outline how the
    elements of a s. 36 cause of action are met on the facts alleged, let alone in
    a manner distinct from the basis for its negligent misrepresentation claims.
    Accordingly, I would not interfere with the motion judges decision in relation
    to the
Competition Act
claim.

J.

Failure to Grant Leave to Amend

[92]

The motion judges decision not to grant leave to amend the claim,
    which had already been amended twice before the matter came before her, was a
    discretionary one subject to deference from this court. Even though she erred
    in striking the premature commercialization claim, I am not persuaded there is
    any basis to interfere with her decision not to allow the claim to be amended in
    so far as it pertains to the misrepresentation and
Competition
    Act
claims.


IV.

Conclusion

[93]

I
would allow the appeal in part and vary the
    order below to reinstate the claim for premature commercialization and to limit
    the claims struck out to the misrepresentation and
Competition
    Act
claims. I would otherwise dismiss the appeal.
    Success having been divided, each party should bear their own costs of the
    appeal and in the court below.

Released: BZ October 4, 2019


B. Zarnett J.A.
I agree.
Grant Huscroft J.A.
I agree. Gary Trotter J.A.





[1]
The
    corn seed originally sold was called Agrisure Viptera. For the 2014 crop year,
    Syngenta also sold a type of corn seed known as Agrisure Duracade to North
    American corn growers. It also contained MIR 162 and when it was sold in Canada
    it had not been approved in China. It was withdrawn from the Canadian market in
    March 2014.



[2]

Darmar no longer presses a claim based on negligence in not
    preventing commingling.


