



COURT OF APPEAL FOR ONTARIO

CITATION: Subway Franchise Systems of
    Canada, Inc. v. Canadian Broadcasting Corporation, 2021 ONCA 25

DATE: 20210118

DOCKET: C67850

Brown, Zarnett and Thorburn
    JJ.A.

BETWEEN

Subway Franchise Systems of
    Canada, Inc., Subway IP Inc. and
Doctors Associates Inc.

Plaintiffs (Respondents)

and

Canadian Broadcasting
    Corporation, Charlsie Agro, Kathleen Coughlin,
Eric Szeto and
Trent University

Defendants (
Appellant
)

Alexander D. Pettingill, Joyce Tam and
    Natasha OToole, for the appellant

William C. McDowell, Sana Halwani and
    Paul-Erik Veel and
Brendan F. Morrison, for the respondents

Heard: June 26, 2020 by video conference, with
    supplementary submissions in writing

On appeal from the order of Justice
    Edward M. Morgan of the Superior Court of Justice, dated November 22, 2019,
    with reasons reported at 2019 ONSC 6758, and from the costs decision, dated
    March 3, 2020, with reasons reported at 2020 ONSC 1263.

Zarnett J.A.:

I.

INTRODUCTION

[1]

When does a claim that is framed in negligence
    fall within the scrutiny of Ontarios anti-SLAPP (Strategic Litigation Against
    Public Participation) legislation in s. 137.1 of the
Courts of Justice Act
,
    R.S.O. 1990, c. C.43 (
CJA
)? When will such a claim pass the
    legislations substantial merit hurdle necessary to allow it to continue? This
    appeal raises those questions.

[2]

On February 24, 2017, the Canadian Broadcasting
    Corporation (CBC) aired an episode of its television show, 
Marketplace
.
    It featured an investigative report comparing the contents of chicken
    sandwiches sold by five fast food chains in Canada. The chicken sandwiches sold
    by the respondents (Subway) were reported to be made of only slightly more
    than 50% chicken, substantially below the chicken content of sandwiches sold
    by the other chains.

[3]

Prior to the
Marketplace
broadcast, CBC
    contracted with a laboratory of the appellant, Trent University (Trent), to
    test the chicken content of the sandwiches. The results of that testing were,
    in part, the basis for the statements made on the broadcast. Trent personnel also
    participated in the broadcast.

[4]

Subway, alleging that the statements on the
    broadcast were false and that the testing by Trent was inaccurate and
    carelessly done, launched an action against CBC and Trent. The action against
    CBC is exclusively for defamation. As against Trent, the lawsuit asserts two
    causes of actiondefamation and negligence.

[5]

Trent moved under s. 137.1 of the
CJA
to dismiss the part of Subways action that made a claim against Trent in
    negligence.
[1]
Section 137.1 contemplates that if a defendant satisfies an initial threshold
    of showing that the claim against it arises out of an expression it made on a
    matter related to the public interest, the claim is to be dismissed unless the
    plaintiff satisfies certain requirements under s. 137.1(4), including showing
    that there are grounds to believe the claim has substantial merit.

[6]

Trents motion failed. The motion judge held
    that the negligence claim did not arise from an expression by Trent on a matter
    related to the public interest, since the negligence claim was focussed on the
    quality of the testing, rather than the communication of the results. As the
    initial threshold for a s. 137.1 motion was not met, the negligence claim could
    proceed. In any event, applying the standard that would apply on a motion to
    strike under r. 21 of the
Rules of Civil Procedure
, R.R.O. 1990, Reg.
    194, the motion judge held that the negligence claim had sufficient merit to
    proceed and the harm suffered by Subway (which the continuance of the claim
    sought to remedy) outweighed the public interest in protecting Trents
    expression.

[7]

The motion judge ordered Trent to pay costs of
    its unsuccessful motion to Subway; since the motion had not passed the initial
    threshold, the policy underlying the presumptive no costs for a failed motion
    in s. 137.1(8) was inapplicable.

[8]

Trent appeals the dismissal of its motion and
    the costs it was ordered to pay. The decision on its appeal was deferred until
    after the Supreme Court of Canada released, and the parties had the opportunity
    to make submissions on, certain decisions dealing with s. 137.1 of the
CJA
and with the principles governing the duty of care analysis in cases of
    negligently caused pure economic loss.
[2]

[9]

For the reasons that follow, I would allow
    Trents appeal from the dismissal of its motion. With the benefit of the
    Supreme Courts recent jurisprudence, I conclude that Trent satisfied the
    initial threshold of showing that the negligence claim arose from an expression
    on a matter related to the public interest. I also conclude that Subway has not
    satisfied its burden of showing that the negligence claim meets the substantial
    merit requirement under s. 137.1(4). Subway does not have a real prospect of
    success on the issue of whether a relationship of proximity and thus a duty of
    care existed necessary to support Subways claim for pure economic loss against
    Trent. Subways negligence claim ought to have been dismissed. The motion judge
    erred in concluding otherwise.

[10]

Given those conclusions, the motion judges
    costs order must also be set aside.


II.

BACKGROUND

(1)

The Factual Context

[11]

The factual background common to both the
    present appeal and the CBC appeal is set out in the reasons in the CBC appeal. However,
    for ease of understanding of what follows, I highlight certain facts about the
    relationship between Trent and Subway.

[12]

Trent was retained by CBC to test samples of
    Subways sandwiches, as well as those of its competitors. It intended to be
    paid by CBC for its services. This was not academic research.

[13]

Neither Trent nor CBC had a contract or any
    pre-existing relationship with Subway.

[14]

Trent knew that CBC wanted the testing for a
    media broadcast and that CBC would report the results of Trents testing on the
    broadcast. Trent placed no restrictions on what use CBC could make of its test
    results.

[15]

Trent knew that the Subway samples it obtained,
    tested and reported on were Subway products. A Trent representative accompanied
    CBCs representative to purchase chicken sandwiches from a Subway restaurant,
    and purchased additional sandwiches, without CBC, in order to test them.

[16]

After Trent provided CBC with its testing
    results, CBC advised Subway that an accredited lab had conducted testing that
    showed Subways chicken sandwiches were 50% soy. It does not appear that Subway
    was aware that the lab was Trent. Subways response to CBC was that its chicken
    sandwiches contained 1% or less soy, and CBC relayed this response to Trent.
    Trent advised CBC that Subways claim was not reasonable.

[17]

Trent employees appeared on the broadcast to
    discuss the results of their testing.

(2)

The Motion Below

[18]

As noted above, Subways action against Trent
    asserted two causes of action, defamation and negligence.

[19]

Trent did not move, as CBC did, under s. 137.1
    of the
CJA
, to dismiss Subways action against it for defamation. It
    did so only in respect of the negligence claim. Accordingly, the action for
    defamation against Trent will continue, regardless of the fate, under s. 137.1
    of the
CJA
, of the negligence cause of action.

[20]

Trent moved to dismiss the negligence claim on
    the basis that it arose from an expression by Trent on a matter related to the
    public interest, and that Subway could not meet the burden that falls upon the
    plaintiff advancing such a claim to avoid it being dismissed. That burden,
    under s. 137.1(4) of the
CJA
, has a merits component (the existence of
    grounds to believe the action has substantial merit and that the defendant
    lacks a valid defence) and a public interest component (grounds to believe the
    public interest in allowing the claim to continue outweighs the public interest
    in protecting the expression).

[21]

It is important to appreciate what was and was
    not in issue on Trents s. 137.1 motion below, in order to appreciate the
    issues on this appeal.

[22]

First, Trents motion to dismiss the negligence
    claim under s. 137.1 was a targeted one, in the sense that it only put in issue
    a subset of the matters that could be raised on such a motion. Clearly in issue
    was the threshold requirement as to whether the negligence claim arose from an
    expression related to a matter of public interest. But if the motion passed
    that hurdle, Trent relied on limited grounds to dispute Subways position that
    the negligence claim should be allowed to continue.

[23]

Specifically, Trent disputed that the negligence
    claim passed the substantial merit hurdle under s. 137.1(4) only on the bases that
    no duty of care was owed to Subway and that the negligence claim was
    impermissible because it was a dressed-up defamation claim. Trent expressly
    did not contest that Subway could satisfy the court, for the purpose of the s.
    137.1
CJA
motion, that Trents testing was inaccurate and fell below
    the standard of care of a testing laboratory. Trent led no evidence to
    challenge Subways on this issue. Nor did Trent contest that Subway could show
    that Trent otherwise had no valid defence to the negligence claim,
assuming
Trent owed a duty of care to Subway and that a negligence action was
    permissible.
[3]
Additionally, Trent did not contest that Subway could satisfy the public
    interest hurdle; it conceded that the harm sustained by Subway outweighed the
    public interest in protecting the expression.

[24]

Second, Subway did not contest that the subject
    of the
Marketplace

broadcast, namely the chicken content of
    sandwiches sold by Subway and other fast food chains, relates to a matter of
    public interest. However, the parties did not agree about the effect of this as
    it related to the applicability of s. 137.1 of the
CJA
to the
    negligence claim against Trent.

(3)

The Motion Judges Decision

[25]

The motion judge dismissed Trents s. 137.1
    motion. His primary reason was his finding that Trent did not satisfy the
    initial threshold for such a motion, which required Trent to show that the
    proceeding sought to be dismissed arose from an expression made by the
    defendant that relates to a matter of public interest: s. 137.1(3). He held
    that, insofar as Subways claim against Trent was for negligence, the claim was
    not one that arose from an expression; the action for negligence was about the
    quality of Trents laboratory testing, standards, and methodology, not the
    reporting of the results.

[26]

Since

Trents motion did not satisfy the
    initial threshold, its motion to dismiss the negligence claim had to fail. The
    motion judge observed that it was not strictly necessary to go on to consider
    whether Subway satisfied the factors under s. 137.1(4)(a) and (b) that allow a
    proceeding to continue even if it arose from an expression related to a matter
    of public interest.

[27]

However, the motion judge did briefly comment on
    the substantial merit issue. He reviewed the arguments about Subways
    negligence claim, including whether a negligence claim is permissible if there
    is a concurrent defamation claim, and whether Trent owed a duty of care to
    Subway that could support a negligence claim. He observed that case law had
    been cited supporting both sides positions on these issues and that the law
    concerning duty of care was in a state of flux. He referred to the standard
    that would have applied had Trent moved to strike the negligence claim under r.
    21 of the
Rules of Civil Procedure
whether the claim was arguableand
    he drew from this that uncertainty alone is a reason not to dismiss a claim at
    a preliminary stage. He concluded that the negligence claim had sufficient
    merit to sustain it at this stage.

[28]

Although Trent did not contest that Subway
    satisfied the other s. 137.1(4) criteria, the motion judge briefly addressed
    them. He noted that Trent had put forward no evidence of a valid defence of its
    laboratory methodology, and that [t]he balance of harm is in Subways favour
    since there is nothing to balance its evidence against. There is no public
    interest in the s. 137.1 sense in the way that Trent conducted its lab tests,
    and so any evidence of harm suffered by Subway is more than sufficient for
    present purposes. To put it simply, anything outweighs nothing.

[29]

On the question of costs, the motion judge recognized
    that if a motion under s. 137.1 fails, the presumptive rule is no costs, unless
    the judge considers a different order to be appropriate: s. 137.1(8). The
    motion judge exercised his discretion to depart from the presumptive rule and
    ordered Trent to pay Subway $222,000 in costs. He held that since Trent did not
    meet the relatively low threshold of showing the proceeding it sought to
    dismiss arose from an expression on a matter of public interest, the policies
    underlying s. 137.1 and its no costs provision were inapplicable.

III.

ANALYSIS

(1)

The Statutory Framework

[30]

Section 137.1 of the
CJA
provides, in
    relevant part, as follows:

137.1
(1) The purposes of this section and sections 137.2 to 137.5 are,

(a) to encourage individuals to
    express themselves on matters of public interest;

(b) to promote broad
    participation in debates on matters of public interest

(c) to discourage the use of
    litigation as a means of unduly limiting expression on matters of public
    interest; and

(d) to reduce the risk that
    participation by the public in debates on matters of public interest will be
    hampered by fear of legal action. 2015, c. 23, s. 3.

(2) In this section,

expression means any
    communication, regardless of whether it is made verbally or non-verbally,
    whether it is made publicly or privately, and whether or not it is directed at
    a person or entity. 2015, c. 23, s. 3.

(3) On a motion by a person against
    whom a proceeding is brought, a judge shall, subject to subsection (4), dismiss
    the proceeding against the person if the person satisfies the judge that the
    proceeding arises from an expression made by the person that relates to a
    matter of public interest. 2015, c. 23, s. 3.

(4) A judge shall not dismiss a
    proceeding under subsection (3) if the responding party satisfies the judge
    that,

(a) there are grounds to believe
    that,

(i) the proceeding
    has substantial merit, and

(ii)
    the moving party has no valid defence in the proceeding; and

(b) the harm likely to be or have
    been suffered by the responding party as a result of the moving partys
    expression is sufficiently serious that the public interest in permitting the
    proceeding to continue outweighs the public interest in protecting that
    expression. 2015, c. 23, s. 3.

(2)

The Initial ThresholdIs the Negligence Claim
    one that Arises from an Expression that Relates to a Matter of Public Interest?

[31]

The gateway to s. 137.1 is the requirement, in
    s. 137.1(3), that the defendant show that the proceeding against it arises from
    an expression it made that relates to a matter of public interest. The
    provisions that contemplate dismissal of the proceeding unless the plaintiff
    satisfies certain criteria are not engaged unless this threshold requirement is
    met. This is a threshold burden, which means that it is necessary for the
    moving party to meet this burden in order to even proceed to s. 137.1(4) for
    the ultimate determination of whether the proceeding should be dismissed:
Pointes
    (SCC)
, at para. 21.

[32]

The role played by the threshold requirement is
    easily understood in light of the purposes set out in s. 137.1(1). These
    include the encouragement of persons to express themselves on matters of public
    interest, and the discouragement of the use of litigation to unduly limit such
    expression. Where a defendant, on a motion under s. 137.1, meets the threshold
    requirement, it has shown two things: (i) the proceeding arose from the
    defendant having done what the law seeks to encourageexpress itself on a
    matter of public interest, and (ii) the proceeding might be litigation being
    used to unduly limit such expression.

[33]

But if the defendant does not meet the threshold
    requirement, because it does not show that the claim arises from such an
    expression, none of the purposes enumerated in s. 137.1(1) are engaged. The
    provisions requiring dismissal of the proceeding, unless the plaintiff can
    satisfy the criteria set out in s. 137.1(4)(a) and (b), are inapplicable.

[34]

Most cases to date that have involved
    significant disputes about whether the threshold requirement was met have been
    about whether the
content
of the expression from which the proceeding
    arose related to a matter of public interest. Here, the primary issue is about
    whether the proceeding
arose from an expression
.

[35]

The motion judge did not view the negligence
    claim as having arisen from an expression, as he considered s. 137.1 to be
    aimed at what he called expressive torts, like defamation, not other types of
    wrongdoing. He stated that 
the
    terms of
s. 137.1
of the
CJA
are an awkward
    fit for claims which are framed other than in defamation-related torts such as
    libel and slander. The legislative purpose is to protect free and democratic
    expression, not conduct at large, and the statute is correspondingly designed
    to address expressive torts, not wrongdoing at large. He distinguished the
    claim made against Trent for defamation for publishing inaccurate test results,
    from the negligence claim which he viewed as focussed on holding the
    laboratory to the appropriate scientific and professional standard, not on
    whether or how they published the results. The site of the negligence claim
    was how Trent performed its testing, not the way the results were communicated.

[36]

Trent argues that the motion judge erred in
    coming to this conclusion. It submits that s. 137.1 is not limited to
    defamation claims, and that an expression is an integral part of this
    negligence claim. A successful action in negligence requires the plaintiff to
    show, among other things, that it was owed a duty of care, that the defendant breached
    the duty, and that the plaintiff sustained damages. It was only the
    communication or expression of the test results, by Trent to CBC, and by CBC
    and Trent personnel on the
Marketplace
broadcast to a viewing audience,
    that caused any damage to Subway and thus crystallized the claim. Unpublished
    research cannot give rise to a claim by the subject of the research as no
    damages can flow from unpublished negligent research:
Fulton v. Globe &
    Mail
(1997), 207 A.R. 374 (Alta. Q.B.), at paras. 18-19.

[37]

Subway, on the other hand, argues that it is not
    sufficient, for a claim to meet the threshold requirement, that it involve some
    expressive content. To so hold would sweep many types of claim within the
    anti-SLAPP provisions which, Subway submits, were not intended to be covered.
    Expression must be the gravamen of the claim. The gravamen of this negligence
    claim, it submits, is not an expression but how Trent conducted the testing.

[38]

I agree
    with Trent that the motion judge erred in reaching the conclusion that the
    claim in negligence did not arise from an expression that related to a matter
    of public interest. It was an error of law to view s. 137.1 as aimed at a
    limited category of torts like defamation. It was also an error of law not to
    appreciate the centrality of expression to this negligence claim.

[39]

In
Pointes
, the claim was not for defamation; it alleged that the defendant had
    breached a contract by making certain statements and offering certain opinions
    at an Ontario Municipal Board hearing. Section 137.1 was held to apply to that
    claim. As this court explained in
Pointes (ONCA)
, the requirement that the
    proceeding arise from an expression is met where the expression grounds the
    claim. Putting it another way, this court considered the requirement to have
    been met because the claim targets the expression: at paras. 52, 103.

[40]

In
Pointes (SCC)
,
Côté
J. discussed the
    proper approach to determine when a proceeding arises from an expression:

Second, what does arises from require? By
    definition, arises from implies an element of causality. In other words, if a
    proceeding arises from an expression, this must mean that the expression is
    somehow causally related to the proceeding. What is crucial is that many
    different types of proceedings can arise from an expression, and the
    legislative background of s. 137.1 indicates that a broad and liberal
    interpretation is warranted at the s. 137.1(3) stage of the framework.
    This means that proceedings arising from an expression are not limited to
    those directly concerned with expression, such as defamation suits. A
    good example of a type of proceeding that is not a defamation suit, but that
    nonetheless arises from an expression and falls within the ambit of
    s. 137.1(3), is the underlying proceeding here, which is a breach of
    contract claim premised on an expression made by the defendant [Footnote
    omitted.]: at para. 24.

Returning later in her reasons to the
    precise claim in
Pointes (SCC)
,
Côté
J. found it
    to pass the threshold because: It is a breach of contract action premised on
    an alleged breach of the Agreement resulting from Mr. Gagnons testimony at the
    OMB. There is thus a clear nexus between Mr. Gagnons expression and the
    underlying proceeding: at para. 102.

[41]

The negligence claim here arises from an
    expression, in the sense described both by this court and by the Supreme Court
    in
Pointes
. The expression is causally connected to the claim; there
    is a nexus between them; the expression grounds the claim; and the claim
    targets the expression. The expression or communication of or about the test
    results is integral to all aspects of Subways negligence claim: the existence
    of a duty of care, whether the duty was breached, and damages.

[42]

In pleading that Trent owed it a duty of care,
    Subway alleges that Trent knew that its testing was being conducted 
for the
    purpose of broadcasting conclusions about [Subways] products
 (emphasis
    added).

[43]

In pleading that Trent breached its duty to
    Subway, Subway pleads that Trent knew or ought to have known that its
[t]ests
    would be reported and/or relied on
, that 
Trent reported conclusions to
    CBC
that were materially different from the conclusions it made, that
    Trents results 
did not support the conclusions reported to the CBC
 or
    the viewing audience, and that 
test results were not explained with the
    appropriate caveats to CBC
 or the viewing audience (emphasis added).

[44]

In pleading damages, Subway alleges that Trents
    
carrying out the testing of SUBWAY® products and/or making statements to
    the CBC
, caused damage to their reputation and brand (emphasis added). No
    basis is suggested on which Subway is said to have suffered damages from
    Trents testing, other than by virtue of communication of or about the results.

[45]

Although in important ways the negligence action
    is concerned with the quality of Trents testing, in equally important and
    fundamental ways it is concerned with Trents knowledge that it was doing the
    testing to provide information to be broadcast; it is concerned with what Trent
    communicated about its tests; and it is concerned with the harm that resulted
    from the communication of, about, and based on, its test results. That is
    sufficient to satisfy the initial threshold of being a claim that arises out of
    an expression. A claim in an action that complains about these matters falls
    within the category of litigation that could unduly limit such expression.

[46]

Subway further argues that even if the claim
    arose from an expression, the expression did not relate to a matter of public
    interest because Trents testing was of the DNA content of the sandwiches, in
    which the public would have no interest. I reject that argument. The very
    essence of Subways claim is that the purpose of Trents testing was for it to
    be the basis of conclusions that would be broadcast about the chicken content
    of sandwiches sold by Subway and certain of its competitors, and that this is
    what occurred. That is the very matter the motion judge found to be, and that
    Subway does not contest is, a matter of public interest.

[47]

Accordingly, the motion judge erred in finding
    that Trents motion did not pass the initial threshold requirement. Contrary to
    the motion judges conclusion, the negligence claim had to be dismissed unless
    Subway satisfied the relevant criteria in s. 137.1(4) of the
CJA
. I
    now turn to that issue.

(3)

Are There Grounds to Believe that Subways Negligence
    Claim has Substantive Merit?

A.

The Standard Against Which the Substantial Merit of a Claim is to be
    Assessed

[48]

The motion judge, in considering whether there
    are grounds to believe the negligence claim has substantial merit, used the
    standard applicable on a motion to strike. He did not have the benefit of the
    Supreme Courts decision in
Pointes
, which describes the applicable
    standard as one that
is more demanding than the one applicable on a motion to strike,
    which requires that the claim have some chance of success under the
    plain and obvious test. It is also more demanding than requiring that the
    claim have a reasonable prospect of success, which is a standard that
    this Court has also used to animate the plain and obvious test (citations
    omitted): at para. 50. The standard is lower, however, than that applicable on
    a motion for summary judgment: at para. 51.

[49]

Instead,

for an underlying proceeding to have
    substantial merit, it must have a real prospect of success  in
    other words, a prospect of success that, while not amounting to a demonstrated
    likelihood of success, tends to weigh more in favour of the plaintiff. In
    context with grounds to believe, this means that the motion judge needs to be
    satisfied that there is a basis in the record and the law  taking
    into account the stage of the proceeding  for drawing such a
    conclusion. This requires that the claim be legally tenable and supported by
    evidence that is reasonably capable of belief: at para. 49.

[50]

Here, Trent does not argue that the claim is
    unsupported by evidence reasonably capable of belief. It argues that the claim
    is not legally tenable, and therefore does not have a real prospect of success,
    for two reasons. First, the negligence claim is impermissible because it is a
    dressed-up defamation claim. Second, a negligence claim has to be founded on a
    duty of care owed by Trent to Subway, which does not here exist.

[51]

Because the motion judge did not examine these
    questions according to the standard set by the Supreme Court in
Pointes
,
    which is an error of law, it is necessary to undertake that examination here.

B.

Is Subways Negligence Claim Impermissible Because it is a Dressed-Up
    Defamation Claim?

[52]

A defamation action is subject to notice and
    limitation provisions, as well as special defences. These protections were
    developed to strike a balance between the competing values of protection of reputation
    and freedom of expression:
Shtaif v. Toronto Life Publishing Co. Ltd.
, 2013 ONCA 405, 366 D.L.R.
    (4th) 82, at para. 75. Trent argues that a plaintiff is not permitted to dress
    up what is essentially a defamation claim as a claim in negligence, and
    effectively side-step these protections:
Elliott v.
    Canadian Broadcasting Corp.
(1993), 16 O.R. (3d) 677 (Gen. Div.) at paras. 59-60, affd
    (1995), 25 O.R. (3d) 302 (C.A.), leave to appeal refused, [1995] S.C.C.A. No.
    393.

[53]

Trent acknowledges that in
Bella v. Young
,
    2006 SCC 3, [2006] 1 S.C.R. 108, the Supreme Court considered an argument that
    only a defamation action is proper
where loss of reputation is claimed, as a negligence claim
    does not strike the proper balance between free expression and the duty not to
    harm others.
In
    rejecting that argument, the Supreme Court stated:

The possibility of suing in defamation does
    not negate the availability of a cause of action in negligence where the
    necessary elements are made out. Freedom of expression and the policies
    underlying qualified privilege can be taken into account in determining the
    appropriate standard of care in negligence. There is no reason in principle
    why negligence actions should not be allowed to proceed where (a) proximity
    and foreseeability have been established, and (b) the damages cover more
    than just harm to the plaintiffs reputation (i.e. where there are further
    damages arising from the defendants negligence): at paras. 55-56.

[54]

But, Trent argues, there are two prongs to the
    test laid down in
Bella
that must be met for a negligence claim to be
    permissible in this sort of circumstance, and Subway meets neither. The first
    is the existence of a duty of care. The second is the existence of damages that
    cover more than just harm to the plaintiffs reputation.

[55]

As did the parties, I first address the second
    prong that has to do with the nature of the damages claimed. I then turn to the
    prong concerning duty of care.

[56]

Subways claim in the action includes damages
    for harm to reputation, depreciation of goodwill and value of trademarks, loss
    of sales, expenses to defend legal proceedings (class actions) that were
    brought against Subway as a result of the broadcast, and expenses of mitigation.
    Although the damages go beyond harm to reputation, Trent interprets the second
    prong of
Bella
to mean that the damages claimed for negligence must go
    beyond any that can be claimed in a defamation action. Since, in a defamation
    action, consequential financial losses may be claimed, Trent argues that there
    is nothing claimed by Subway in this action that meets the second prong in
Bella
.

[57]

I do not accept Trents argument.

[58]

The second prong of
Bella
says only
    that the claim for damages must go beyond damages to reputation. In a
    defamation action, general damages for loss of reputation
are presumed
    from the publication of the false statement and are awarded at large:
Hill v. Church of Scientology
,
[1995] 2 S.C.R. 1130, at para.
164
. It is those damages that a negligence claim must go beyond.

[59]

To be sure,
a plaintiff in a defamation action may also be awarded other types of
    damages, such as aggravated damages, punitive damages, and special damages. Special
    damages can include loss of business caused by the defamation. Unlike an award
    of general damages for harm to reputation, to support an award of special
    damages in a defamation action, actual pecuniary loss must be proven:
Botiuk
    v. Toronto Free Press Publications Ltd.
, [1995] 3 S.C.R. 3, at paras. 108-111. But the second prong
    of Bella does not require a negligence claim, in order to be permissible, to
    seek damages beyond these types.

[60]

First, the language used by the court in
Bella
does not support Trents interpretation. If the Supreme Court in
Bella
had intended the second prong to mean that the type of damages claimed must go
    beyond any head of damages that could be claimed in a defamation action, they
    would have said so, rather than referring only to damages for harm to
    reputation.

[61]

Second, in my view, the jurisprudence since
Bella
does not support the view advanced by Trent as to what the Supreme Court meant
    about the scope of the second prong.

[62]

Trent relies on this courts decision in
Shtaif
,
    but I do not read
Shtaif
as involving an interpretation of the second
    prong in
Bella
. The negligence claim in
Shtaif
was dismissed
    because the first prong in
Bella
, the existence of a duty of care, was
    not shown. The decision does not say that if a duty of care had existed, the fact
    that consequential financial losses can be claimed in a defamation action meant
    the second prong of the
Bella
test had not been fulfilled:
Shtaif
,
    at paras. 74-85.

[63]

As well, Trent relies on
Avalon Rare Metals
    Inc. v. Hykawy
, 2011 ONSC 5569, where the court struck a concurrent claim
    for negligence in preparing and disseminating a research report on a companys
    activities, under both prongs of the
Bella
test. On the first prong,
    it held, at para. 24, that a duty of care had not been adequately asserted. On
    the second prong, the court stated that it appears from the pleading that the
    plaintiff claims the same damages under its negligence claim as it does for
    defamation. Other than a claim for damages for loss to reputation, there is
    simply a bald pleading of foreseeable damages or other damages which is not
    particularized and which does not distinguish those damages from the damages
    claimed for defamation: at para. 27.

[64]

I do not read
Avalon
to say that if a
    duty of care existed and a particularized claim for damages for negligence for
    matters other than harm to reputation had been asserted, the claim would have
    failed the second prong in
Bella
.

[65]

Trents
    view of the scope of the second prong in
Bella
was not applied in
Roy v. Ottawa Capital Area Crime Stoppers
, 2018 ONSC 4207, 142 O.R. (3d)
    507. The court refused a summary judgment motion, which sought to dismiss a
    negligence claim against persons who had caused or allowed the plaintiff to be
    incorrectly identified as a purse snatcher on a website. The plaintiff alleged
    that same publication to be defamatory. In discussing the second prong and what
    the plaintiff would have to show at trial, the court stated: With respect to
    negligence, the plaintiff has the burden of proving all of the elements
    necessary to a successful negligence claim including liability and damages. She
    has the additional burden of demonstrating that the negligence claim is not
    just a defamation action dressed up. That requires her to prove a causal link
    to damages
beyond mere reputational damage.
 (emphasis added): at para.
    53.

[66]

Similarly, in
Guergis v. Hamilton
, 2015
    ONSC 4915, the court, relying on
Bella
, allowed a breach of fiduciary
    duty claim against a lawyer to continue, even though the alleged breach of duty
    included an allegation that the lawyer defamed the client. In apparent
    reference to the claim passing the second prong, the court noted that the claim
    was for economic damages (not merely reputational damages) arising from the
    breach of duty: at para. 17.

[67]

Here, Subways negligence claim seeks damages
    beyond merely reputational damages.

[68]

Under the standard to be applied under s. 137.1,
    the question at this stage is whether, on the issue of whether Subways
    negligence claim passes the second prong in
Bella
, Subway has a real
    prospect of success, that tends to weigh more in its favour, that is legally
    tenable, and is based on evidence reasonably capable of belief (although there
    is no issue about that last item here). In my view, on this issue, the
    negligence claim passes that hurdle.

C.

The Duty of Care Issue

(i)

Introduction

[69]

Subways negligence claim must be based on a
    duty of care owed to it by Trent. The general law of negligence requires that.
    So does the first prong in
Bella
.

[70]

Subway contends that Trent, as a laboratory,
    owed it a duty of care in testing Subways products, even though Subway did not
    engage Trent to do the testing, and even though CBC and consumers, rather than
    Subway, relied on the results. Subway submits that there is a
prima facie
duty of care since the harm that occurred was a reasonably foreseeable
    consequence of Trents conduct, and a sufficient relationship of proximity
    existed between Subway and Trent, either by analogy to previously recognized
    proximate relationships, or as a novel proximate relationship by virtue of a
    full proximity analysis. Subway also argues that there is no policy reason to
    negate the
prima facie
duty.

[71]

Trent disputes the existence of a duty of care
    on two bases: first, that Subway cannot establish sufficient proximity to
    support a duty of care, and second, because policy considerations negate any
    duty of care.

[72]

Because of the conclusion I reach on proximity,
    it is not necessary to consider whether policy considerations would negate a
    prima facie duty of care.

(ii)

The Required Approach

[73]

Subways negligence claim is one for pure
    economic loss, that is, 
economic loss that is
    unconnected to a physical or mental injury to the plaintiffs person, or to
    physical damage to property:
1688782 Ontario Inc. v Maple Leaf Foods Inc.
,
    2020 SCC 35, 450 D.L.R. (4th) 181, at para. 17.

[74]

Accordingly, Subway must show a duty of care in
    conformity with the principles for doing so in cases of pure economic loss as
    set out in
Deloitte & Touche v. Livent Inc. (Receiver of)
, 2017
    SCC 63, [2017] 2 S.C.R. 855, and in
Maple Leaf
.

[75]

The approach to determining the existence and
    extent of a duty of care in a claim for pure economic loss is the modified
Anns/Cooper
test. It addresses the question of whether a duty of care exists in two stages;
    first, whether a
prima

facie
duty exists and, second,
    whether residual policy considerations should negate or limit the
prima

facie
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. At the second stage the
    court considers whether, despite the proximity of the relationship and reasonably
    foreseeable quality of the plaintiffs injury, the defendant should nonetheless
    be insulated from liability: see
Livent
, at paras. 16, 22-23, 25, 32
    and 41-42.

(iii)

Finding Proximity in a Claim for Pure Economic
    Loss

[76]

Both
Livent
and
Maple Leaf
emphasize the importance of a properly performed proximity analysis in a pure
    economic loss case, and provide authoritative guidance on how that is to be
    done.
As the majority in
Maple Leaf

(SCC)
observed,
Livent
not only 
restated the
    analytical framework governing cases of negligent misrepresentation or
    performance of a service to take into account the importance of proximity, but
    did so in a way that has implications for all pure economic loss cases, not
    just those styled as claims for negligent misrepresentation or performance of a
    service: at paras. 29-30. In
Maple Leaf (SCC)
, the majority further
    elucidated that analytical framework as it applied to cases of negligent
    misrepresentation or performance of a service, and described the framework to
    be used in cases involving the supply of shoddy goods, to better account for
    the requisite element of proximity: at paras. 41, 60.

[77]

In doing so, the court reiterated three
    fundamental, inter-related, points.

[78]

First, proximity is distinct from reasonable
    foreseeability of harm. Parties are not in a proximate relationship simply
    because it is reasonably foreseeable that carelessness by one will harm the
    other economically. [T]he defendants ability to reasonably foresee injury to
    a plaintiff is insufficient to ground a finding of proximity:
Maple Leaf
    (SCC)
, at para. 84.

[79]

Second, the proximity analysis takes place
    against the backdrop of the fundamental principle that a plaintiff must have a
    right, or legally cognizable interest, that would be vindicated by recognizing
    a duty of care on the part of the defendant. This is particularly important in
    cases of pure economic loss because there is no general right, in tort,
    protecting against the negligent or intentional infliction of pure economic
    loss. The loss to be recovered must be the result of an interference with a
    legally cognizable right:
Maple Leaf (SCC)
, at paras. 18-19.

[80]

Third, the proper identification and assessment
    of all relevant factors arising from the relationship between the parties, in
    order to determine whether their relationship can truly be called proximate,
    furnishes a principled basis to determine to whom duties are owed and to whom
    they are not, as well as the scope of the duties:
Livent
, at para 31.

[81]

In
Livent
, two routes to establishing
    proximity were discussed.

[82]

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: at para. 28. If a relationship
    falls within a previously established category, or is analogous to one, then
    the requisite close and direct relationship is shown: at para. 26.

[83]

However, both in and after
Livent
,
    stress has been placed on the importance of cautio[n] in finding proximity
    based on a previously established or analogous category, since there is a need
    to examine the particular relationship at issue in each case:
1688782
    Ontario Inc. v Maple Leaf Foods Inc.
, 2018 ONCA 407, 140 O.R. (3d) 481, at
    para. 50, affd 2020 SCC 35. [A] court should be attentive to the particular
    factors which justified recognizing that prior category in order to determine
    whether the relationship at issue is, in fact,
truly
the same as or analogous to that which was previously recognized (emphasis
    added):
Livent
, at para. 28. Ultimately, then, to ground an analogous
    duty, the case authorities relied upon by the [plaintiff] must be shown to
    arise from
an analogous relationship and analogous
    circumstances
 (emphasis added):
Maple Leaf (SCC)
, at para. 65.

[84]

The second route to establishing proximity is
    where a previously established or analogous proximate relationship cannot be
    found. 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 exists, courts must examine all
    relevant factors arising from the relationship between the plaintiff and the
    defendant. While these factors are diverse and depend on the circumstances of
    each case, this Court has maintained that they include expectations,
    representations, reliance, and the property or other interests involved as
    well as any statutory obligations [Citations omitted.]:
Livent
, at
    para. 29.

[85]

But the search for a novel duty of care through
    the full proximity analysis is not completely open-ended. It must be conducted
    taking into account the

principles that inform a proper duty of care
    analysis in the area of pure economic loss, and the factors applicable to the
    type of case under consideration:
Maple Leaf (SCC)
, at para. 95.

(iv)

The Proximity Analysis is Informed by the Type
    of Case

[86]

Categories of proximate relationshipsbe they
    established, analogous, or novelare not to be confused with categories of the
    types of cases in which pure economic losses can arise. In
Maple Leaf (SCC)
,
    the current categories of the types of cases in which pure economic loss can
    arise between private parties were described as: (i) negligent misrepresentation
    or performance of a service; (ii) negligent supply of shoddy goods or
    structures; and (iii) relational economic loss.

[87]

These categories of the types of cases in which pure
    economic losses can arise are analytical tools only. Arguing that a loss
    occurred in one of these waysthat is, invoking one of the categories of types
    of casesdoes not show that a relationship of proximity exists. It does not, by
    itself, substitute for an examination of the particular relationship in issue
    in each case between the plaintiff and the defendant. Instead, what matters is
    whether the requirements for imposing a duty of care are satisfiedand, in
    particular, whether the parties were at the time of the loss in a sufficiently
    proximate relationship:
Maple Leaf (SCC)
, at paras. 20-23.

[88]

Nevertheless, the category of pure economic loss
    that is alleged can inform the proximity analysis. In
Maple Leaf (SCC)
,
    the court explained that [w]hether a proximate relationship exists between two
    parties at large, or inheres only for particular purposes or in relation to
    particular actions, will depend on the nature of the relationships at issue
It may also depend on the nature of the particular kind of pure
    economic loss alleged
 (emphasis added): at para. 30.

[89]

In both
Livent
and
Maple Leaf (SCC)
,
    factors were identified that are determinative to finding proximity when the
    kind of pure economic loss alleged is negligent misrepresentation or
    performance of a service. In
Maple Leaf (SCC)
, the court also reviewed
    the factors necessary to determining proximity for cases in the category of
    negligent supply of shoddy structures or goods.

[90]

As I explain in more detail below, although
    Subway does not characterize its claim as falling within either category, it is
    nevertheless instructive to consider the courts treatment of these categories,
    to better ensure that, in analyzing Subways claim, effect is being given to
    the implications of
Livent
and
Maple Leaf
.

[91]

For cases in the category of negligent
    misrepresentation or performance of a service, two factors are
determinative
of whether proximity is established: the defendants undertaking, and the
    plaintiffs reliance:
Livent
, at para. 30;
Maple Leaf (SCC)
,
    at para. 32.

[92]

As explained in
Maple Leaf (SCC)
, at
    paras. 33-34, it is the presence of those factors, within the relationship,
    that gives rise to a legally cognizable right and thus a correlative duty of
    care:

Taking

Cooper

and

Livent
    Inc. (Receiver of)
together, then, this Court has emphasized the
    requirement of proximity within the duty analysis, and has tied that
    requirement in cases of negligent misrepresentation or performance of a service
    to the defendants undertaking of responsibility and its inducement of
    reasonable and detrimental reliance in the plaintiff. Framing the analysis in
    this manner also illuminates the legal interest being protected and, therefore,
    the right sought to be vindicated by such claims. When a defendant undertakes
    to represent a state of affairs or to otherwise do something, it assumes the
    task of doing so reasonably, thereby manifesting an intention to induce the
    plaintiffs reliance upon the defendants exercise of reasonable care in
    carrying out the task. And where the inducement has that intended effect
⸺
that is, where the plaintiff reasonably relies, it alters its
    position, possibly foregoing alternative and more beneficial courses of action
    that were available at the time of the inducement. That is, the plaintiff may
    show that the defendants inducement caused the plaintiff to relinquish its pre‑reliance
    position and suffer economic detriment as a consequence.

In other words, it is

the intended effect

of the defendants undertaking upon the
    plaintiffs autonomy that brings the defendant into a relationship of
    proximity, and therefore of duty, with the plaintiff. Where that effect works
    to the plaintiffs detriment, it is a wrong to the plaintiff. Having
    deliberately solicited the plaintiffs reliance as a reasonable response, the
    defendant cannot in justice disclaim responsibility for any economic loss that
    the plaintiff can show was caused by such reliance. The plaintiffs pre‑reliance
    circumstance has become an entitlement that runs against the defendant
    (Weinrib, at p. 230).

[93]

Consistent with that approach,
Maple Leaf
    (SCC)
makes two additional points about the centrality, to the analysis of
    proximity in a negligent misrepresentation or performance of a service case, of
    the defendants undertaking of responsibility and the plaintiffs reliance.
    First, it is not sufficient that the defendant gave an undertaking; it is
    important to whom the undertaking was given. It must have been in favour of the
    plaintiff: at paras. 38-39. Second, reliance must be by the plaintiff,
    represented by a change in position that the plaintiff actually made from an
    alternative course it was otherwise free to pursue. The plaintiff cannot
    substitute reliance, by others, on something the defendant said or did, even if
    the reliance by others detrimentally affected the plaintiff: at paras. 39-40.

[94]

Maple Leaf (SCC)
also establishes that, for claims in the category of negligent
    supply of shoddy goods or structures, the duty of care is correlative to a
    right to be free of a negligently caused real and substantial danger to person
    or property. An economic loss sustained to avoid a negligently created real and
    substantial danger to person or property is treated, in the eyes of the law, as
    interference with the plaintiffs right in person or property: at paras. 41-48,
    54. The nature of the right at stake is important to the proximity analysis in
    several ways, including distinguishing cases that are truly analogous from ones
    that are not, as well as informing the analysis of when a novel duty should be
    recognized: at paras. 65, 73, 77, 79, 82 and 95.

(v)

Subways Claim

[95]

Since the kind of pure economic loss claimed may
    inform the proximity analysis, it is important to consider what type of claim
    Subway is making. Subway alleges that its loss occurred because Trent was
    careless in performing a servicetesting Subways productsand that Trents
    carelessness in testing led it and CBC to make false statements about those
    products, thereby affecting consumer behaviour and causing Subways pure
    economic loss.

[96]

Subway has not taken the position that its case
    falls into the category of negligent misrepresentation or performance of a
    service (or any other of the current categories that describe how pure economic
    loss occurs). It maintains that neither it, nor Trent, have sought to
    categorize its claim this way. It argues, therefore, that its argument for
    proximity based on an analogous category of proximate relationship, or a novel
    duty, may be approached without reference to the specific and determinative
    factors applicable to claims within this category.

[97]

The category or analytical tool to be used to
    assist in determining the proximity question is not dependent on what a party
    calls its claim, but on what the claim really is. For example, in
Lavender
    v. Miller Bernstein LLP
, 2018 ONCA 729, 142 O.R. (3d) 401, leave to appeal
    refused, [2018] S.C.C.A. No. 488, the plaintiff called its claim one for
    negligence simpliciter. But this court took into account what was required in a
    claim within the category of negligent misrepresentation or performance of a
    service to conclude that, on the facts, the absence of an undertaking or
    reliance precluded a finding of proximity: at paras. 65-67, 73.

[98]

Nevertheless, I agree with Subway that a claim
    for pure economic loss may fall outside the three categories, not only in name
    but in substance. But even for such a claim, it is necessary to give effect to
    the implications of the framework in
Livent
and
Maple Leaf (SCC)
. That
    framework and its particular emphasis on what is necessary to find proximity and
    why, follows from the basic proposition that there is no right to be free of
    negligently caused pure economic loss absent interference with a legally
    cognizable right.

[99]

Subways negligence claim has certain attributes
    similar to a claim in the category of one for pure economic loss that came
    about through negligent misrepresentation or performance of a service. At its
    core, it alleges that Trent carelessly performed a servicetestingand
    carelessly communicated its faulty results.

[100]

But totally missing are what would be the determinative elements to
    establish proximity for a claim within the negligent misrepresentation or
    performance of a service categoryan undertaking of responsibility by Trent in
    favour of Subway, and reliance by Subway:
Maple Leaf (SCC)
, at paras.
    32-34;
Livent
, at para. 30.

[101]

Here, Trent gave no express undertaking to Subway. The only express
    undertaking Trent gave to conduct testing was to CBC. Subway does not point to
    anything that would support an implication of an undertaking of responsibility
in
    its favour.
Given that the undertaking of responsibility must be such as
    to deliberately invite reliancea change of positionby the person in whose
    favour the undertaking is given, nothing suggests Trent gave any such undertaking.
    The testing Trent performed and statements it made are not suggested to have
    been intended to induce Subway to change its position, or to do anything at
    all.

[102]

Subway does not contend that it relied on Trents services or
    statements. Subway was not induced to, and did not change its position, in
    reliance upon any undertaking of Trent. Subway disagreed with and challenged
    Trents testing results as soon as it learned of themit did the opposite of
    relying on them. As
Maple Leaf (SCC)
holds, the fact that consumers rely
    on what the defendant did or said, does not, within this category of claim, fill
    the gap created by the plaintiffs own non-reliance: at paras. 38-39.

[103]

The presence of an undertaking and reliance in a negligent
    misrepresentation or performance of a service case illuminates the plaintiffs
    right and justify the correlative duty. Neither is present in this case. Nor,
    like a case in the shoddy goods category, does Subways claim seek to impose a
    duty correlative to what is seen, in the eyes of the law, as a legally
    cognizable right in person or property. These absences must be borne in mind
    when assessing whether Subway can establish proximity for its negligence claim through
    either of the two routes it argues for, analogous relationship or novel proximate
    relationship through a full proximity analysis.

(vi)

Can Subway Establish Proximity?

(a)

Subways Analogous Relationship Argument

[104]

Subway argues that a laboratory owes a duty of care to the entity
    whose products it tests, even if the entity did not hire the laboratory and the
    entity did not rely on the test results. Subway does not contend that this is
    an established category of proximate relationship. Rather, it argues that
    relationships of proximity recognized in previously decided cases are analogous
    to its relationship with Trent.

[105]

I do not accept Subways argument. Given what is at stake when the
    question of proximity is considered, none of the cases Subway points to are
    truly analogous. They do not show an analogous relationship in analogous
    circumstances.

[106]

Subway points to cases that have recognized that a medical
    laboratory owes a duty of care to an individual where it has performed medical
    tests on the individual at the request of the individual, their doctor, or
    another entity: see
Cleveland (Litigation Guardian of) v. Hamilton Health
    Sciences Corp.
, 2009 CanLII 70130, affd 2011 ONCA 244
; Green v. The
    Hospital for Sick Children
, 2017 ONSC 6545, affd 2018 ONSC 7058 (Div.
    Ct.);
Bertin v. Kristofferson
, 2000 CanLII 1109 (NB QB), revd 2001
    NBCA 118; and
Neufville v. Sobers
, 1983 CarswellOnt 2621 (Ont. H.C.).

[107]

The bases on which a proximate relationship was found in these cases
    does not support the requisite analogy to the relationship at issue in this
    case. Significantly, none of these cases involved a claim for pure economic
    loss. In
Cleveland
, the claim for damages related to delayed diagnosis
    of a congenital order, which deprived the plaintiff of the opportunity to
    receive proper treatment: at para. 5. In
Green
, it related to, among
    other things, pain and suffering and loss of custody of the plaintiffs child:
    at para. 111. In
Bertin and Neufville
, both of which pre-date the
    Supreme Courts decision in
Cooper v. Hobart
,
    2001 SCC 79, [2001] 3 S.C.R. 537
, the claims were related to, respectively,
    pain and disfigurement, and death:
Bertin
, at para. 26;
Neufville
,
    at para. 1.

[108]

Distinguishing these cases based on the nature of the loss at issue
    is necessary, given the different framework for assessing proximity in claims
    of pure economic loss: such claims warrant more rigorous examination than in
    other claims for negligence:
Lavender
, at para. 72. In
Maple
    Leaf,
the Supreme Court rejected an argument that proximity could be
    established by analogy to certain previously decided cases, in part, because
    those cases involved actual physical damage, such that the resulting economic
    losses were not, as a matter of law, pure economic loss but consequential
    economic loss: at paras. 77-79. The nature of the right at stake is relevant
    to distinguishing cases that are truly analogous from ones that are not.

[109]

Moreover,
Cleveland
,
Green
,
Bertin
and
Neufville
involved, among other things, requests to the laboratory for testing by the
    plaintiff or someone serving the plaintiffs interests, where the results of
    the testing would be used to determine a course of treatment or some other
    intervention in the plaintiffs life. The distinct nature of the undertaking,
    expectations, reliance, and heightened interests at stake in these cases are
    different enough to overwhelm any similarities to the case at bar.

[110]

Subway cites
Lowe v. Guarantee Co. of North America
(2005),
    80 O.R. (3d) 222 (C.A.), in which this court refused to strike a claim against
    health professionals who prepared a medical opinion about an insured for the
    purpose of determining entitlements to statutory accident benefits from the
    insurer. The health professionals were part of a statutorily prescribed
    Designated Assessment Centre, put in place for use by insureds and insurers to
    obtain neutral third-party opinions, which served as preliminary determinations
    of the insureds entitlement. In holding that it was not plain and obvious that
    no prima facie duty of competence to the insured was owed the court relied on
    the legislatively created decision-making function with consequences for both
    insurers and insureds, to find an arguable relationship of proximity between
    the health professionals and the persons assessed: at paras. 11, 39, 47-49.

[111]

Subway also cites
Rubens v. Sansome
, 2017 NLCA 32. In
Rubens
,
    a physician who, at the request of an insurer and with the consent of the
    plaintiff/insured, conducted an independent medical examination of the
    plaintiffs medical records and provided an opinion to the insurer which it
    relied on to deny the plaintiffs claim for disability benefits, was found to
    owe a duty of care to the plaintiff.

[112]

In my view, neither
Lowe
nor
Rubens
are truly
    analogous to this case. First, there is the absence here of a legislative
    scheme, like the one in
Lowe
, that the court relied upon as an
    important factor to find arguable proximity. As the court noted in
Livent
,
    statutory obligations can be important to whether a relationship of proximity
    exists: at para. 29. Second, in
Rubens
, the plaintiff had a
    pre-existing legal relationship with the insurer under a contract of insurance;
    the insurer appointed the physician to review medial records to evaluate a
    claim under the contract by the insured, and the insured consented. The
    relationship, expectations and interests stand in contrast to the circumstances
    of this case, where nothing similar is present. Moreover, the court in
Rubens
,
    which did not have the benefit of
Livent
or
Maple Leaf
,
    placed reliance on the foreseeability of harm as an important part of its
    proximity analysis: at para. 54.

[113]

Subway also points to another group of cases in which a defendant
    who performed an investigation of the plaintiff, and reported the outcome to a
    third person, was found to arguably owe a duty of care to the plaintiff who was
    the subject of the report, although no contract existed between the plaintiff
    and defendant, and although it was not the plaintiff, but one or more third
    persons, who relied on the report.

[114]

Subway cites
Haskett v. Trans Union of Canada Inc.

(2003),
    63 O.R. (3d) 577 (C.A.), leave to appeal refused, [2003] S.C.C.A. No. 208. In
Haskett
,
    this court refused to strike a claim asserting that credit reporting agencies,
    who investigated the credit of consumers and made reports to credit granting
    entities, owed a duty of care to the consumers who were the subjects of their
    reports, even though it was the credit granting entities, not the consumers,
    who relied on the reports to grant or deny credit to the consumers. The court
    found the relationship of proximity could be supported on two bases: as a
    category of relationship analogous to that underlying the category of negligent
    misrepresentation (negligent misrepresentation without reliance by the
    plaintiff) or as a new category: at paras. 33-41.

[115]

Haskett
was decided on a motion to
    strike, on which a lower standard of scrutiny is applied compared to that which
    must be used in relation to Subways claim. The court in
Haskett
did
    not have the benefit of the Supreme Courts jurisprudence in
Livent
and
Maple Leaf
; especially its comments on the inability to find
    proximity in a claim within the category of negligent misrepresentation, when
    there has been no reliance by the plaintiff. Moreover, the comment in
Haskett

that the claim may be in a new category (a seeming reference to a category
    of case describing the way in which the economic loss occurred) does not seem
    to have been picked up in
Maple Leaf (SCC)
, where the majority did not
    include any such category when it listed the current categories of pure
    economic loss claims: at para. 21.

[116]

Furthermore, the court in
Haskett
referred to policy
    considerations arising from statutory provisions designed to protect consumers
    with respect to the collection and dissemination of their credit data. These
    obligations were found to inform the duty of care: at para. 30. There are no
    such policy considerations arising from statutory provisions in the case at
    bar.

[117]

Subway also cites
Correia v. Canac Kitchens
, 2008 ONCA 506,
    91 O.R. (3d) 353, where this court overturned a summary judgment dismissing a
    negligence claim against private investigators who were retained by an employer
    to investigate workplace thefts. The court allowed the claim by an employee,
    who was wrongly identified as a culprit, discharged from employment, criminally
    charged (without further independent investigation by the police) and briefly
    jailed, to proceed to trial. The court reasoned that as the police owe a duty
    in negligence to suspects being investigated, private investigators performing
    police like functions should be subject to similar liability: at paras. 18, 47.

[118]

Notably,
Correia
was not analyzed as a claim for pure
    economic loss. The courts proximity analysis rested, in part, on the high
    interests at stake when a person is under investigation for a crime, namely,
    their freedom, reputation, and how they may spend a good portion of their life:
    at para. 29. The same interests are not engaged by Subways claim for pure
    economic loss.

[119]

Nor is the decision in
Spring v. Guardian Assurance plc
,
    [1994] 3 All E.R. 129 (HL (Eng)), truly analogous. In
Spring
, an unfavourable
    reference was provided by the plaintiffs former employer to a prospective
    employer, that the latter relied upon in deciding not to hire the plaintiff.
    The court found that the former employer owed a duty of care in providing the
    reference. One of the judges for the majority held that the source of the duty
    lay in an assumption of responsibility by the [former employer] to the
    plaintiff in respect of the reference, and reliance by the plaintiff upon the
    exercise by [the former employer] of due care and skill in respect of its
    preparation: at p. 143, per Lord Goff. As explained above, there is no such
    undertaking or reliance in the instant case. The plaintiff and defendant in
Spring
were also in a prior contractual relationship, and rules of a self-regulatory
    body, to which the prospective and former employer belonged, required that the
    prospective employer obtain, and the former employer to provide, references
    that were full and frank. Nothing similar is present here.

[120]

In summary, Subways cases do not show truly analogous
    relationships, in analogous circumstances.

[121]

A further difficulty facing Subways attempt to analogize a
    relationship of proximity from prior cases is that it fails account for an
    arguably more direct analogy that goes in the other direction. In
Shtaif
,
    this court rejected the notion that reporters investigating a story for
    publication were in a relationship of proximity with the subject of the story
    solely by reason of conducting the investigation. Laskin J.A. stated, at para.
    82:

In a general sense, members of the media have
    or should have an obligation to adequately investigate a story to be published,
    to ensure the accuracy of the facts about any person referred to in the story,
    and to obtain that persons side of the story: see
Grant v. Torstar Corp
.
,
    2009 SCC 61, [2009] 3 S.C.R. 640. Teitel did contact and interview Roberts, and
    Maddocks contacted him to check the accuracy of some of his statements. But to
    say, as the plaintiffs have, that these contacts by themselves gave rise to a
    duty of care would mean that in virtually every case a plaintiff could proceed
    with a negligence claim as well as a defamation claim. The principle in
Young
    v. Bella
does not go that far.

[122]

The existence of an analogy
    running counter to the one Subway contends for is important, since the purpose
    of a proximity analysis is to provide a principled basis for imposing a duty
    and determining its scope. In this case, Trent was doing testing for a media
    report. Subway does not contend that CBC owed it a duty of care by virtue of
    investigating the story, sufficient to support a claim against CBC in
    negligence. Subway does not explain, or justify, why a laboratory hired by the
    media is in a relationship of proximity with the subject of the media report,
    while investigative journalists are not.

[123]

In my view Subways claim in
    negligence does not have a real prospect of success of establishing a
    relationship of proximity analogous to any established category of proximity.

(b)

Subways Novel Duty of Care Argument

[124]

Subway submits that even if a relationship of proximity cannot be
    established by analogy to a previously recognized one, a novel proximate
    relationship should be recognized based on a full proximity analysis. I am
    unable to accept that Subway has a real prospect of success on this contention.

[125]

Subways argument for proximity must establish a relationship that
    would take its case beyond an assertion that it was simply entitled to be
    protected from pure economic loss caused by negligence.

[126]

I reiterate what Subway points to in support of the argument that a
    full proximity analysis reveals a relationship of proximity. Trent was not
    doing academic research, but was hired by CBC to do testing and expected
    payment from CBC for it. Trent purchased Subway chicken sandwiches it tested
    from a Subway restaurant. Trent knew whose products it was testing. It knew CBC
    would report the results of Trents tests. Trent was provided with Subways
    response to the test results through CBC, and told CBC that Subways
    responsethat disagreed with the results of Trents tests about the content of
    its productwas unreasonable. Trent placed no restrictions on how its test
    results could be used, and Trent representatives appeared on the
Marketplace
broadcast to discuss the test results.

[127]

In my view, these circumstances speak to the foreseeability of harm
    that would arise if Trent did its work, or reported on it, carelessly. But that
    is not the proximity question. Proximity is a distinct and more demanding
    hurdle than reasonable foreseeability:
Maple Leaf (SCC)
, at para. 62.
    A novel duty of care cannot be established based on the foreseeability of harm
    alone.

[128]

The constellation of factors to which Subway points are primarily
    about foreseeability of harm, not proximity. They do not show a close and direct
    relationship. They do not show any expectations, representations, reliance, or
    statutory obligations as between Trent and Subway. They do not show anything
    that fulfils the purpose served by the requirement for an undertaking and
    reliance in a negligent misrepresentation or performance of services case, that
    is, something that shows a legally cognizable right of the plaintiff is
    affected. Nor do they show interests affected akin to rights in person or
    property. Subways negligence claim is only about the pure economic harm it
    suffered.

[129]

The application of the principles relating to proximity in a claim
    for pure economic loss prevent the recognition of a novel proximate
    relationship in this case. As the Supreme Court in
Maple Leaf
explained (concerning a claim within the category of supply of shoddy goods),
    at para. 95, while a novel duty of care, being novel, starts with a blank
    slate, that slate is filled by applying the same
Anns/Cooper
framework
    that, as we have just explained, operates to preclude recovery here.

(vii)

Conclusion on Duty of Care

[130]

In light of my conclusions, I need not address Trents argument that
    any
prima

facie
duty of care that arose from the
    relationship of proximity and the reasonable foreseeability of loss is negated
    by residual policy concerns about the effect of recognizing the duty on other
    legal obligations, the legal system, or society generally:
Livent
, at
    para. 38.

[131]

The question of whether a duty of care is owed is a question of law,
    as are the components of the duty of care analysis, including the question of
    proximity:
Maple Leaf (SCC)
, at para. 24. Subways negligence claim
    lacks a real prospect of success. It is not legally tenable.

(4)

The Costs Appeal

[132]

Given my conclusions above, the motion judges costs order, which
    was premised on the failure of Trents motion, must be set aside.

IV.

CONCLUSION

[133]

I would allow Trents appeal, set aside the motion judges order,
    and replace it with an order dismissing Subways negligence claim.

[134]

In accordance with the agreement of the parties, Trent is entitled
    to costs of the appeal fixed in the sum of $45,000, inclusive of disbursements
    and applicable taxes. If the parties are unable to agree on the costs of the
    motion below, they may make written submissions. The submissions of the appellant
    shall be made within ten days of these reasons. The submissions of the
    respondent shall be made ten days thereafter. The submissions shall not exceed
    three pages each.

Released: January 18, 2021 DB

B.
    Zarnett J.A.

I
    agree. David Brown J.A.

I agree.
    Thorburn J.A.





[1]
At the same time, CBC moved to dismiss the entire action against
    it. CBCs motion succeeded, and Subways appeal from that order (the CBC
    Appeal) was heard together with this appeal, and is the subject of separate
    reasons released together with these reasons.



[2]

1704604
    Ontario Ltd. v. Pointes Protection Association
,
    2020 SCC 22, 449 D.L.R. (4th) 1;
Bent v. Platnick,
2020 SCC 23, 449
    D.L.R. (4th) 45; and
1688782 Ontario Inc. v. Maple Leaf Foods Inc
.
, 2020 SCC 35, 450 D.L.R. (4th) 181.



[3]

Trent emphasizes that it did not
    concede these matters for all stages of the action. As a s. 137.1 motion is not
    an adjudication of the merits of the action, what is put in issue at this point
    of the proceeding does not prejudge what may be in issue if the matter is
    allowed to proceed to be determined on the merits
:
Bent
,
at para. 176.


