Date: 20230216
Docket: T-2090-22
Citation: 2023 FC 227
Ottawa, Ontario, February 16, 2023
PRESENT: Mr. Justice Sébastien Grammond
BETWEEN:
10066055 MANITOBA LTD.
Plaintiff
and
PARKS CANADA AGENCY
Defendant
ORDER AND REASONS
[1] The plaintiff filed a Statement of Claim [the Claim] against the defendant, Parks Canada Agency [Parks Canada], in this Court on October 12, 2022. The plaintiff alleges that Parks Canada misrepresented the terms of its lease [the Lease] for a property located within Riding Mountain National Park [the Park] resulting in delays to the plaintiff’s plans for the development of the property.
[2] In response, Parks Canada brought the present motion to strike the Claim without leave to amend pursuant to rule 221(1)(a) of the Federal Courts Rules, SOR/98-106 [the Rules]. Parks Canada argues that the material facts pleaded in the Claim do not disclose a reasonable cause of action.
[3] I will grant Parks Canada’s motion in part. The Claim fails to disclose a reasonable cause of action in negligent misrepresentation because it is plain and obvious that the plaintiff did not detrimentally rely on the purported misrepresentation. However, leave to amend is granted because I am not convinced the Claim cannot be cured by alleging a different cause of action.
I. Background
[4] In May 2020, a leasehold interest in property located in the Park, consisting of a retail store, living quarters, and one seasonal cabin, was listed as available on the Multiple Listing Service. Parks Canada is the lessor of the property. The plaintiff was interested in acquiring the Lease with the intent of building five new rental units on the property. Before doing so, it obtained a Lease Information Sheet dated May 28, 2020, from an employee of Parks Canada, Ms. Bardsley. The Lease Information Sheet expressly stated that visitor accommodation was an allowable use of the property. The plaintiff contacted Ms. Bardsley directly to inform her of its proposed development. During this conversation, Ms. Bardsley never informed the plaintiff that its proposal would be incompatible with the Lease.
[5] Based on the information in the Lease Information Sheet and its discussion with Ms. Bardsley, the Lease with Parks Canada was assigned to the plaintiff on October 15, 2020. Subsequent to a request from Parks Canada, the plaintiff resubmitted its development proposal on December 7, 2020. On January 15, 2021, Ms. Bardsley advised the plaintiff that the proposed development was an intensification of the rental accommodations and therefore was not within the original intent of the Lease. The plaintiff promptly expressed its disagreement with this interpretation on January 19, 2021. On March 1, 2021, Ms. Bardsley informed the plaintiff that the Lease prohibited commercial accommodations and therefore its proposed development was denied. It was denied again in September 2021 after the plaintiff resubmitted its proposed development. Finally, on January 17, 2022, after plaintiff retained legal counsel, Parks Canada admitted that Ms. Bardsley’s interpretation of the Lease was incorrect and that the plaintiff was entitled to proceed with the proposed development.
[6] In this Claim, the plaintiff submits that Ms. Bardsley’s erroneous interpretation of the Lease amounted to negligent misrepresentation, which the plaintiff had to rely on because it required her approval to move forward with its proposed development. The misrepresentation delayed the granting of the development permit by 12 months causing the plaintiff to lose a year’s worth of income from its proposed development.
II. Analysis
[7] Rule 221(1)(a) provides that the Court may strike a pleading that does not disclose a reasonable cause of action. The test to be met is whether it is “plain and obvious” that the Claim does not disclose a reasonable cause of action: R v Imperial Tobacco Canada Ltd, 2011 SCC 42 at paragraph 17, [2011] 3 SCR 45; Hunt v Carey Canada Inc, 1990 CanLII 90 (SCC), [1990] 2 SCR 959 at 980.
[8] Parks Canada submits that the Claim should be struck for three reasons. First, it is plain and obvious that there is no special relationship of proximity between the plaintiff and Parks Canada. Second, the plaintiff did not plead material facts that disclose any reliance on representations made on behalf of Parks Canada. Finally, there is no causal connection between the alleged reliance on representations made by Parks Canada and the damage alleged by the plaintiff.
[9] I will only examine the second argument because I find it to be determinative in this case. As the Supreme Court of Canada explained in Queen v Cognos Inc, 1993 CanLII 146 (SCC), [1993] 1 SCR 87 at 110, the test for negligent misrepresentation is composed of five elements:
(1) there must be a duty of care based on a “special relationship” between the representor and the representee; (2) the representation in question must be untrue, inaccurate, or misleading; (3) the representor must have acted negligently in making said misrepresentation; (4) the representee must have relied, in a reasonable manner, on said negligent misrepresentation; and (5) the reliance must have been detrimental to the representee in the sense that damages resulted.
[10] Subsequent cases clarifying the “special relationship” that gives rise to a duty of care in cases of negligent misrepresentation have not changed these five essential elements: Deloitte & Touche v Livent Inc (Receiver of), 2017 SCC 63, [2017] 2 SCR 855; 1688782 Ontario Inc v Maple Leaf Foods Inc, 2020 SCC 35 [Maple Leaf Foods]. Thus, in order to succeed in a claim of negligent misrepresentation, a plaintiff must prove not only misleading statements, but also that they reasonably relied on these statements to their detriment.
[11] As the Supreme Court recently wrote in Maple Leaf Foods at paragraph 40, “detrimental reliance is manifested by the plaintiff altering its position, thereby foregoing more beneficial courses of action that it would have taken, absent the defendant’s inducement.” It is plain and obvious that the plaintiff did not alter its position or take actions to its detriment based on Parks Canada’s misrepresentation. In fact, rather than relying on Parks Canada’s interpretation of the Lease, the plaintiff challenged it from the outset. When Ms. Bardsley informed the plaintiff, on January 15, 2021, that the proposed five commercial accommodation units went beyond the original intent of the Lease, the plaintiff communicated its disagreement on January 19, 2021. The plaintiff continued to assert its disagreement by resubmitting its proposal a second time in September 2021 and ultimately retaining legal counsel in December 2021. The plaintiff unequivocally refuted and actively challenged the misrepresentation and as such did not detrimentally rely on it. It is therefore plain and obvious that the Claim does not disclose a reasonable cause of action in negligent misrepresentation because the essential element of detrimental reliance is not made out.
[12] A statement of claim can be struck without leave to amend if the defect is not one that can be cured by amendment: Simon v Canada, 2011 FCA 6 at paragraph 8. On the limited record before me, it appears the nature of the dispute between the parties is contractual. For this reason, the plaintiff may well have a contractual claim against Parks Canada, possibly on the basis of the principles set out in cases such as Bhasin v Hrynew, 2014 SCC 71, [2014] 3 SCR 494; CM Callow Inc v Zollinger, 2020 SCC 45; Wastech Services Ltd v Greater Vancouver Sewerage and Drainage District, 2021 SCC 7. While the facts as pleaded do not disclose a cause of action in negligent misrepresentation, they may possibly be restated so as to disclose a contractual claim.
[13] For this reason, I will strike the plaintiff’s Claim and grant it leave to amend its pleading.
ORDER in T-2090-22
THIS COURT ORDERS that:
The plaintiff’s Statement of Claim is struck in its entirety;
The plaintiff is granted leave to amend its Statement of Claim;
The Attorney General of Canada be awarded costs of this motion in the amount of $800.00.
"Sébastien Grammond"
Judge
FEDERAL COURT
SOLICITORS OF RECORD
Docket:
T-2090-22
STYLE OF CAUSE:
10066055 MANITOBA LTD. v PARKS CANADA AGENCY
MOTION IN WRITING CONSIDERED AT OTTAWA, ONTARIO, PURSUANT TO RULE 369 OF THE FEDERAL COURTS RULES
ORDER AND REASONS:
GRAMMOND J.
DATED:
february 16, 2023
APPEARANCES:
Kathleen Coutts
For The Plaintiff
Erin Harley
For The Defendant
SOLICITORS OF RECORD:
Tapper Cuddy LLP
Barristers and Solicitors
Winnipeg, Manitoba
For The Plaintiff
Attorney General of Canada
Ottawa, Ontario
For The Defendant