DATE: 20030605

DOCKET: C38082

COURT OF APPEAL FOR ONTARIO

WEILER, GOUDGE AND ARMSTRONG JJ.A.

B E T W E E N:

ALINE BOULANGER

Chris Morrison Joel Rochon Gary Will

Appellant

(Plaintiff)

for the appellant

• and -

S. Gorden McKee

JOHNSON & JOHNSON CORPORATION, JOHNSON & JOHNSON MEDICAL PRODUCTS INC./ PRODUITS MEDICAUX JOHNSON & JOHNSON INC., JANSSEN-ORTHO INC. and THE ATTORNEY GENERAL OF CANADA

Kathryn J. Manning for the respondents

Respondents (Defendants)

Heard: November 15, 2002

On appeal from the judgment of Justice Ian V.B. Nordheimer of the Superior Court of Justice dated March 20, 2002.

GOUDGE J.A.:

[1] In this action the appellant, Aline Boulanger, is suing Johnson & Johnson Corporation, two of its subsidiaries (Johnson & Johnson Medical Products Inc./Produits Medicaux Johnson & Johnson Inc., and Janssen-Ortho Inc.) and the Attorney General of Canada. The three Johnson & Johnson companies are the respondents in this appeal. The Attorney General of Canada did not participate in this court.

[2] The action is brought as a proposed class action on behalf of all persons in Canada (and their relatives) who used the prescription drug Prepulsid, which was manufactured by the respondents. The drug was approved by Health Canada in 1990 for sale in Canada to treat certain gastrointestinal disorders. The statement of claim alleges that the appellant has suffered serious health problems as a result of taking Prepulsid, that this was true for many who ingested it and that the drug provided no beneficial effect to its users. As a consequence of these proceedings, it was withdrawn from general distribution in August 2000.

[3] The statement of claim alleges a number of causes of action against Health Canada which are not relevant for this appeal. As against the respondents, the appellant alleges liability based on negligence, failure to warn, breach of fiduciary duty, breach of warranty and collateral contract, and seeks damages as a result. These too are not in issue in this appeal.

[4] However, two claims by the appellant are central to this appeal.

[5] First, in addition to her other claims, the appellant seeks damages from the respondents based on the filings made by the respondents with Health Canada for the purpose of obtaining its approval to market Prepulsid in Canada. The appellant alleges that in making these filings, the respondents were fraudulent or negligent and failed to comply with the provisions of the Food and Drugs Act, R.S.C. 1985, c. F-27.

[6] Second, the appellant claims reimbursement of the purchase price paid for the drug.

[7] The respondents moved under rule 21.01(1) to strike the paragraphs supporting both claims as disclosing no reasonable cause of action. The motions judge agreed, and as a result, struck out a number of paragraphs of the statement of claim. This is the appeal from that order.

[8] It is common ground that the test to be applied to the contested paragraphs in the pleading is whether it is plain and obvious that they disclose no reasonable cause of action.

[9] The first set of paragraphs which were struck are those dealing with the respondents’ filings with Health Canada. There the appellant pleads that in order to sell Prepulsid in Canada, the respondents had to seek regulatory approval from Health Canada. The appellant says that the respondents’ filings to obtain this approval were fraudulently or negligently prepared and failed to comply with the provisions of the Food and Drugs Act. The respondents failed to disclose to Health Canada problems about which the respondents knew or ought to have known.

[10] The motions judge found that in so far as these pleadings simply allege a nominate tort of breach of statute, they cannot be sustained. I agree. While a statutory requirement can inform a common law duty of care, there is no cause of action in tort for breach of a statute. See Canada v. Saskatchewan Wheat Pool, 1983 21 (SCC), [1983] 1 S.C.R. 205.

[11] The motions judge also concluded that these pleadings could not be sustained on the basis of negligent misrepresentation. Again I agree. It is clear that in Canada, actual reliance is a necessary element of an action in negligent misrepresentation and its absence will mean that the action cannot succeed. See Hercules Managements Ltd. v. Ernst & Young, 1997 345 (SCC), [1997] 2 S.C.R. 165 at para. 18. Here there is absolutely no assertion of reliance by the appellant (or by anyone on her behalf) on the representations of the respondents to Health Canada. Indeed there is no pleading of reliance on the fact of regulatory approval. This complete absence of reliance is fatal to a negligent misrepresentation claim. Thus these paragraphs of the statement of claim cannot be said to disclose a reasonable cause of action based on misrepresentation.

[12] However, in my view, the paragraphs are sustainable on the basis of the appellant’s negligence claim against the respondents. That claim is broadly pleaded. The appellant alleges that the respondents negligently designed, formulated, tested, manufactured, labelled, distributed, advertised, marketed and promoted Prepulsid and thus caused harm to the appellant.

[13] There is no doubt that the respondents owed a duty of care to the appellant as a consumer of their drug product. The respondents concede as much in their factum. The only question is whether that duty can be said to extend to the representations which the respondents made to Health Canada to obtain the regulatory approval needed to market Prepulsid in this country.

[14] The appellant’s allegation is that the standard of care required of the respondents includes taking reasonable care in the filings they made to obtain regulatory approval and that without that approval, Prepulsid would not have been available to harm the appellant. These filings are pleaded as an aspect of the respondents’ conduct which caused the appellant harm and which fell below the standard required of a reasonable drug manufacturer. They are one of the ways in which the appellant says the respondents were negligent. Framed this way, I cannot say that it is plain and obvious that such a claim will fail. Indeed the claim could appropriately be viewed as one of negligent misstatement. See Haskett v. Equifax Canada Inc., 2003 32896 (ON CA), [2003] O.J. No. 771 (C.A.), leave to appeal to S.C.C. requested.

[15] Thus I would allow this aspect of the appeal and dismiss the motion to strike these paragraphs of the statement of claim (namely, the first sentence of paragraph 3 the words “which the Plaintiff states were fraudulently and/or negligently prepared and in violation of the provisions of the Food and Drug Act”, in paragraph 20 the words “and for damages resulting from the fraudulent and/or negligent filings with Health Canada to obtain its approval for Prepulsid and failure to comply with the provisions of the Food and Drug Act” and paragraph 29, paragraph 56(n) and paragraphs 63.1 through 63.6).

[16] The second set of paragraphs struck from the statement of claim asserts that the appellant is entitled to reimbursement for the full purchase price which she paid for Prepulsid. This is not pleaded as damages for the respondents’ unlawful conduct. There is a separate pleading which seeks the purchase price as a part of the damages claimed and which is not attacked by the respondents.

[17] In seeking to reverse the order striking these paragraphs, the appellant offers three arguments. In my view, they are each easily answered.

[18] First, the appellant says that reimbursement is properly claimed as a remedy for the negligence which she has pleaded. I disagree. The reimbursement sought in these paragraphs is not pleaded as damages for the harm caused by the respondents’ negligent conduct, but simply as a claim for the return of monies paid. Put that way rather than as damages, the respondents’ negligence cannot yield the entitlement to reimbursement pleaded.

[19] Second, the appellant also claims reimbursement as a remedy for the respondents’ alleged breach of contract. Again I disagree. The claims of breach of contract as against the respondents (including implied warranty) were not attacked in this motion, but assuming that they can be successfully maintained by the appellant against the manufacturer of the drug (who is not the seller), reimbursement (as distinct from damages equivalent to the purchase price) would not follow as a remedy. Reimbursement would come only with rescission of the contract and that is not available here, since the drugs cannot be returned. The parties cannot be restored to their pre-contractual positions. See Kingu v. Walmar Ventures Ltd. (1986), 1986 142 (BC CA), 10 B.C.L.R. (2d) 15 (C.A.).

[20] Third, the appellant seeks to support these paragraphs on the basis of unjust enrichment. In my view this argument also fails. The difficulty is that the purchase price for which the appellant seeks reimbursement was paid to the retailer not to the respondents. Any benefit to the respondents from this payment was indirect and only incidentally conferred on the respondents. Unjust enrichment does not extend to permit such a recovery. In Peel (Regional Municipality) v. Canada; Peel (Regional Municipality) v. Ontario, 1992 21 (SCC), [1992] 3 S.C.R. 762, McLachlin J. said this at para. 58:

To permit recovery for incidental collateral benefits would be to admit of the possibility that a plaintiff could recover twice – once from the person who is the immediate beneficiary of the payment or benefit (the parents of the juveniles placed in group homes in this case), and again from the person who reaped an incidental benefit. [Citations omitted.] It would also open the doors to claims against an undefined class of persons who, while not the recipients of the payment or work conferred by the plaintiff, indirectly benefit from it. This the courts have declined to do. The cases in which claims for unjust enrichment have been made out generally deal with benefits conferred directly and specifically on the defendant, such as the services rendered for the defendant or money paid to the defendant [emphasis added].

[21] Thus I would dismiss the appeal from the order striking these paragraphs from the statement of claim.

[22] Success being divided, there should be no order of costs in this court.

Released: June 5, 2003 “KMW”

“S.T. Goudge J.A.”

“I agree K.M. Weiler J.A.”

“I agree Robert P. Armstrong J.A.”