COURT OF APPEAL FOR ONTARIO

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)

Counsel: Alexander D. Pettingill, Joyce Tam and Natasha O’Toole, 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 Ontario’s 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 legislation’s 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 action—defamation and negligence.

[ 5 ] Trent moved under s. 137.1 of the CJA to dismiss the part of Subway’s 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 ] Trent’s 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 Trent’s 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 Trent’s appeal from the dismissal of its motion. With the benefit of the Supreme Court’s 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 Subway’s claim for pure economic loss against Trent. Subway’s negligence claim ought to have been dismissed. The motion judge erred in concluding otherwise.

[ 10 ] Given those conclusions, the motion judge’s 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 Subway’s 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 Trent’s 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 CBC’s 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 Subway’s chicken sandwiches were 50% soy. It does not appear that Subway was aware that the lab was Trent. Subway’s response to CBC was that its chicken sandwiches contained 1% or less soy, and CBC relayed this response to Trent. Trent advised CBC that Subway’s 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, Subway’s 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 Subway’s 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 Trent’s s. 137.1 motion below, in order to appreciate the issues on this appeal.

[ 22 ] First, Trent’s 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 Subway’s 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 Trent’s testing was inaccurate and fell below the standard of care of a testing laboratory. Trent led no evidence to challenge Subway’s 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 Judge’s Decision

[ 25 ] The motion judge dismissed Trent’s 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 Subway’s 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 Trent’s laboratory testing, standards, and methodology, not the reporting of the results.

[ 26 ] Since Trent’s 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 Subway’s 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 arguable—and 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 Subway’s 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 party’s 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 Threshold—Is 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 encourage—express 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 (SCC), 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. Gagnon’s testimony at the OMB. There is thus a clear nexus between Mr. Gagnon’s 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 (SCC). 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 Subway’s 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 [Subway’s] 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 Trent’s 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 Trent’s “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 Trent’s 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 Trent’s testing, in equally important and fundamental ways it is concerned with Trent’s 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 Trent’s 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 Subway’s claim is that the purpose of Trent’s 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 Trent’s motion did not pass the initial threshold requirement. Contrary to the motion judge’s 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 Subway’s 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 Court’s decision in Pointes (SCC), 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 (SCC), which is an error of law, it is necessary to undertake that examination here.

B. Is Subway’s 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, aff’d (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 plaintiff’s reputation (i.e. where there are further damages arising from the defendant’s 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 plaintiff’s 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 ] Subway’s 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 Trent’s 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 Trent’s 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 court’s 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 company’s 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 ] Trent’s 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, Subway’s 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 Subway’s 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 ] Subway’s 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 Subway’s 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 Trent’s 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 ] Subway’s negligence claim is one for pure economic loss, that is, “economic loss that is unconnected to a physical or mental injury to the plaintiff’s 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 Foods Inc..

[ 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 plaintiff’s 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 (SCC) 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 defendant’s 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, aff’d 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 relationships—be they established, analogous, or novel—are 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 ways—that is, invoking one of the categories of types of cases—does 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 satisfied—and, 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 court’s treatment of these categories, to better ensure that, in analyzing Subway’s claim, effect is being given to the implications of Livent and Maple Leaf (SCC).

[ 91 ] For cases in the category of negligent misrepresentation or performance of a service, two factors are determinative of whether proximity is established: the defendant’s undertaking, and the plaintiff’s 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 defendant’s 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 plaintiff’s reliance upon the defendant’s 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 defendant’s 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 defendant’s undertaking upon the plaintiff’s autonomy that brings the defendant into a relationship of proximity, and therefore of duty, with the plaintiff. Where that effect works to the plaintiff’s detriment, it is a wrong to the plaintiff. Having deliberately solicited the plaintiff’s 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 plaintiff’s 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 defendant’s undertaking of responsibility and the plaintiff’s 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 plaintiff’s 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) Subway’s 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 service—testing Subway’s products—and that Trent’s carelessness in testing led it and CBC to make false statements about those products, thereby affecting consumer behaviour and causing Subway’s 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 ] Subway’s 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 service—testing—and 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 category—an 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 reliance—a change of position—by 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 Trent’s 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 Trent’s testing results as soon as it learned of them—it 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 plaintiff’s 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 plaintiff’s right and justify the correlative duty. Neither is present in this case. Nor, like a case in the shoddy goods category, does Subway’s 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) Subway’s 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 Subway’s 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., aff’d 2011 ONCA 244; Green v. The Hospital for Sick Children, 2017 ONSC 6545, aff’d 2018 ONSC 7058 (Div. Ct.); Bertin v. Kristofferson, rev’d 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 plaintiff’s child: at para. 111. In Bertin and Neufville, both of which pre-date the Supreme Court’s 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 plaintiff’s interests, where the results of the testing would be used to determine a course of treatment or some other intervention in the plaintiff’s 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 insured’s 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 plaintiff’s medical records and provided an opinion to the insurer which it relied on to deny the plaintiff’s 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 (SCC), 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 Subway’s claim. The court in Haskett did not have the benefit of the Supreme Court’s jurisprudence in Livent and Maple Leaf (SCC); 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 court’s 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 Subway’s 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 plaintiff’s 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, Subway’s cases do not show truly analogous relationships, in analogous circumstances.

(b) Subway’s Novel Duty of Care Argument

[ 121 ] A further difficulty facing Subway’s 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 person’s 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 Subway’s 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) Subway’s 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 ] Subway’s 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 Trent’s tests. Trent was provided with Subway’s response to the test results through CBC, and told CBC that Subway’s response—that disagreed with the results of Trent’s tests about the content of its product—was 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. Subway’s 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 (SCC) 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 Trent’s 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. Subway’s negligence claim lacks a real prospect of success. It is not legally tenable.

(4) The Costs Appeal

[ 132 ] Given my conclusions above, the motion judge’s costs order, which was premised on the failure of Trent’s motion, must be set aside.

IV. CONCLUSION

[ 133 ] I would allow Trent’s appeal, set aside the motion judge’s order, and replace it with an order dismissing Subway’s 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. CBC’s motion succeeded, and Subway’s 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.