Motion judge did not properly consider prospect of success of premature commercialization claim

Fraud and misrepresentation - Negligent misrepresentation (Hedley Byrne principle)

Plaintiff was Ontario corn grower and defendant was seller of corn seed containing genetically modified trait (“seed”). Seed had been approved for sale in North America but had not been approved by regulatory officials in China. Plaintiff commenced proposed class action against seller on behalf of itself and others similarly situated in Canada. Plaintiff alleged that defendant negligently commercialized seed prematurely without foreign approvals and made negligent misrepresentations about its application for approval of seed in China. Commercialization of seed by defendant when it had not been approved for import by Chinese regulators led to barring of all North American corn from Chinese market, leading to surplus of corn that could only be sold in North America, leading to fall in price of corn and losses to plaintiff and prospective class members. Plaintiff alleged losses resultant of defendant's neligence in negligent misrepresentations, breach of Competition Act, and premature commercialization of seed. Defendant was successful on motion to dismiss action on basis that it did not disclose reasonable cause of action. Plaintiff appealed. Appeal allowed in part. It could not be said on facts that plaintiff had no reasonable prospect of successfully establishing that defendant owed it duty of care not to negligently prematurely commercialize seed and motion judge erred in dismissing that claim. Plaintiff's reliance on defendant's representation was outside scope of proximity between it and defendant, thus there was no reasonable prospect that claim in negligent misrepresentation could succeed. Motion judge did not consider whether full proximity analysis and consideration of reasonable foreseeability would reveal reasonable prospect of success in establishing duty of care sufficient to support premature commercialization claim.

Darmar Farms Inc. v. Syngenta Canada Inc. (2019), 2019 CarswellOnt 15611, 2019 ONCA 789, Grunt Huscroft J.A., Gary Trotter J.A., and B. Zarnett J.A. (Ont. C.A.); reversed (2018), 2018 CarswellOnt 19926, 2018 ONSC 7129, H.A. Rady J. (Ont. S.C.J.).

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