A Justice of the Ontario Superior
Court of Justice has granted summary judgment and has summarily
dismissed a counterclaim in a case in which a cheese producer
alleged that its supplier had fraudulently withheld information
concerning the Canadian Food Inspection Agency's labelling
requirements for "Omega3 Cheese". The Court relied, among
other things, on the fact that there was no proof of any
representations to this effect and the License Agreement entered
into between the supplier and the cheese manufacturer which
excluded representations and warranties with respect to
merchantability and fitness for purpose and the "ability to
obtain regulatory approval". (EFI Technologies Inc. v. Silani
Sweet Cheese Ltd., CALN/2015-008,  O.J. No. 1222, Ontario Superior Court
Food Labelling -- Misrepresentation of Labelling
The Plaintiff, EFI Technologies Inc. ("EFI") applied
for summary judgment in the amount of $148,414.45 against the
Defendant, Silani Sweet Cheese Ltd. ("Silani") for milk
sold by EFI to Silani, and summary dismissal of Silani's
The milk was sold pursuant to a Licensing Agreement dated July
8, 2011 in which Silani agreed to pay $0.03 per litre for milk that
EFI produced pursuant to an agreement with Dairy Farmers of
Ontario. The milk was to contain "a minimum DHA content of
.30% and a total long chain Omega3 content of 1.00% of fatty
The License Agreement required EFI to provide Silani with a
minimum of 3,000,000 litres of milk per year.
The License Agreement also contained an acknowledgement by
Silani that EFI was not making "ANY REPRESENTATION OR WARRANTY
AS TO THE MERCHANTABILITY OR FITNESS FOR ANY USE" of EFI's
"TECHNOLOGY" or "AS TO THE SAFETY, EFFICIENCY and
ABILITY TO OBTAIN REGULATORY APPROVAL".
Silani had told EFI of its intention to use the milk to create a
product labelled as "Omega3 Cheese".
Silani's ability to label its product was subject to
Canadian Food Inspection Agency ("CFIA") review.
In July of 2012, the CFIA required changes to Silani's
labelling. These changes had a negative impact on sales.
Silani filed a Counterclaim seeking $500,000.00 in damages.
Silani alleged, among other things, that EFI had knowledge of
CFIA's regulations and that EFI knew Silani could not sell
cheese labelled as "Omerga3 Cheese".
Decision: Dow, J. granted summary judgment to EFI and summarily
dismissed the Silani's Counterclaim [at para. 7 and 10].
Dow, J. concluded [at para. 6] that the key aspects of the
The terms of the License Agreement
which did not include any representation with respect to how the
milk was to be used or sold as Omega3 Cheese but which did include
the exclusion clause quoted above.
The absence of any evidence to
support the allegation the Plaintiff had made a specific
representation that Silani could sell cheese labelled as
The continued acceptance of milk and
payment for milk after the CFIA required a change to the
The Court rejected Silani's argument that EFI knew Silani
could not label and sell its "Omega3 Cheese" and that EFI
remained silent concerning its knowledge of this reqiurement [at
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