** HIGHLIGHTS ** *
- 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, [2015] O.J. No. 1222, Ontario Superior Court of Justice)
** NEW CASE LAW **
EFI Technologies Inc. v. Silani Sweet Cheese Ltd.; CALN/2015-008, Full text: [2015] O.J. No. 1222; 2015 ONSC 789, Ontario Superior Court of Justice, G.R. Dow J., March 12, 2015.
Food Labelling -- Misrepresentation of Labelling Requirements.
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 Counterclaim.
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 acid".
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 evidence included:
- 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 "Omega3 Cheese".
- The continued acceptance of milk and payment for milk after the CFIA required a change to the labelling.
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 para. 8].
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