Executive Summary: Key Legal and Evidentiary Issues

• North West's motion to strike asked whether the proposed class claim over the Nutrition North Canada subsidy disclosed any reasonable cause of action under Rule 25.11(1)(d).
   
• Over the plaintiffs' objection, the court relied on the Beaulieu affidavit and the 2024 funding agreement because the claim incorporated the agreement by reference.
   
• Third-party beneficiaries cannot sue to enforce someone else's contract, so the breach of contract claim failed.
   
• Unjust enrichment failed at the first stage because the funding agreements and the retail sales were contracts.
   
• Causation was missing from the Competition Act and provincial consumer protection claims, since the plaintiffs pleaded they would have made the same purchases anyway.
   
• Calling the claims novel did not save them, because established legal tests made them non-viable.
   

Facts of the case

The North West Company LP, NWC GP Inc. and The North West Company Inc. (together, North West) operate grocery stores in northern Alberta, Saskatchewan, Manitoba, Ontario, Quebec, and Newfoundland and Labrador, as well as the Yukon, the Northwest Territories and Nunavut. In many northern communities, North West has monopoly or near-monopoly control of the retail grocery market, and its customers are primarily Indigenous. Because food costs are high in the north, the federal government funds the Nutrition North Canada program (NNC). Under funding agreements with the Department of Crown-Indigenous Relations and Northern Affairs, retailers including North West receive a subsidy, and North West has received subsidy payments since the program began in 2011.

Four plaintiffs, Nellie Taptaqut Kusugak, Malaya Qaunirq Chapman, Isabelle Mark Chapadeau and Chief Darryl Kelly Wastesicoot, are Indigenous residents of northern communities who regularly make purchases from North West. Their proposed class covers all persons and entities who bought subsidy-eligible goods from North West and its subsidiaries from April 1, 2011, to the present day. They alleged that North West kept part of the subsidy as profit, partly by imposing higher profit margins on eligible products, and falsely told both the federal government and the class that it passed the full subsidy on to consumers. Their Fresh as Amended Statement of Claim, filed September 3, 2025, pleaded breach of contract, unjust enrichment, breach of s. 52 of the Competition Act with damages under s. 36, and breach of The Business Practices Act and equivalent consumer protection legislation in other provinces and territories.

North West moved to strike the claim. It argued that the case amounted to customers believing they paid too much for groceries. It also argued that the federal government might or should seek recovery of any improperly retained funds under its funding agreements, which raised the prospect of double recovery. The plaintiffs separately sought leave to amend their already amended claim.

Policy and legislative provisions at issue

A condition of the NNC funding agreements is that retailers pass the full subsidy to consumers by reducing the sales price of eligible foods by the full amount received. Only North West and the federal government are parties to these agreements, and they do not contemplate rights for third parties. North West filed an affidavit from Michael Beaulieu, a Vice-President of The North West Company Inc., attaching the funding agreement for April 2024 to March 2027. He confirmed that none of the funding agreements he reviewed contains language expressly or explicitly granting contractual rights to third parties.

The court identified the relevant terms of the 2024 agreement. The agreement is between His Majesty the King in right of Canada and The North West Company, and its purpose is to fund North West's administration of the NNC. Section 15 gives the government rights if North West does not comply, including withholding funding. Section 24 requires North West to take any reasonably necessary actions to remedy default or risk termination, and Section 30 allows North West itself to terminate. No rights are given to any other party, including the plaintiffs. Separately, the plaintiffs pointed to Schedule 4, Section 2, which requires the recipient to administer the program in accordance with the Nutrition North Canada Program National Manual. That manual was not attached to the affidavit.

On the statutory side, s. 36 of the Competition Act requires a plaintiff to plead actual loss, conduct contrary to Part VI, and a causal link between the two. Under Manitoba's consumer protection statute, s. 23(2)(a) refers to "loss suffered" and s. 23(3) places an onus on the consumer to "minimize any damage."

Reasoning and analysis

On a motion to strike, the court accepts the pleaded facts as true and asks whether it is plain and obvious that the claim is certain to fail, a remedy reserved for the clearest of cases. As a preliminary matter, the plaintiffs asked the court to disregard the Beaulieu affidavit entirely. They argued that it ran afoul of the rule against evidence on such motions, covered less than two years of a class period spanning over 14 years, and omitted the operative manual. The court rejected these objections. Since the claim expressly relied on the funding agreement, the agreement was incorporated by reference and formed an integral part of the factual matrix. It was also open to the plaintiffs to bring forward the manual or other agreements if those documents helped their position. None were filed, which left their completeness argument conjectural and speculative.

The breach of contract claim rested on the plaintiffs being the intended beneficiaries of the funding agreements. Relying on the Supreme Court of Canada's decisions in London Drugs and Fraser River, the court held that the third-party beneficiary doctrine works only as a shield, letting a non-party rely on a contract defensively. It cannot be used as a sword to sue the contracting parties. Courts in British Columbia, Ontario and Manitoba, including this court in Moss v. BMO Nesbitt Burns Inc., have consistently refused offensive use of the doctrine. Even the rare exception described in Moss, where a contract contains express language making a party liable to a third party, could not apply, because no such language exists here. Policy reasons pointed the same way, since private suits by beneficiaries over government funding agreements would frustrate program delivery.

Unjust enrichment failed at the first stage of the test in Moore v. Sweet, which ends the analysis if the benefit was conferred under a contract. The plaintiffs themselves pleaded the funding agreements under which North West received the subsidy. Any complaint that North West was not properly administering those agreements was the basis for a breach of contract claim, and only the federal government could bring that claim. A second contract also stood in the way: customers bought goods at the shelf price under contracts of purchase and sale.

The Competition Act claim failed on causation. Rather than pleading detrimental reliance, or that they would have made different purchases, bought less or paid different prices, the plaintiffs pleaded that they shopped at North West because they had no viable alternative. On their own pleading, they would have made the same purchases anyway. What the federal government was told was not relevant to their claim. Their causation theory also contradicted their own allegation that they paid higher prices because North West imposed higher profit margins, not because of any representation. Lin v. Airbnb, Inc. did not help them, because the plaintiffs did not allege that North West charged more than the stated price. Zanin v. Ooma, Inc. was equally unhelpful, as no pleaded facts showed that North West's representations changed the shelf prices the plaintiffs paid.

The consumer protection claims shared the same defect. Under the Nunavut, Yukon and Northwest Territories statutes, which imply terms into consumer contracts rather than creating a freestanding cause of action, the claims appeared not to be permitted. Ontario requires at least a pleading that the product could have been bought elsewhere for less or was worthless, and the plaintiffs did not and could not plead that. Reliance is required in Alberta, Saskatchewan and Newfoundland and Labrador. Manitoba requires a representation that caused an avoidable loss, and Quebec requires a misrepresentation capable of influencing consumer behaviour. Because the plaintiffs never denied they would have bought the same goods, causation failed under the consumer protection legislation of all provinces. Their appeal to novelty also failed, since novelty describes new or unsettled areas of law and cannot rescue claims that established tests render non-viable.

Ruling and overall outcome

The Court of King's Bench of Manitoba granted North West's motion and struck every cause of action in the plaintiffs' claim, including breach of contract, unjust enrichment, the Competition Act claims and all consumer protection claims. By agreement of all parties at the hearing, further argument and a decision on the plaintiffs' motion for leave to amend were deferred until the plaintiffs could consider these reasons. North West was the successful party, but the decision orders no damages and does not address costs, so no monetary amount was awarded.