IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR  
GENERAL DIVISION  
Citation: Walsh v. TRA Company Limited, 2022 NLSC 6  
Date: January 19, 2022  
Docket: 200101T1035  
BETWEEN:  
DAVID WALSH and LENORA WALSH  
FIRST PLAINTIFF  
AND:  
TRA COMPANY LIMITED  
FIRST DEFENDANT  
AND:  
FOODLAND LIMITED  
SECOND DEFENDANT  
AND:  
SOBEYS GROUP INC.  
THIRD DEFENDANT  
AND:  
SOBEYS CAPITAL INCORPORATED  
FOURTH DEFENDANT  
AND:  
SOBEY’S LAND HOLDINGS LIMITED  
FIFTH DEFENDANT  
AND:  
JOSEPH GREEN  
SIXTH DEFENDANT  
Before: Justice Glen L.C. Noel  
Page 2  
Place of Hearing:  
Dates of Hearing:  
St. John’s, Newfoundland and Labrador  
November 23 27, 30; December 1 3, 7 –  
11; 14 18, 2020; and January 4 8; March  
29 31; June 28, 29; July 5 and 6, 2021  
Summary:  
The Plaintiffs were the sole shareholders of corporations that owned and operated  
grocery stores in the Town of Bay Bulls under the Foodland banner and on  
Merrymeeting Road in St. John’s as Walsh’s Family Foods. They sold their shares  
in the corporations that operated the stores in 1995 and 1996, respectively.  
They claim their corporations were not supplied goods by Defendant TRA at the cost  
arrangement that TRA had promised them, and that they lost money on the sales of  
their shares in the corporations resulting from the Defendants’ failure to pay the  
promised trade deals. Their action seeks damages from the Defendants for negligent  
or fraudulent misrepresentation.  
The Court held:  
1. The Walshes have not established the elements necessary to prove negligent  
or fraudulent misrepresentations.  
2. The Walshes’ claims for negligence, negligent misrepresentation, and  
personal losses for fraudulent misrepresentation are statute-barred by s. 5(a)  
and (b) of the Limitations Act. The only claim not time-barred (but dismissed  
for no liability) is for economic losses arising from fraudulent  
misrepresentation governed by s. 6(c) of the Limitations Act.  
3. The Walshes failed to establish (i) an independent and separate wrong to them  
personally as shareholders, and (ii) the claims for loss of share value are  
damages sustained by the Corporations and not a direct loss to them as  
shareholders. The common law rule in Foss v. Harbottle precludes their  
claims, and denying the claims cannot be considered “too flagrantly opposed  
to justice.”  
Page 3  
4. The Walshes did not sustain any direct personal losses for which they can  
recover damages.  
5. The Walshes’ expert-opinion evidence is inadmissible, and the admissible  
evidence failed to prove the Walshes suffered losses associated with the sale  
of their shares in either of the Bay Bulls or Merrymeeting Road Corporations.  
The Court dismissed the action against the Defendants with no order as to costs for  
the reasons provided.  
Appearances:  
Paul D. Dicks, Q.C. and  
Megan S. Reynolds  
Appearing on behalf of the Plaintiffs  
Appearing on behalf of the Defendants  
Colm St. R. J. Seviour, Q.C.,  
Jonathan D. Dale and  
Christopher D. Goodridge  
Authorities Cited:  
CASES CONSIDERED: Walsh v. TRA Company Limited, 2016 NLTD(G)  
119; Foss v Harbottle, (1843) 67 E.R. 189, (1843) 2 Hare 461; Walsh v. TRA  
Co. [2006] N.J. No. 389, 2006 CarswellNfld 376 (N.L.S.C.(T.D.)); Walsh v.  
TRA Co., 2007 NLCA 50; Walsh v. T.R.A. Company Limited, 2015 NLTD(G)  
27; H.(F.) v. McDougall, 2008 SCC 53; Queen v. Cognos Inc, [1993] 1 S.C.R.  
87; Hercules Managements Ltd v. Ernst & Young, [1997] 2 S.C.R. 165; Lam  
v. Chiu, 2012 BCSC 440; R. v. B. (K.G.), [1993] 1 S.C.R. 740; Hennessey v  
Eastern Regional Health Authority, 2019 NLSC 239; Midland Resources  
Holding Ltd. v. Shtaif, 2017 ONCA 320; WEH Enterprises Ltd. v. Squires,  
2010 NLCA 41; Morgan v. Rogers, 2011 NLCA 27; Central & Trust Co. v.  
Rafuse, [1986] 2 S.C.R. 147; Ryan v. Moore, 2005 SCC 38; Grant Thornton  
LLP v. New Brunswick, 2021 SCC 31; Bauer v. Erben, 2007 NBQR 299;  
Brunette v. Legault Joly Thiffault, s.e.n.c.r.l., 2018 SCC 55; NPV  
Management Ltd. v. Anthony, 2003 NLCA 41; Danyluk v. Ainsworth  
Technologies Inc., 2001 SCC 44; Kosmopoulos v. Constitution Insurance Co.  
of Canada, [1987] 1 S.C.R. 2; 642947 Ontario Ltd. v. Fleischer (2001), 209  
D.L.R. (4th) 182, 56 O.R. (3d) 417 (C.A.); Salah v. Timothy’s Coffees of the  
Page 4  
World Iinc., 2010 ONCA 673; Yaiguaje v. Chevron Corporation, 2018 ONCA  
472 Groupe d’action d’investisseurs dans Biosyntech c Tsang, 2016 QCCA  
1923; Midland Resources Holding Ltd. v. Shtaif, 2017 ONCA 320; Tran v.  
Bloorston Farms Ltd., 2020 ONCA 440; McGowan v. Bank of Nova Scotia,  
2010 PESC 17, affd 2001 PECA 20; 3Com Corp. v. Zorin International  
Corp., 2006 CarswellOnt 3333, 148 A.C.W.S. (3d) 819 (C.A.), Catalyst Pulp  
& Paper Sales Inc. v. Universal Paper Export Co., 2008 BCSC 515;  
Streamside Engineering & Development Ltd. v. Canadian Imperial Bank of  
Commerce, [1990] Nfld. & P.E.I.R. 220, 266 A.P.R. 220 (N.L.S.C.(T.D.));  
Cuscuna c. Ferrarelli, 2017 QCCS 2475; Rogers v. Bank of Montreal (1985),  
30 B.L.R. 41, 64 B.C.L.R. 63 (S.C.); Rogers v. Bank of Montreal, [1987] 2  
W.W.R. 364, 9 B.C.L.R. (2d) 190 (C.A.); Scotia Mortgage Corp. v. Lockhart,  
2011 CarswellOnt 15667, [2012] O.J. No. 1143 (Sup. Ct. J.); Scotia Mortgage  
Corp. v. Lockhart, 2012 ONCA 158; leave to appeal denied, 303 O.A.C. 400  
(note), 440 N.R. 394 (note); Martin Marietta Materials Canada Ltd. v. Beaver  
Marine Ltd., 2016 NSSC 225; Piccolo v. Piccolo, 2014 ONSC 5280; White  
Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23; Walsh  
v. TRA Company Limited, 2019 NLSC 131; Bye v. Newman, 2016 BSSC 267;  
Hiscott v. Hall, 2015 NLCA 1; Walsh v. TRA Company Limited,  
2019 NLSC 167  
STATUTES CONSIDERED: Limitations Act, S.N.L. 1995, c. L-16.1;  
Limitation of Actions Act, S.N.B 2009, c. L-8.5; Corporations Act, R.S.N.L.  
1990, c. C-36; Judicature Act, R.S.N.L. 1990, c. J-4  
RULES CONSIDERED: Rules of Supreme Court, 1986, S.N.L. 1986, c. C-  
42, Sch. D  
TEXTS CONSIDERED: Bruce MacDougall, Misrepresentation, (Toronto:  
LexisNexis, 2016)  
REASONS FOR JUDGMENT  
NOEL, J.:  
Page 5  
TABLE OF CONTENTS  
INTRODUCTION .......................................................................................................................... 8  
BACKGROUND .......................................................................................................................... 10  
How It Started for the Walshes and TRA Newfoundland.......................................................................11  
The Walshes Becoming Independent Foodland Operators.....................................................................11  
Merrymeeting Road Store Acquisition ...................................................................................................12  
Walshes’ Sale of their Stores and Shares................................................................................................13  
The Pleaded Causes of Action and Foundation of the Claims................................................................13  
Legal Constraints on the Claims .............................................................................................................14  
Documentary and Testimonial Evidence ................................................................................................16  
ISSUES ......................................................................................................................................... 17  
ANALYSIS................................................................................................................................... 18  
1. Did the Defendants negligently or fraudulently misrepresent to the Walshes the terms and  
conditions of the Supply Arrangement?.................................................................................... 18  
Context of the Two Alleged Misrepresentations ....................................................................................19  
Defendants’ Position on the Misrepresentation Allegations...................................................................20  
Burden and Standard of Proof.................................................................................................................21  
Elements of Negligent Misrepresentation..................................................................................... 21  
Duty of Care Based on “Special Relationship” or “Personal Relationship”...........................................22  
No Untrue, Inaccurate or Misleading Representations ...........................................................................24  
The 1983 Foodland Presentation, Including the Foodland Brochure .....................................................25  
David Walsh........................................................................................................................................25  
Lenora Walsh......................................................................................................................................26  
Joseph Green.......................................................................................................................................27  
The Secretly Taped Calls....................................................................................................................29  
Russ Tiller...........................................................................................................................................31  
Foodland Brochure..............................................................................................................................33  
‘Dead-Net’ Costing Commercially Unreasonable ..................................................................................34  
John Gardiner......................................................................................................................................34  
Darrell Rushton...................................................................................................................................35  
Rushton as a Source of Alleged Misrepresentation ............................................................................35  
Other Elements of Cognos Test Negligence and Reliance ..................................................................35  
Requirement to Show Damages..............................................................................................................37  
Page 6  
Elements of Fraudulent Misrepresentation ................................................................................... 37  
The Alleged Deceitful Conduct ..............................................................................................................38  
Sobeys Equivalent Cost or Pricing Misrepresentation after the Walshes Commenced Foodland  
Operations...............................................................................................................................................38  
Separateness of TRA and Sobeys Business Operations..........................................................................40  
Joseph O’Leary...................................................................................................................................41  
1984 Sobeys Supply Agreement.........................................................................................................42  
Misrepresentation Claims Ignore Foodland Program Benefits Offered to the Walshes’ Corporations..43  
Karl Vokey..........................................................................................................................................44  
Off-Invoice Allowance – Supplier’s Invoice Cost with 5% Upcharge Less the Deal .........................44  
Additional Price Support to Foodland Operators................................................................................45  
The Manual Override of the Supplier’s Invoice Cost on Non-Directs................................................47  
Rebates on Direct Products ................................................................................................................49  
Walshes’ Acknowledgement of Foodland Program Benefits..............................................................49  
Retail-Oriented Differences between Sobeys (corporate stores) and Individual Operators (Foodland  
stores)..................................................................................................................................................50  
Walshes’ Reliance on the Sobeys Departmental Analyses (SDAs)........................................................52  
TRA Financial Records...........................................................................................................................54  
2. Are any of the claims out of time and barred by the applicable statutory limitation period?... 55  
Limitations Decision...............................................................................................................................55  
Grant Thornton LLP v. New Brunswick..................................................................................................58  
Application of Discoverability to the Facts ............................................................................................59  
By-Cheque evidence ...........................................................................................................................60  
Tiller’s 1997 No Net-Net Cost Advice ...............................................................................................62  
Mr. Walsh’s Examination on Lunch Meetings in 1998 ......................................................................63  
January 29, 1999 Meeting with Counsel and Bill Moulton ................................................................64  
Fraudulent Concealment Doctrine Has No Application .........................................................................66  
3. Are the claims for losses to the Walshes’ Corporations precluded by the common law rule in  
Foss v. Harbottle, and if so, can this be considered “too flagrantly opposed to justice”?........ 67  
Sale of Shares in Bay Bull Store.............................................................................................................67  
Sale of Shares Respecting Merrymeeting Road Store ............................................................................68  
Application of Foss v Harbottle..............................................................................................................69  
Piercing the Corporate Veil ....................................................................................................................70  
ONCA Decisions in Midland Resources and Tran v. Bloorston ............................................................74  
No Independent Wrong to the Walshes as Individuals...........................................................................77  
Page 7  
Other Authorities Relied on by the Walshes...........................................................................................80  
4. Did the Walshes otherwise sustain any direct personal losses for which they can recover  
damages?................................................................................................................................... 82  
Derivative Claims Not Recoverable .......................................................................................................83  
Claim for Mental Anguish ......................................................................................................................84  
Corporations Act Remedies Not Availed of by the Walshes..................................................................86  
5. What, if any, damages can the Walshes establish through the admissible expert evidence for  
alleged losses resulting from having sold their shares at an artificially low price?.................. 86  
Admissibility of Expert Opinion of Ashley Power-Stack for the Walshes.............................................87  
The Guiding Authorities on Expert Opinion Evidence.......................................................................87  
Power-Stack’s Engagement as an Expert............................................................................................88  
Trial Ruling on Threshold Qualification of Power-Stack...................................................................90  
Cross-examination of Power-Stack on her Analysis Approaches.......................................................93  
Defendants’ Case Law on Admissibility of Expert Opinion...............................................................95  
Accepted Criticism of the Allowance Analysis by Defendants’ Expert .................................................96  
(i) The SDAs as compared to the financial statements of the Walshes’ Corporations .......................97  
(ii) The implied margins of the Walshes’ Corporations using Allowance Analysis...........................98  
(iii) The Implied Operating Profits of the Walshes’ Corporations......................................................99  
Walshes’ Objections to the Admissibility of the Glass Report.............................................................100  
Consideration Paid for the Shares.........................................................................................................102  
The Joint Consulting Agreement for Merrymeeting Road Sale........................................................103  
Other Material Points of Disagreement between the Experts ...............................................................104  
a) Grouping of the “Bulk Sales” Department with the “Grocery” Department ...............................105  
b) The Issue Relating to Valuation of Past and Future Losses ........................................................106  
c) Accounting for Notional Salary...................................................................................................107  
d) Approach to Estimating Maintainable EBITDA .........................................................................108  
No Losses Established on either Share Sale .........................................................................................110  
Bay Bulls...........................................................................................................................................110  
Merrymeeting Road ..........................................................................................................................111  
COSTS........................................................................................................................................ 111  
CONCLUSION........................................................................................................................... 113  
Page 8  
INTRODUCTION  
[1] David Walsh is a persistent and strong-willed gentleman, formerly involved  
in the retail grocery business. He refuses to let go of his understanding of the  
wholesale grocery supply arrangement he thought and hoped he had secured with  
TRA and Sobeys dating back to 1983.  
[2] He and his wife Lenora Walsh have been married 53 years. They are both in  
their late seventies. They worked extremely hard, and generously supported their  
community throughout their working lives. They won numerous awards for their  
accomplishments in supermarket customer service. They have endured much as a  
loving family, including the loss of their son to brain cancer before the Trial  
concluded.  
[3] Sobeys is a large successful national grocery wholesaler and retailer with  
several corporate arms, including TRA Newfoundland Limited and Foodland  
Limited.  
[4] The Walshes were the sole shareholders of corporations that owned and  
operated grocery stores in the Town of Bay Bulls and on Merrymeeting Road in St.  
John’s. They claim their corporations were not supplied goods and product by TRA  
at the cost arrangement they were promised. Their action seeks damages from the  
Defendants in tort for negligent or fraudulent misrepresentation.  
[5]  
The matter for determination in this case, as framed by Counsel for the  
Walshes in their Closing Trial Submissions, is:  
Whether the Walshes lost money on the sales of their shares in two companies as  
a result of the Defendants’ failure to pay various trade deals to the Walsh  
companies, which owned stores at Bay Bulls and Merrymeeting Road in  
St. John’s.  
 
Page 9  
[6] Counsel for the Defendants submit the Walshesmisrepresentation claims  
cannot succeed because:  
a) the claims are for losses to their corporations, and the law does not permit the  
Walshes as shareholders to recover for a wrong to the corporations;  
b) they are time-barred under the Limitations Act, S.N.L. 1995, c. L-16.1;  
c) their misrepresentation allegations are demonstrably unfounded; and  
d) even if their claims are somehow tenable, the Trial evidence confirms that no  
damages were incurred by either the Walshes or their corporations.  
[7]  
It is one of the longest active civil cases before our Court. The Walshes filed  
their action over 20 years ago, in 2001. There have been several filed decisions  
along the way in conduct of the proceedings. (see Appendix A)  
[8] A central figure in all of this is the Sixth Defendant, the late Joseph Green.  
He was the General Manager/President of TRA Newfoundland Limited until his  
retirement in 1990. He died long before the Trial commenced. His answer to the  
Walshes’ allegations did not go without preservation. Mr. Walsh secretly recorded  
private conversations with Green, and at the age of 85, Green provided four days of  
Discovery testimony. For the Walshes to succeed in their claim, I would have to  
find that Green repeatedly lied to Mr. Walsh a man he revered as a mentor and  
best friend.  
[9] Mr. Walsh’s preoccupation for all these years has been to expose and share in  
“all trade deals” that the buying power of TRA and Sobeys was able to generate. He  
claims that is what the Defendants promised, never passed-on, and never shared with  
his corporations. If they had, the Walshes’ corporations would have been more  
profitable and the value of their shares much higher.  
Page 10  
[10] On a best-case scenario, their expert opinion evidence, if admissible (which  
the Defendants strongly contest), puts the loss at $1,715,000.  
[11] I searched long and hard to find a path for the Walshes to succeed. I would  
like to be in a position to award them some measure of damages. But unfortunately,  
their claim is fraught with legal barriers and evidentiary shortfalls, and the damages  
not what the Walshes seek.  
[12] They had the finest of counsel in Paul D. Dicks, Q.C. and his extremely  
capable junior counsel, Megan S. Reynolds. Despite the very best in legal  
representation and an impressive expert witness, the law and established facts do not  
support any of the relief the Walshes are seeking.  
[13] The law restrains judges from doing what they prefer and their heart desires.  
I have to do what the law demands and the evidence reveals. As much as I want the  
Walshes to be vindicated and succeed in this lawsuit, I cannot be governed by my  
sympathy for them.  
[14] Mr. Walsh, in his testimony, said he was not looking for sympathy or  
vengeance but justice. It is my duty to explain to him and Mrs. Walsh why justice  
requires that I dismiss their action. It is a judgment that I take no comfort in  
delivering.  
[15] If there is any solace for the Walshes, for reasons that I will provide, I am not  
ordering costs against them.  
BACKGROUND  
[16] To appreciate the legal and factual issues engaged, I will lay out the  
chronology and background of the dispute.  
 
Page 11  
How It Started for the Walshes and TRA Newfoundland  
[17] Mr. Walsh in 1975 joined with three partners to incorporate Southern  
Discount Limited and purchase a convenience store business in Bay Bulls. Shortly  
thereafter, they built a 5000 square-foot Quonset hut (semi-circular metal building)  
and operated a supermarket. Mr. Walsh and his partner Tony Barton bought out  
their other partners in Southern Discount.  
[18] TRA got its start in Newfoundland in the early 1980s when Sobeys purchased  
the assets of an insolvent wholesaler. TRA with its warehousing capability began  
supplying product to the Sobeys stores; other Sobeys group banner stores, such as  
the Foodland; and some independents that included Southern Discount.  
[19] TRA and TRA Newfoundland Limited over the years went through various  
corporate amalgamations and renaming within the Sobeys group of companies, and  
ultimately amalgamated and continued as Sobeys Capital Incorporated (“Sobeys”).  
There is no dispute that the Walshes have named the responsible legal entities (I  
refer to TRA and TRA Newfoundland Limited interchangeably in these reasons).  
[20] In 1983, Mr. Walsh approached TRA for financial support to buy Tony Barton  
out of the Bay Bulls business. Mr. Walsh accepted TRA’s loan of $200,000 to allow  
him to buy out Barton for a total of $250,000.  
The Walshes Becoming Independent Foodland Operators  
[21] Foodland was a tradename owned by Sobeys and was used to expand sales in  
the province through the Foodland banner-store concept for small rural  
supermarkets. The Foodland Programwas a retail program provided by TRA.  
   
Page 12  
[22] In the fall of 1983, the Foodland Program was presented to Mr. and  
Mrs. Walsh. The meeting occurred at TRA’s office in Donovans Business Park.  
Mr. Walsh put the timing of this meeting as being in October/November 1983,  
shortly after the buyout of Barton.  
[23] Green and Russ Tiller of TRA, in the Foodland presentation meeting,  
reviewed and provided a brochure to the Walshes titled “The Foodland Program.”  
Following the meeting, Mr. and Mrs. Walsh, Green and his wife, and Tiller and his  
wife went out for a celebratory dinner.  
[24] The Walshes allege it was based on the representations made at the Foodland  
presentation meeting, together with discussions that Mr. Walsh had with Darrell  
Rushton, Sobeys Vice-President and subsequent President of wholesale operations,  
that they decided to become an independent Foodland banner store on January 1,  
1984.  
[25] Southern Discount was renamed Walsh’s Foodland Limited on February 29,  
1984, and operated at Bay Balls as “Walsh’s Foodland.The Walshes owned the  
shares of Davlen Holdings Limited, which held the shares of Walsh’s Foodland  
Limited.  
Merrymeeting Road Store Acquisition  
[26] In 1995, the Walshes incorporated DLW Investments Ltd. with the intent of  
purchasing a grocery business in St. John’s. DLW Investments proceeded with this  
acquisition in mid-1995, purchasing the Merrymeeting Road store, which it operated  
as “Walsh’s Family Foods.Although not a Foodland banner store, the supply  
arrangement also applied to Walsh’s Family Foods.  
 
Page 13  
WalshesSale of their Stores and Shares  
[27] The Walshes claim they relied on the representations of the Defendants to  
their detriment, resulting in the stores becoming unprofitable and forcing them to  
sell the stores.  
[28] On February 10, 1995, the Walshes sold their shares in Davlen Holdings, the  
company that owned the Bay Bulls store, to Sobeys, and on July 16, 1996, sold their  
shares in DLW Investments, the company that owned the Merrymeeting Road store  
to Colemans. (I will refer to Davlen Holdings and DLW Investments as the  
“Corporations”).  
The Pleaded Causes of Action and Foundation of the Claims  
[29] The Walshes assert three causes of action:  
(a) fraudulent misrepresentation;  
(b) negligent misrepresentation; and  
(c) negligence.  
[30] There is no pleaded claim for breach of contract. It was the Corporations, and  
not the Walshes, who are alleged to have been promised that TRA would pass along  
all trade deals, and/or TRA would charge the Corporations the same costs as the  
Sobeys stores.  
[31] The Walshes in their Further Amended Statement of Claim formally  
abandoned their prior-pleaded claim in contract.  
   
Page 14  
[32] The supply arrangement was an agreement between TRA and the  
Corporations (the “Supply Arrangement”). The Walshes as individuals and  
shareholders were not parties to any agreement or contract with TRA.  
[33] The Supply Arrangement consisted of TRA’s provision of products from  
TRA’s wholesale operations, called “Non-Directs,and the supply of products from  
suppliers, such as dairy products, potato chips and soft drinks, delivered directly to  
the Walshes’ stores and billed to and paid by TRA, known as “Directs.”  
[34] For good reason, counsel for the Walshes did not purse the claim in simple  
negligence in their Trial Brief or Closing Submissions. Nothing in the evidence  
otherwise supports a claim in negligence alone. In earlier proceedings before this  
Court (Walsh v. TRA Company Limited, 2016 NLTD(G) 119, at para 33, and referred  
to below as the “Limitations Decision”), the Walshes acknowledged that there is no  
independent claim in negligence for pure economic loss.  
[35] The only ground for liability against the Defendants rests on the alleged  
misrepresentations.  
Legal Constraints on the Claims  
[36] The Walshes’ claims are seriously constrained by the common law rule in  
Foss v Harbottle, (1843) 67 E.R. 189, (1843) 2 Hare 461, as well as prior judicial  
rulings in this matter.  
[37] Foss v. Harbottle stands for the fundamental principle of corporate law that a  
corporation and its shareholders are different entities and only the corporation can  
sue for a wrong done to it. Shareholders have no cause of action for wrongs done to  
their corporation. Shareholders cannot sue for consequential losses to themselves  
resulting from damage inflicted on their corporation in which they own shares.  
 
Page 15  
[38] Orsborn J struck the entirety of this action in 2006. He concluded, when  
viewing the Statement of Claim contextual as a whole, it “is a corporate loss claim  
and is not maintainable by individual shareholders(Walsh v. TRA Co. [2006] N.J.  
No. 389, 2006 CarswellNfld 376 (N.L.S.C.(T.D.)).  
[39] On appeal, the action was reinstated: Walsh v. TRA Co., 2007 NLCA 50  
(“Reinstatement Decision”). The Court of Appeal in the Reinstatement Decision  
was not prepared to find that the Walshes’ action could not succeed, given that they  
had pled certain personal duties owed to them and had alleged, in part, to have  
sustained personal damages. The Court held:  
25.  
… The Walshes are not, in the allegations underlined in the excerpts from  
the statement of claim set out in paragraph 2 above, asserting a right to recover, in  
their capacity as shareholders, their share of any damages to which the corporation  
might be entitled if the pleaded allegations are made out. They have alleged a  
special relationship, misrepresentation arising out of that relationship, reliance on  
those misrepresentations and, as a consequence, they claim, they have personally  
suffered damages. Whether they will be able to lead evidence to demonstrate such  
a personal relationship, in addition to or as opposed to a corporate relationship  
between the Walsh Companies on the one hand and the Sobey Companies and  
Green on the other hand, must await trial of the issues. They are not to be precluded  
from having the opportunity to establish such a relationship, and presenting their  
argument as to entitlement at law, by the court anticipating that a Foss v. Harbottle  
defence will be presented and will be successful.  
[40] In 2015, in an application to strike the pleaded damages for “losses resulting  
from having sold their shares at an artificially low price,Whalen CJ recognized the  
two legal pre-conditions to any claim advanced by the Walshes (at para. 32):  
(a) an independent relationship or duty existing between them and the wrongdoer;  
and  
(b) the damages represent a loss separate from that of their Corporations that is  
causally linked to the personal wrong done to the Plaintiffs: Walsh v. T.R.A.  
Company Limited, 2015 NLTD(G) 27 (the “2015 Pleadings Decision”).  
Page 16  
[41] Whalen CJ went further and held (at para. 43) that the Walshes’ alleged losses  
resulting from having sold their shares at an artificially low price “are damages  
suffered by the Corporations and not the Plaintiffs.” Notwithstanding this finding,  
Whalen CJ was not prepared to hold on a striking of pleadings application that the  
Walshes had no chance of success.  
[42] In particular, Whalen CJ relied on appellate authorities for the proposition that  
treating the Corporations and the Walshes as one entity and refusing to permit their  
claim for the impugned damages may lead to a result “too flagrantly opposed to  
justice.”  
[43] Finally, McGrath J in the Limitations Decisions held that the Walshes’ claims,  
except for economic losses arising from fraudulent misrepresentation, are governed  
by a two-year limitation period, subject to the discoverability principle.  
Documentary and Testimonial Evidence  
[44] The parties worked cooperatively and assembled a Common Book of  
Documents consisting of 13 Volumes, 332 Tabs, 4133 pages. This allowed for the  
convenience in the management of documentary exhibits at Trial and efficient use  
of court time in Trial spanning over the course of six weeks. The parties were not  
restricted from tendering other documents in evidence.  
[45] The parties agreed that documents under Category 1 in the Common Book  
would be entered as consent exhibits and form part of the Trial record for the truth  
of their contents. Category 2 documents do not form part of the Trial record, unless  
a witness identified and spoke to the document, at which point it was entered as an  
exhibit through the first witness speaking to it. Documents noted as Category “X”  
in the Common Book were subject to the right of a party to object to admissibility.  
[46] The Walshes presented their evidence through Mr. Walsh’s seven days of  
testimony followed by Mrs. Walsh, and two former employees of TRA, Russ Tiller  
 
Page 17  
and Joseph O’Leary. The Walshes called Ashley Power-Stack (her testimony lasted  
four days) as an expert in business valuations, and in particular, share valuations.  
[47] Testimony from the Defendants came primarily from Karl Vokey (seven days  
duration) and two others, John Gardiner and Darrell Rushton, who through their  
roles with TRA or Sobeys had knowledge of the Supply Arrangement with the  
WalshesCorporations. The Defendants tendered Susan Glass as an expert in  
business valuation and damage quantification, and Glass testified for three days.  
[48] Counsel left no stone unturned in preparing their submissions for my deciding  
the issues. I not only had the benefit of their detailed Trial Briefs but also lengthy  
written Closing Submissions of the Plaintiffs and the Post-trial Brief of the  
Defendants, together with closing oral submissions. At my request, counsel  
provided a complete transcript of the Trial proceedings.  
ISSUES  
[49] The issues for my determination are:  
1. Did the Defendants negligently or fraudulently misrepresent to the Walshes  
the terms and conditions of the Supply Arrangement?  
2. Are any of the claims out of time and barred by the applicable statutory  
limitation period?  
3. Are the claims for losses to the Walshes’ Corporations precluded by the  
common law rule in Foss v. Harbottle, and if so, can this be considered “too  
flagrantly opposed to justice”?  
 
Page 18  
4. Did the Walshes otherwise sustain any direct personal losses for which they  
can recover damages?  
5. What, if any, damages can the Walshes establish, through the admissible  
expert evidence, for alleged losses resulting from having sold their shares at  
an artificially low price?  
ANALYSIS  
1. Did the Defendants negligently or fraudulently misrepresent to the  
Walshes the terms and conditions of the Supply Arrangement?  
[50] There is a fundamental difference of understanding between the parties on  
what the Supply Arrangement was intended to mean and include.  
documentation exists detailing the specific terms of the Supply Arrangement.  
No  
[51] Mr. Walsh is an honest man. He believes firmly that TRA and Green misled  
him and Mrs. Walsh and deceitfully concealed from them the true cost of goods that  
their Corporations were paying compared to the Sobeys stores. Mr. Walsh has a  
misguided understanding of the Supply Arrangement. His perception of the  
Defendants’ mistreatment of his Corporations is unsupported by the preponderance  
of evidence.  
[52] Mrs. Walsh’s credibility is beyond reproach. She presented as a quiet person  
who candidly acknowledged this dispute has consumed their lives. She spoke of  
them losing friendships over the years because Mr. Walsh would not stop talking  
about it. She put considerable time and hours into the stores, but she had limited  
knowledge and involvement in the Supply Arrangement the Corporations had with  
TRA.  
   
Page 19  
Context of the Two Alleged Misrepresentations  
[53] Mr. Walsh’s motivation and purpose for pursuing the Foodland Program was  
to avail of TRA’s buying power, which was increased by having Sobeys within the  
buying group. TRA was able, because of its bulk purchasing power and  
warehousing capabilities, to purchase significant volumes (e.g. carloads) of grocery  
products at the lowest possible prices. This enabled TRA to pass on preferred  
supplier pricing costs to the Walshes’ Corporations, spoken to in the evidence as the  
“Supplier’s Invoice Cost.” By themselves, the Walshes’ Corporations were limited  
to purchasing products on smaller volumes at higher supplier prices.  
[54] The Walshes claim their Corporations were enticed to enter the Supply  
Arrangement with TRA on two promises that turned out to be either negligent or  
fraudulent misrepresentations. First, they claim their net cost for products purchased  
through TRA would include the full benefit of all supplier discounts (“trade deals”)  
the all trade deals offrepresentation. Second, they would receive the same  
product cost arrangement as the Sobeys stores, that being TRA’s cost plus five  
percent the Sobeys equivalent costrepresentation. They allege the Sobeys  
stores received substantial trade deals that TRA did not pass on to their Corporations  
to reduce the cost of product.  
[55] The trade deals fell into three board categories:  
1. TRA invoiced the Walshes’ Corporations the Supplier’s Invoice Cost plus a  
5% upcharge less the off-invoice supplier deal or allowances on products from  
TRA’s warehouse (the “Off-Invoice Allowance”).  
2. Suppliers paid rebates to TRA on the products delivered directly to the  
Walshes’ stores (“Rebates on Directs”).  
3. Suppliers paid various allowances after they had issued the invoices, including  
by-cheques, volume discounts, co-op advertising, and other rebates (referred  
 
Page 20  
to collectively as Rebates on Non-Directs.The Defendants also refer to  
these as Incremental Supplier Funding received by Sobeys stores, as reflected  
in the Sobeys Departmental Analyses (“SDAs”). Some of the witnesses at  
times referred to this as “inside monies.”  
[56] It is not in dispute that the Walshes’ Corporations received the benefit of the  
Off-Invoice Allowance. They claim they never received their full entitlement to  
Rebates on Directs and Rebates on Non-Directs.  
Defendants’ Position on the Misrepresentation Allegations  
[57] The Defendants submit the totality of evidence refutes the misrepresentation  
allegations. The contention that the Corporations were to receive all trade deals off’  
would mean TRA promised to provide “dead net” costs (costs of product net of all  
trade deal) a commercially absurd proposition. No other TRA customer,  
including the Sobeys stores, received such a deal. Witnesses for TRA and Sobeys  
testified that if TRA supplied the Walshes on such a basis, TRA would have lost  
money.  
[58] On the Sobeys equivalent costrepresentation, the Defendants submit firstly,  
the evidence establishes that TRA invoiced the Corporations at exactly the same  
product prices as TRA charged the Sobeys stores; and secondly, there is no evidence  
that the Walshes’ Corporations were promised Incremental Supplier Funding  
received by Sobeys stores.  
[59] The Defendants further summit the misrepresentation allegations ignore the  
substantial financial and price support TRA provided to the Walshes’ Corporations  
as part of the Foodland Program benefits.  
 
Page 21  
Burden and Standard of Proof  
[60] The Walshes have the burden of proving their misrepresentation allegations  
on a balance of probabilities. The standard of proof is no different for negligent or  
fraudulent misrepresentations. While I have to remain mindful of the seriousness of  
the fraudulent allegations when assessing the evidence, the standard of proof does  
not change: H.(F.) v. McDougall, 2008 SCC 53, at para. 40.  
Elements of Negligent Misrepresentation  
[61] I will review the elements and evidence pertaining to negligent  
misrepresentation, and then consider fraudulent misrepresentation.  
[62] The Supreme Court of Canada set out the elements of negligent  
misrepresentation in Queen v. Cognos Inc, [1993] 1 S.C.R. 87, at para. 34, as  
follows:  
(1) there must be a duty of care based on a "special relationship" between the  
representor and the representee;  
(2) the representation in question must be untrue, inaccurate, or misleading;  
(3) the representor must have acted negligently in making said misrepresentation;  
(4) the representee must have relied, in a reasonable manner, on said negligent  
misrepresentation; and  
(5) the reliance must have been detrimental to the representee in the sense that  
damages resulted. In the case at bar, the trial judge found that all elements were  
present and allowed the appellant's claim.  
   
Page 22  
Duty of Care Based on “Special Relationship” or “Personal Relationship”  
[63] To hold that the Defendants were in a “special relationship” with the Walshes,  
two factors need to be present:  
a) the Defendants ought reasonably to have foreseen that the Walshes would rely  
on their representations, and  
b) the Walshes’ reliance would, in the particular circumstances of the case, be  
reasonable: Hercules Managements Ltd v. Ernst & Young, [1997] 2 S.C.R.  
165, at para. 24.  
[64] The Court of Appeal’s Reinstatement Decision provides additional direction  
on the nature of the relationship with the Defendants that the Walshes must establish.  
The Walshes must demonstrate “a personal relationship, in addition to or as opposed  
to a corporate relationship between the Walsh Companies on the one hand and the  
Sobey[s’] Companies and Green on the other hand.” [emphasis added]  
[65] The Walshes have failed to demonstrate a special or personal relationship  
between them and the Defendants. While the Walshes came to form good  
friendships over time in their dealings with TRA Newfoundland, and especially  
Green, the representations made to the Walshes arise solely from a corporate  
relationship and not to them as individuals. The Walshes as individuals did not  
contract with TRA; the Supply Arrangement was strictly between Corporations and  
the alleged promises were made to the Walshes’ companies.  
[66] On a broader basis, the Walshes allege the Defendants, knowing that the  
Walshes placed their trust in them during the course of their relationship from 1983  
to 1996, owed them a duty of care to be open and honest with them on matters  
relevant to their operations. I find the duty of openness and honesty was to the  
Corporations, and the Defendants did not breach any duty of care to the Walshes as  
individuals.  
 
Page 23  
[67] TRA and Foodland’s affiliation with Southern Discount evolved out of a  
corporate relationship.  
[68] Southern Discount, in becoming a Foodland affiliate in late 1983, was  
progressing from its status as an independent stand-alone store to becoming a  
member of TRA’s Foodland Program. Southern Discount had a prior commercial  
relationship with TRA. It continued its commercial dealings with TRA under the  
Foodland banner. The relationship was not with the Walshes personally.  
[69] The Foodland presentation was made to the Walshes in their capacities as  
Southern Discount representatives, not as individuals. TRA had no commercial  
interest in dealing with the Walshes as individuals. It was the business of Southern  
Discount that was the subject of the Foodland presentation.  
[70] In contrast with the commercial discussions involving Southern Discount  
becoming a Foodland affiliate, Mr. Walsh did have personal dealings with TRA  
when it came to buying out his partner, Tony Barton. The financing of Barton’s  
buy-out was a commercial transaction between Mr. Walsh individually and  
personally with TRA, whereas the Sothern DiscountTRA connection was a  
corporate relationship.  
[71] The Walshes’ friendship with Green is of no assistance in establishing a  
“special” or “personal relationship.When Green first made the representations to  
the Walshes to become part of the Foodland Program, they were not close friends  
but became so over the course of the business relationship. I accept Mr. Walsh’s  
evidence that the respect he had for Green was a significant factor for the Walshes  
in joining the Foodland Program. He came to look up to Green as a trusted advisor  
and considered him like a father. That does not diminish that Green, in his capacity  
as TRA’s point person, was at all times dealing with the Walshes in a commercial  
capacity as representatives of their companies and not personally as individuals.  
[72] The Supply Arrangement did not engage the Walshes in their personal  
capacities. TRA invoiced the Walshes’ Corporations and not the Walshes  
Page 24  
personally. The Walshes had no personal liability to pay invoices if their  
Corporations failed to pay.  
[73] It follows that there exists no duty of care owed by TRA and Green to the  
Walshes in their personal capacities. The Walshesclaims fail on this essential  
threshold requirement.  
[74] If I am wrong and the Defendants did owe a duty of care to the Walshes as  
individuals separate from their Corporations, their claims still fail on the other  
elements of the Cognos test.  
No Untrue, Inaccurate or Misleading Representations  
[75] I must focus carefully on the actual representations. The Supply Arrangement  
constitutes the contract, but the terms of the contract arose from pre-contractual  
representations and discussions. The representations that induced the Walshes into  
the contract were not untrue, inaccurate, or misleading.  
[76] TRA and Sobeys, however, could have perhaps avoided this costly litigation  
if they had taken care to document the Supply Arrangement, and had been more  
forthcoming and open with Mr. Walsh that he was not getting and was never going  
to get “net-net cost” of product as he envisaged. The lack of openness does not lead  
to legal liability but goes to costs, as I will discuss when dealing with costs.  
[77] Mr. Walsh perceived, in his mind and heart, that the representations that were  
made to him and Mrs. Walsh were untrue, inaccurate, and misleading. The weight  
of the evidence refutes the assertions and perception that the Walshes erroneously  
held.  
 
Page 25  
[78] The Walshes must establish the Defendants made the representations and that  
the representations were false. Whether there has been a representation of fact is  
determined on an objective basis on all of the evidence: Bruce MacDougall,  
Misrepresentation, (Toronto: LexisNexis, 2016) at 83, 85, and 128.  
[79] The Walshes rely on three principal sources of TRA representations: (i) the  
1983 Foodland presentation meeting, including the Foodland brochure;  
(ii) Mr. Walsh’s discussion with Darrell Rushton; and (iii) representations as to  
TRA’s pricing to the Sobeys stores after the Walshes’ Corporations entered into the  
Supply Arrangement.  
[80] Mr. Walsh’s recollections are challenged not only by TRA witnesses,  
Rushton, Green and John Gardiner, but also by Tiller called as a witness for the  
Walshes.  
[81] Mrs. Walsh could offer only vague remembrances of what Green and Tiller  
discussed with them in the Foodland presentation. Her evidence is understandably  
of limited probative value in corroborating Mr. Walsh’s recollections of the  
misrepresentations.  
The 1983 Foodland Presentation, Including the Foodland Brochure  
David Walsh  
[82] At the Foodland presentation meeting Mr. Walsh attended with Mrs. Walsh,  
Green and Tiller went over the benefits to the Walshes of becoming a part of the  
Foodland Program. They would be joining one of the biggest buying groups in  
Canada. Mr. Walsh recalled being told, as the retailer, they would look after the  
customers, and the wholesaler, and TRA, in turn, would look after them. By joining  
the Foodland Program, Mr. and Mrs. Walsh would be independent operators  
carrying the Foodland banner in their franchised area from Trepassey to Bay Bulls  
on the Southern Shore.  
   
Page 26  
[83] Mr. Walsh testified that that their net costfor products purchased through  
TRA would be the same as Sobeys and that they would receive the full benefit of all  
supplier discounts. In exchange, the Walshes were required to pay TRA’s net cost  
plus the same 5% upcharge that was charged to the Sobeys stores. Mr. Walsh  
described in his cross-examination that there was “no doubt whatsoever that we were  
receiving exactly the same as Sobeys.”  
[84] Mr. Walsh’s understanding on “net costing” goes beyond the ability of the  
Walshes’ Corporations to purchase from TRA at carload prices (volume discounts)  
without buying carload volumes and the ability to get the Off-Invoice Allowance.”  
Mr. Walsh understood “net costing” to mean all deals and allowances would be  
“netted down” on the TRA invoice.  
[85] There would be no way for TRA to show on the upfront issued invoice for  
product supplied to the Walshes’ Corporations trade deals from suppliers that were  
subsequently accredited to TRA or Sobeys (the “inside monies”). However, I accept  
the submissions of the Walshes that TRA had the ability to track, account for, and  
provide the benefit of ‘all trade deals,if that was in fact what the Walshes’  
Corporations were promised.  
[86] Mr. Walsh did not state in his direct evidence the specific trade deals  
promised, but he acknowledged in cross-examination that his Corporations received  
many of the trade deals listed in his pleadings.  
[87] He could not recall the discussion of By-cheques at the Foodland presentation.  
Prior to selling his shares, he assumed he was receiving the full amount of Rebates  
on Directs.  
Lenora Walsh  
[88] The Foodland presentation meeting came as a surprise to Mrs. Walsh. She  
was working as a nurse at the time and preoccupied with raising the Walshes’ young  
 
Page 27  
children as well as her nursing career. She had very limited involvement with  
Southern Discount or the grocery business up to 1983. On the day of the meeting,  
she had worked an entire nursing shift, had returned home and was preparing dinner  
for her children when Mr. Walsh informed her that they would be going for a  
meeting at TRA’s offices that evening. She had not previously discussed the  
opportunity to join the Foodland Program with Mr. Walsh.  
[89] Although Mrs. Walsh heard what was said at the meeting, she acknowledges  
she “didn’t know what it all meant.” She recalls hearing that they were to pay “cost”  
plus the 5% upcharge less the deals. When asked about whether that was TRA’s  
cost, Mrs. Walsh’s recollection was that they were told that they would be paying  
the same as Sobeys. She did not recall whether TRA’s invoice cost was discussed  
nor whether the concept of ‘net-net’ pricing was discussed. She had no knowledge  
of what deals existed in the grocery store business at the time of the meeting.  
[90] Mrs. Walsh indicated that Tiller went through the Foodland brochure with  
Mr. Walsh, but that she was not paying close attention to all of it.  
[91] She remembers the parties were excited about what they discussed at the  
meeting, and “how happy Dave was about it.”  
[92] When I turn to consideration of Green’s and Tiller’s evidence on the Foodland  
presentation, I find no support for the contention that the Defendants made the ‘all  
trade deals’ representation to the Walshes or that the Defendants represented the  
Walshes’ Corporations were to receive Sobeys’ costs.  
Joseph Green  
[93] Green was first the General Manager, and subsequently the President of TRA,  
for the period of 1979 to 1990. He had primary responsibility for the Foodland  
Program and its upcharge and royalty operators.  
 
Page 28  
[94] Green died in 2014. Pursuant to the Rule 46.11(2) of the Rules of Supreme  
Court, 1986, S.N.L. 1986, c. C-42, Sch. D, Sobeys gave the Walshes notice to enter  
Green’s Discovery testimony as Trial evidence. Rule 30.13(1)(c) permits any part  
or all of a deposition, so far as admissible under the rules of evidence, where the  
deponent is dead, to be entered as evidence for any purpose by any party. There is  
no evidentiary rule precluding the admission of Green’s material evidence.  
[95] I accept Green’s evidence and find that after many years retired from TRA he  
had no reason to lie and did not lie or mislead Mr. Walsh in any way.  
[96] When Green was discovered in April 2010, he had no specific recollections  
of the Foodland presentation meeting, but he was able to confirm what he would  
have told the Walshes about the Foodland Program and Supply Arrangement.  
[97] On the Off-Invoice Allowance, Green confirmed TRA would supply goods at  
supplier invoice cost, plus the 5% upcharge, less any invoice deal.  
[98] TRA collected Rebates on Directs paid by suppliers and TRA then paid 50%  
to the stores. He explained in his Discovery testimony how all direct products that  
went to the stores were invoiced through TRA to achieve higher volume percentage  
rebates from suppliers than individual stores could get on their own. TRA shared  
the rebates evenly between the stores.  
[99] By-cheques were not offered to the Walshes or any Foodland stores. The  
money received from supplier By-cheques was used by TRA as price support for  
Foodland stores; specifically on staple items that had no up-charge; on items  
advertised and sold by the stores at below cost as a loss leader; and on special in-  
store promotions and giveaways.  
Page 29  
The Secretly Taped Calls  
[100] Mr. Walsh secretly recorded 18 persons. Mr. Walsh taped Green in three  
telephone calls, which occurred on May 28, 1999; May 30, 1999, and June 18, 1999.  
These calls were transcribed.  
[101] Despite Counsel for the Walshes giving notice at a Pre-trial Case Management  
meeting of their intent to object to the entry of transcripts of these calls, they did not  
raise objection at Trial to the admissibility of the transcripts as evidence.  
[102] I admit the taped and transcribed conversations on the “principled approach”  
to the admission of evidence. Generally, hearsay statements out-of-court  
statements offered to prove the truth of the contents are not admissible. What was  
said in the conversations between Mr. Walsh and Green meets the principled  
approach requirements of relevancy, necessity, and reliability: Lam v. Chiu, 2012  
BCSC 440, at para. 8; and R. v. B. (K.G.), [1993] 1 S.C.R. 740. The statements are  
highly probative and there is no prejudice to the Walshes in the sense of unfairness  
by misuse, overconsumption of time, or distraction and confusion of issues.  
[103] I attach significant weight to Green’s statements. The calls occurred prior to  
the Walshes commencing litigation. Green was long-retired from TRA, with no  
residual connections to TRA and Sobeys. Green was wholly unaware that Walsh  
was taping him. Mr. Walsh challenged Green to tell the truth and Green confirmed  
each time, “I’m telling you the truth, Dave.”  
[104] Mr. Walsh’s purpose in making and taping the calls was to confirm the  
particulars of the 1983 Foodland presentation and to get Green to admit the ‘all-trade  
deals off’ version of the Supply Arrangement. Mr. Walsh failed in this effort.  
[105] Green confirmed what was promised was the Off-Invoice Allowance or  
“TRA’s invoice cost.Walsh asked for clarification on invoice cost and Green said,  
invoice cost is the supplier’s invoice cost.” He explained Mr. Walsh and every  
 
Page 30  
other Foodland upcharge store received “the supplier’s invoice cost, less the off case  
deal.” Mr. Walsh asked, “okay, so all I got was the off-invoice allowance?” Green  
replied, “yes, the off case allowance, yes.” When Mr. Walsh specifically put to  
Green that he was to receive “all the deals,” Green categorically denied this:  
A. No, I didn’t say you got all …  
Q. Oh you did, Joe.  
A. All the off invoice deals, Dave, off invoice deals.  
[106] Mr. Walsh, who later attended all of Green’s Discoveries, confirmed that  
Green was consistent “to the grave” with his version of the Foodland presentation.  
Mr. Walsh testified that Green had a “fantastic memory.”  
[107] In the conversations with Green, Mr. Walsh did not challenge him on the other  
central allegation that the Walshes make that they were promised they would get  
Sobeys’ cost.  
[108] It is simply untenable that Green would turn on Mr. Walsh and lie to him as  
Mr. Walsh alleges. I asked Mr. Walsh during his testimony why a man that he  
revered turned on them. This was his reply:  
A. Well, I guess the only answer I can give you, that Joe Green was  
Newfoundland’s answer to Sybil.  
Q. To?  
A. Sybil, the movie where they had multiple personalities. The manthere was a  
side of him that I know now that was the hardest working, kindest man, considerate  
man you ever met in your life, and the other side that [you] didn’t know, he was  
cunning and baffling, and you believe him. …  
[109] I cannot accept Mr. Walsh’s explanation. Green had no reason to lie to  
Mr. Walsh. Green spoke the truth in his taped conversations with Mr. Walsh, and  
Page 31  
the truth of his statements undermines Mr. Walsh’s own memory of the Foodland  
presentation.  
Russ Tiller  
[110] Neither did Tiller’s evidence lend support to Mr. Walsh’s recollections.  
[111] Tiller was a former TRA management employee that the Walshes called as a  
witness. He was with TRA in 1983 and 1984, until Green asked him to leave the  
company. Subsequently, he had supply arrangements with TRA in Nova Scotia for  
his own business operations.  
[112] Tiller had good recall of the Foodland presentation and was familiar with the  
Foodland Program, having presented it to others on many occasions. I find his  
evidence was balanced. He had previously given Discovery testimony and  
Mr. Walsh had also secretly taped his conversation with him.  
[113] Tiller related that the meeting included a “page-by-page” review of the  
Foodland brochure.  
[114] He emphasized to the Walshes that TRA had the ability to buy in bulk  
(carloads of grocery items) and provide the Walshes with volume-purchasing  
advantage, including lowest available prices from suppliers and the security of  
supply. He explained to them how the Off-Invoice Allowance would involve the  
supplier published timeframe deals off the supplier’s invoice.  
[115] He was unsure how By-cheques came up in the discussions, but Green did say  
the Walshes would get credit for By-cheque deals and it was something he would  
further discuss with Mr. Walsh. He related By-cheques at the time were not a big  
part of the business in Newfoundland.  
 
Page 32  
[116] Tiller’s understanding of the “Trade Deals are Passed On” section of the  
Foodland brochure was that it was confined to the off-invoice deals.  
[117] Sobeysinternal costing, merchandising, and trade deals were not the subject  
of the Foodland presentation.  
[118] Nevertheless, his evidence on the Sobeys equivalent costrepresentation  
helps explain why the Walshes came away with a different understanding than he  
and TRA had on what Sobeys’ cost meant. They were told they would get the “same  
price as Sobeys.” Tiller understood this to mean “the same going-out cost.” The  
invoice price for both Sobeys stores and the Walshes’ store was the same. The term,  
‘net cost’ or ‘net-net cost’ was never used.  
[119] Tiller confirmed he did not dwell on cost that much because “it’s like opening  
a can of worms” and “someone’s definition of cost was different than somebody  
else’s.He wanted to avoid the part on cost. He “went by as quickly as possible”  
knowing it could not “be avoided forever.” He confirmed whatever cost meant he  
understood it could not mean “TRA’s net cost” for supplying product to Foodland  
operators.  
[120] Tiller was aware that one of Mr. Walsh’s goals in wanting to join the Foodland  
Program was to compete with Bidgoodsstore, a supermarket within driving  
distance of customers for the Walshes’ Bay Bulls store. Tiller made the odd  
comment in his testimony, about Mr. Walsh wanting to compete against somebody  
like Bidgoods that “he’s smarter than I thought he was initially.” Throughout all of  
Mr. Walsh’s testimony, I never once doubted his resolve and astuteness in going  
after what he wanted to achieve.  
[121] Rather than glossing over and avoiding the discussion on cost (whether  
competing with Bidgoods was a realistic possibility or not), I would have expected  
Tiller to give Mr. Walsh a more fulsome explanation of how supplier cost and trade  
deals worked in the industry. Mr. Walsh then would probably not have come away  
Page 33  
from the presentation with the impression that he was getting the same cost treatment  
as Sobeys.  
[122] Tiller was unsure of how much concentration or explanation either he or  
Green put on the issue of Rebates on Direct at the Foodland presentation. He  
recalled there had been previous discussion with Mr. Walsh about Rebates on Direct  
when he was operating as Sothern Discount. I take from Tiller’s evidence there was  
general discussion with Mr. Walsh prior to the Foodland presentation about the  
ability of TRA to generate volume discounts from suppliers and manufacturers of  
both direct and non-direct products.  
[123] The most Tiller could say was that during his short time with TRA the  
Walshes’ Bay Bull store would have received from TRA a percentage of the Rebates  
on Directs like others.  
Foodland Brochure  
[124] I can see in reference to the “Trade Deals Are Passed On” section of the  
Foodland brochure, how the Walshes would be left with some confusion that they  
would be receiving all trade deals off.But putting the brochure in the context of  
the evidence does not bear out the ‘all trade deals off’ or the Sobeys equivalent cost’  
misrepresentations.  
[125] The brochure reads:  
TRADE DEALS ARE PASSED ON  
Manufacturer and suppliers deals are passed on to the retailer  
Allowances are deducted from the invoice  
• “Buy in” Opportunities are provided before the deal or promotion  
termination…  
 
Page 34  
[126] The wording does not state all deals or allowances are passed on or deducted.  
The brochure makes no reference to Sobeys price equivalency.  
[127] My conclusion on the Foodland presentation evidence is that TRA, through  
Green and Tiller, promised the Walshes the Off-Invoice Allowance deals and some  
portion of monies from By-cheques and Rebates on Directs. Tiller and Green could  
have done better explaining to the Walshes what was in their contemplation, so  
Mr. Walsh would not have had the confusion and unrealistic commercial expectation  
about the Supply Arrangement.  
‘Dead-Net’ Costing Commercially Unreasonable  
[128] Effectively, what Mr. Walsh contends the Walshes were promised — ‘dead-  
net costing’ — is commercially unreasonable. I accept the evidence of both John  
Gardiner and Rushton that it would not have been economically viable for TRA to  
fulfil Mr. Walsh’s expectation of ‘all-trade deals offat a 5% upcharge.  
John Gardiner  
[129] Gardiner joined TRA Newfoundland in 1986 as Vice-President of Operations  
and succeeded Green as President of TRA in 1989. He described the concept of  
dead-net costing” to mean stripping out any and all subsidies (trade deals) a product  
could possibly garner on receipt in the warehouse or after performance sales to get  
it to the absolute lowest cost to TRA. He testified, “it would be ludicrous” to expect  
TRA to promise the Walshes’ companies would be charged on a dead-net cost basis.  
He explained TRA’s operating cost would be in the six-and-a-half to seven percent  
range, so at dead-net cost on a 5% upcharge TRA would be selling products at a loss.  
TRA did not have a dead net cost arrangement with any of its retailers.  
   
Page 35  
Darrell Rushton  
[130] Rushton likewise confirmed TRA “wouldn’t have a wholesaler or warehouse  
business,” if it supplied the Walshes’ Corporations based on product costs net of all  
TRA’s trade deals, allowances, and other product subsidies.  
Rushton as a Source of Alleged Misrepresentation  
[131] The Walshes’ pleadings (at para. 18) identify Rushton as a principal source of  
misrepresentations. Rushton was just short of turning 83 when he testified. He was  
with Sobeys for 43 years until his retirement in 2000. He was articulate, and after  
all these years, still had reasonable recall of his interactions with Mr. Walsh.  
[132] Mr. Walsh’s evidence is somewhat confusing as to the timing of meetings  
with Rushton. He is clear Rushton was not present during the Foodland presentation  
meeting. In answer to a question on re-direct, he said he talked to Rushton “a bit  
before” his meeting with Green and Tiller, and Mrs. Walsh was not present. They  
both confirmed that Mr. Walsh on some unknown date gave Rushton a ride to the  
airport, and Rushton told him he was doing the “right thing” joining the Foodland  
Program.  
[133] Walsh gave no testimony to support Rushton made the ‘all trade deals off’ or  
‘Sobeys equivalent cost’ representations. Rushton confirmed he had no discussions  
with Mr. Walsh about trade deals other than the capability of buying at container-  
load prices.  
Other Elements of Cognos Test Negligence and Reliance  
[134] The remaining elements of the Cognos test only come in play if the Walshes  
had satisfied the Defendants owed them a duty of care and made false or misleading  
representations. The Walshes must prove the Defendants acted negligently in  
     
Page 36  
making the alleged misrepresentations and that the Walshes were reasonable in their  
reliance on the negligent misrepresentations.  
[135] The standard of care expected (Cognos at para. 56) on the Defendants is “a  
duty to exercise such reasonable care as the circumstances require to ensure that  
representations made are accurate and not misleading.”  
[136] While TRA could have done better explaining and documenting terms of the  
Supply Arrangement, the evidence does not meet the burden of establishing on a  
balance of probabilities that the Defendants were negligent in failing to take  
reasonable care in dealing with the Walshes.  
[137] The Walshes’ reliance on the alleged misrepresentations was not reasonable  
in all the circumstances. Mr. Walsh simply heard what he wanted to hear and believe  
that he was getting all the deals and same pricing treatment as Sobeys stores. The  
evidence put forth by the Defendants demonstrates that was not commercially  
attainable or reasonable.  
[138] The evidence also demonstrates that a reasonable and prudent person in Mr.  
Walsh’s circumstances, while operating the stores and buying from TRA, would  
have taken steps to inquire if he was receiving all the trade deals.  
[139] Numerous TRA invoices to the Walshes’ companies entered as evidence state  
“Less Deal” and not “Less Deals.”  
[140] Mr. Walsh had some knowledge of By-cheques and Rebates on Direct at the  
time of the Foodland presentation. It was only after he sold his shares and started  
working with a competitor grocery retailer, Colemans, that he became more  
knowledgeable of the extent that all trade deals or inside moniescould generate.  
Gardiner and Ruston confirmed that Mr. Walsh never asked them whether he was  
receiving all trade deals or “inside monies.”  
Page 37  
[141] The Supply Arrangement offered to the Walshes was not what Mr. Walsh  
honestly believed he had secured and wished he had with TRA. In the non-exclusive  
Supply Arrangement that the Walshes had with TRA, it was incumbent on  
Mr. Walsh to raise with TRA and insist he get all trade deals and the same cost  
equivalency as Sobeys. He could have walked away from the business arrangement  
he had with TRA and become affiliated or deal with another wholesaler, or attempted  
to negotiate a more economically favorable Supply Arrangement with TRA.  
Instead, he chose to sell his shares in the Walshes’ Corporations.  
Requirement to Show Damages  
[142] I will deal with the final element of Cognos, that the Walshes show damages  
resulted, when addressing damages under Issue 3.  
Elements of Fraudulent Misrepresentation  
[143] To establish fraudulent misrepresentation, or deceit, the Walshes must prove  
the following five elements: Hennessey v Eastern Regional Health Authority, 2019  
NLSC 239 at para. 34; and Midland Resources Holding Ltd. v. Shtaif, 2017 ONCA  
320, at para. 162.  
(i)  
a false representation of fact by the defendant to the plaintiff;  
(ii) knowledge the representation was false, absence of belief in its truth,  
or recklessness as to its truth;  
(iii) an intention the plaintiff act in reliance on the representation;  
(iv) the plaintiff acts on the representation; and  
(v) the plaintiff suffers a loss in doing so…  
   
Page 38  
[144] It is apparent that there is substantial consistency in the elements of negligent  
misrepresentation and fraudulent misrepresentation. The principal difference is the  
intention of deceit, which is required to ground fraudulent misrepresentation.  
The Alleged Deceitful Conduct  
[145] The Walshes in their Closing Submissions maintain that TRA and Sobeys  
took active and deliberate steps to conceal from the Walshes the nature, extent, and  
value of the Trade Deals they received and deliberately, deceitfully, and fraudulently  
misrepresented that the Walshes’ stores were paying the same net costs for products  
as the Sobeys stores. They allege that, in response to inquiries about competitors  
selling at lower prices, TRA employees, including Green and Gardiner, consistently,  
deliberately, knowingly, and fraudulently misrepresented that the Walshes’ stores  
were paying the same product costs as TRA/Sobeys. And finally, the Walshes rely  
on the 1984 Sobeys Supply Agreement as evidence of a fraudulent scheme to  
artificially inflate the Sobeys invoices to make it appear that Sobeys was paying the  
same as the Foodland stores.  
[146] Mr. Walsh in his testimony accused the TRA senior personnel of creating “a  
Ponzi scam that would make the Mafia blush.In his younger days, Mr. Walsh  
fought in the boxing ring and he had no trouble facing anybody coming at him, but  
he said, “I was not prepared for my corner to be doing a number on me.”  
[147] There was no “Ponzi scam” and Mr. Walsh’s corner did not turn on him. The  
Walshes have failed to prove deceitful conduct on the part of the Defendants.  
Sobeys Equivalent Cost or Pricing Misrepresentation after the Walshes  
Commenced Foodland Operations  
[148] I have addressed that the ‘all trade deals off’ representation was not made to  
the Walshes, and now turn to the representation that TRA deceitfully misrepresented  
   
Page 39  
to the Walshes that they were receiving the same equivalent cost or pricing as the  
Sobeys stores, after the Walshes’ Corporations entered into the Supply Arrangement.  
[149] The Walshes alleged in their Trial Brief that TRA/Sobeys went to great  
lengths to hide “all trade deals” were not passed on to the Walshes’ Corporations,  
including generating false invoices. Their Further Amended Statement of Claim (at  
para. 28) pleads that the Defendants took active and deliberate steps to prevent the  
Walshes from ascertaining the actual and/or nature of the various trade deals, and  
this amounted to “fraudulent concealment” and “an abuse of high level of trust.”  
The Walshes led no evidence to establish the creation of false invoices, nor any  
evidence of fraudulent concealment, nor an abuse of trust on the part of the  
Defendants.  
[150] Mr. Walsh testified that five or six years after commencing as a Foodland  
operator, he questioned Bidgoods’ ability to undersell him on popular selling items,  
Tetley Tea and Fraser Farms Meatballs. This occurred at a time when he said, “I  
was making a few dollars, we were doing half decent, as I thought, and I wanted to  
build on.”  
[151] He challenged Pat O’Keefe, TRA’s new head buyer, on the Tetley and Fraser  
Farms pricing issue at the TRA offices. Green joined the discussion and showed  
Mr. Walsh that the Foodland price book and the Sobeys price book were the same.  
[152] Gardiner related in his evidence how he similarly showed Mr. Walsh the  
Sobeys price book and the Foodland price book, which were the same.  
[153] The Closing Brief of the Walshes notes that TRA failed to produce any Sobeys  
invoices or price books in the Defendants’ document production or as Trial exhibits.  
However, Mr. Walsh admitted that TRA management showed him the Sobeys price  
book and the invoices were the same for Sobeys stores as Foodland operators.  
Despite the absence of corroborating documentary proof, I am satisfied on the  
testimony at Trial that the Sobeys stores were invoiced on the same basis as  
Page 40  
Foodland stores (with the exception of staple items milk, sugar and flour, which  
the Foodland stores were not charged the 5% upcharge).  
[154] There was therefore no false or deceitful representation of fact made to the  
Walshes.  
[155] Likewise, TRA and its management did not have knowledge the  
representation was false, absence of belief in its truth, or recklessness as to its truth.  
[156] The evidence fails to support a finding that the Defendants took active and  
deliberate steps to conceal the true nature of its cost arrangement with the Sobeys  
stores from the Walshes.  
Separateness of TRA and Sobeys Business Operations  
[157] Notwithstanding their connection as part of the buying group, TRA and  
Sobeys businesses were separate operations. TRA, as the warehouse operator and  
supplier for the Sobeys stores, had no influence on Sobeysmanagement, operations,  
merchandising, and prices. The Sobeys stores were not part of the Foodland  
Program, and did not receive the benefits of the Foodland Program.  
[158] Green consistently indicated that he was not involved with the Sobeys stores  
and did not have knowledge of or a role in their operations or business. When asked  
about the deals Sobeys stores were getting, he stated, “I don’t know … I was not  
associated with Sobeys stores.” In discussing rebates, he said, “I was never involved  
with Sobeysbusiness. I don’t know what they did.” And he testified further, “I  
had no arrangement with Sobeys, I didn’t do any dealings with Sobeys on anything  
really.”  
 
Page 41  
[159] Gardiner similarly had no involvement with the Sobeys stores management or  
operations, and had no knowledge of the SDAs.  
[160] Rushton had no involvement with the operations of the Sobeys stores. Asked  
about TRA’s ability to influence the cost of product sold in Sobeys stores, he stated  
it was up to Sobeys “to do whatever they felt was necessary to compete” with  
competitor stores. He had no knowledge of SDAs and no reason to have access to  
any of the retail operations information.  
Joseph O’Leary  
[161] TRA hired Joseph O’Leary in 1979 as a buyer, and he became the Director of  
Purchasing for TRA Newfoundland in the early 1980s. He worked with TRA until  
1990 reporting to the General Manager, Green. The Walshes called O’Leary as a  
witness.  
[162] His evidence confirms that TRA invoicing (on non-staple products) was the  
same for Foodland operators as the Sobeys stores. He made the interesting  
observation in support of the Walshes’ position that the invoices did not accurately  
represent the true cost of product for the Sobeys stores. He stated: Because it can  
show that you are getting the same price as Sobeys. There’s a front door and there’s  
a back door, but what goes in the front door is not the same as what goes in the  
backdoor.”  
[163] I accept the invoicing would not show additional monies in other deals and  
allowances potentially available and that were in fact paid over to Sobeys. There is  
nothing nefarious or fraudulent about the manner of TRA’s invoicing. O’Leary  
acknowledged in cross-examination that TRA’s management was not colluding and  
contriving to produce a method of invoicing to deceive Mr. Walsh.  
 
Page 42  
1984 Sobeys Supply Agreement  
[164] Mr. Walsh testified in relation to the agreement between Sobeys Stores  
Newfoundland, Lofoods Newfoundland (a Sobeys subsidiary), as Buyers, and TRA  
Newfoundland, as Seller, from 1984 (the “1984 Sobeys Supply Agreement”).  
Significantly, it post-dates the 1983 Foodland presentation, and it did not pertain to  
the Foodland stores or other TRA banner stores.  
[165] Mr. Walsh did not see the 1984 Sobeys Supply Agreement while he was  
operating as a Foodland, only acquiring it after he sold his stores.  
[166] The Walshes submit firstly, it is proof of the type and nature of rebates that  
TRA was supposed to pay the Walsh stores. Secondly, it demonstrates that  
TRA/Sobeys must have had the capacity to track products purchased and the amount  
and types of Trade Deals, discounts and rebates available on which the percentages  
could be calculated.  
[167] The Walshes point to the strong language that “Under no circumstances will  
by cheque allowances be used to net out the product cost,” as evidence that the By-  
cheque amounts were known and calculable at the time of sale. Otherwise, there  
would be no need to specify that they not be used to net out the product cost.  
[168] The Walshes go further and argue the strength of the language is evidence that  
TRA and Sobeys were likely concerned that its invoices might become known to its  
other customers, and see that Sobeys was charged less than the Foodlands, contrary  
to the TRA representations. They allege this is evidence of a fraudulent scheme to  
artificially inflate the Sobeys invoices to make it appear that Sobeys was paying the  
same as the Foodland stores.  
[169] I am unable to accept the Walshes’ position on their view of what the 1984  
Sobeys Supply Agreement proves. In his direct evidence, Mr. Walsh confirmed, “our  
Foodland Program compared perfectly with this.” He confirmed that the Sobeys  
 
Page 43  
stores upcharge was 5% and By-cheques were not to be provided to buyers. What  
it does reflect is substantial benefits were accruing to TRA as the wholesaler for  
Sobeys, thus providing TRA with more discretionary funds to administer to the  
Foodland Program.  
[170] Respecting the quarterly rebate in Clause 7, Gardiner and O’Leary testified  
this payment to Sobeys was to offset freight charges Sobeys incurred. Sobeys  
incurred its own fright charges in transporting goods from TRA’s warehouse to the  
Sobeys stores. Foodland stores received the benefit of no transportation charge to  
their stores.  
Misrepresentation Claims Ignore Foodland Program Benefits Offered to  
the Walshes’ Corporations  
[171] The claims of fraud, deceit, and concealment are erroneously premised on the  
understanding that the Walshes’ Corporation would be treated the same as Sobeys  
stores not just on the Off-Invoice Allowance, but also in every respect on the manner  
of allocation of Trade Deals and for netting down the cost of product. This is an  
erroneous misconception, and seriously ignores the Foodland Program price support  
and other benefits the Walshes’ Corporations received.  
[172] The Foodland benefits reflect an alternate financial support program for the  
Foodland stores, including the Walshes’ Corporations. The evidence confirms their  
Corporations received substantial forms of additional price support in a different  
manner than the Sobeys stores.  
[173] The Defendants tendered evidence as to the Supply Arrangement and other  
aspects of the Foodland Program from Green, Rushton, Gardiner, and most  
extensively Karl Vokey.  
 
Page 44  
Karl Vokey  
[174] Vokey first joined TRA in 1988 after completing university. He was directly  
involved and oversaw the pricing as provided to the Walshes’ Corporations and other  
Foodland stores. He testified in his capacity as the Senior Vice-President, Grocery  
Merchandising and National Resourcing with Sobeys.  
Off-Invoice Allowance – Supplier’s Invoice Cost with 5% Upcharge Less the  
Deal  
[175] Vokey spoke in considerable detail on the workings of the Off-Invoice  
Allowance. It started with the Supplier’s Invoice Cost. Suppliers would publish a  
price list typically once a year of the product case cost based on the volume-buying  
bracket of TRA and Sobeys. TRA would work with brokers and agents or suppliers  
directly to achieve the most favorable case price. The case cost would then be  
entered in TRA’s computer system.  
[176] As a starting point, Foodland and other upcharge customers of TRA would be  
availing of the optimal case cost in the system. They could purchase on a one-case  
order.  
[177] The “deal,” or sometimes referred to as the “published deal,was a temporary  
per-case reduction of the Supplier’s Invoice Cost that would be in effect for a limited  
period of time. It directly and immediately reduced the amount that TRA had to pay  
the supplier for the product.  
[178] TRA communicated and circulated monthly the pricing available to the  
Foodland operators in a “Regular Price Book.It would show the product cost  
(Supplier’s Invoice Cost) and any applicable Off-Invoice Allowance.  
   
Page 45  
[179] The Off-Invoice Allowance was thereby tied to each individual case of  
product purchased during the deal period. TRA accounted for the Off-Invoice  
Allowance at the time of TRA’s receipt of the product in the warehouse. Generally,  
suppliers promoted the product through the published deal and did not require retail  
performance.  
[180] For other rebates, deals, and allowances, suppliers often required retail  
performance activity measured through, among others, product display, carrying  
periods, and competitive consumer pricing. On such rebates and allowances, unlike  
the Off-Invoice Allowance, TRA had to track and make an after-purchase  
reconciliation.  
[181] In addition to the benefit of Foodland and Sobeys having the lowest upcharge  
of any of TRA’s customers, TRA provided additional price support to Foodland  
operators, in which the Walshes’ Corporations participated. TRA did not provide  
this additional price to the Sobeys stores.  
Additional Price Support to Foodland Operators  
[182] The purpose for providing the additional price support, and one of the key  
aspects of the Foodland Program, was to ensure Foodland operators remained  
competitive on a per-item basis without having to incur specific losses on sales that  
would otherwise have been loss leaders.  
[183] There were certain staple and high-demand items that were price sensitive and  
commonly sold at a loss to drive consumer demand and sales on higher-margin  
items. Promotional activity played a significant part of it.  
[184] The forms of the additional price support was retail-focused, and included the  
following: TRA’s Every Day Low Price Program (the “EDLP Program”), the  
Weekly Flyer Program, Store Credits, and discretionary price reductions.  
 
Page 46  
[185] The EDLP Program was designed to make products perceived to be price-  
sensitive for consumers (local grocery shoppers) available to Foodland stores on a  
monthly basis. It made certain high-volume products, in the range of 1500 2000  
items, available to the Foodland Stores at a further discounted price. The prices  
available to the Walshes’ Corporations through the EDLP Program were lower than  
the prices for those same products as set out in the Regular Price Book, and  
represented a discounting of price beyond the Off-Invoice Allowance. TRA  
communicated the EDLP Program to Foodland operators by way of an additional  
price book (the “EDLP Price Book”).  
[186] TRA prepared weekly flyers for the Foodland stores to increase consumer  
activity in the stores. At the relevant timeframe, flyers were the number one tool for  
communicating and promoting products to consumers.  
[187] The Weekly Flyer Program, as well as the EDLP Program, both played into  
the 80-20 rule that Vokey and certain others spoke to in their testimony. The 80-20  
rule is the general principle that 20% of a store’s product would result in 80% of the  
stores sales, and that the pricing on these staple 20% products was extremely  
competitive.  
[188] Consistent with the objective of keeping individual operators whole on loss  
leaders, TRA provided additional price support to the Foodland stores to help  
maintain the margins achieved by the Foodland stores on products while on special.  
[189] The Weekly Flyer Program included the provision of a third price book, called  
the Merchandising Planner.The Merchandising Planner, which supplemented  
the Regular Price Book and the EDLP Price Book, showed the products that would  
be in the flyer for a specific week and the special pricing available to the Foodland  
Stores during the applicable period. The products in the Merchandising Planner  
under “Special Cost” frequently had prices discounted beyond the prices as reflected  
in the Regular Price Book.  
Page 47  
[190] The Merchandising Planner set out the precise amount of additional price  
“allowance” or subsidization (beyond any applicable Off-Invoice Allowance) that  
was being provided on each product. Vokey, Gardiner, and Tiller confirmed the use  
of “allowance” as used in the Merchandising Planner to show the Foodland operators  
the “Landed Store Cost” of the product from the Regular Book Cost is not to be  
confused with the Off-Invoice Allowance. Mr. Walsh acknowledged he had the  
opportunity to buy as much of a particular item at a lower cost as he wanted, and sell  
at a higher cost after the flyer expired.  
[191] TRA gave Store Credits (not including those credits for damaged product or  
incorrect shipments) to account for situations where a Foodland operator sold staple  
and/or price-competitive items at what would otherwise have been a loss. The  
principal difference between Store Credits as compared to the additional price  
support through the EDLP and Flyer Program is that the Store Credits actually  
resulted in credits from TRA to the Walshes’ Corporations in reference to their  
purchases and were initiated by the Foodland operator itself.  
[192] Tiller and Vokey said Store Credits on staple competitive items sold at a loss  
could amount to hundreds of dollars per week payable by TRA to individual  
Foodland operators. TRA tendered documentary evidence of credits of this nature  
payable to the Walshes’ stores. An example of a Store Credit to the Walshes’  
Corporations was subsidization of the unit cost of a carton of milk sold at less than  
what they paid because of market conditions.  
[193] There were additional discretionary reductions of the Off-Invoice Allowance  
on occasions, including reimbursement for special event promotions and more  
significantly, the manual override of the Supplier’s Invoice Cost on the supply of  
Non-Direct products.  
The Manual Override of the Supplier’s Invoice Cost on Non-Directs  
[194] All of the evidence from people familiar with TRA’s pricing system,  
including Tiller, testified to the fact that, at the material time, the Supplier’s Invoice  
 
Page 48  
Cost was entered into TRA’s system, customers were put into pricing groups based  
on their applicable upcharge, and invoices were automatically generated according  
to those pricing groups. Similarly, the evidence established that the only way to  
provide additional price support to a customer of TRA was to do a manual price  
override in TRA’s system.  
[195] Business records entered at Trial showed this form of additional price support  
being provided to the Walshes’ Corporations, as discussed more fully below.  
[196] Gardiner spoke to the mechanics of the price override, in the context of the  
Merchandising Planner, which as recognized by Mr. Walsh, included the provision  
of additional price support. TRA’s computer program system would generate the  
regular product price, and for TRA to override the price in the system it would  
involve a manual override in the Merchandising Planner. Tiller also noted there was  
no other way to do it cost-effectively within the TRA system.  
[197] Vokey spoke to the price override in reference to specific and numerous  
invoices to the Walshes’ Corporations.  
[198] In the absence of a price override, the invoices were generated automatically  
in reference to the “Unit Cost” as denoted on the invoice, which Vokey confirmed  
would be “after the 5% upcharge was applied” and “before the application of the off  
invoice deal,” with the invoice then noting “Less Deal” to signify the reduction of  
an applicable Off-Invoice Allowance. All of these prices would have been  
communicated by way of the Regular Price Book.  
[199] In the context of a price override, meaning additional price support, whether  
further to the EDLP Program, the Weekly Flyer Program, or purely discretionary  
price support, the invoices would have had to be subject to a price override. In that  
situation, the system-generated invoices would simply reflect a lower “Unit Cost”  
and would not directly indicate that additional price support had been provided.  
Page 49  
[200] A number of invoices for a competitive staple product and loss leader,  
Carnation Milk, were referred to as examples of the provision of additional price  
support, by way of the manual price override, with prices below the Supplier’s  
Invoice Cost. Vokey explained the invoices did not reflect “Less Deal” on the  
invoice itself, but that the unit price that TRA sold to the Walshes’ Bay Bulls store  
was considerably less that the Supplier’s Invoice Cost. Even though TRA did not  
produce or tender the actual supplier’s invoices for the Carnation Milk within the  
relevant time, I accept the evidence of Vokey as confirmation that TRA substantially  
subsidized the unit cost of this product for the invoiced period.  
Rebates on Direct Products  
[201] In addition, TRA provided the upcharge Foodland operators, including the  
Walshes’ Corporations, with a quarterly cheque of at least 50% of the rebates  
received by TRA on account of the purchases by the applicable store.  
[202] On the payment of Rebates on Directs, Gardiner testified TRA looked at each  
store individually to ensure they were competitive in their market on staple items,  
such as dairy milk and bread prices.  
Walshes’ Acknowledgement of Foodland Program Benefits  
[203] Mr. Walsh acknowledged in his cross-examination that the Walshes’  
Corporations were receiving additional price supports and other services from TRA  
beyond the standard Off-Invoice Allowance. He recognized various forms of price  
support “on a daily basis” by way of the EDLP Program, the Weekly Flyer Program,  
Store Credits, and other discretionary price support.  
[204] He confirmed TRA provided the Foodland operators, including the Walshes’  
Corporations, with extensive retail counselling services, at the store department  
level, at no charge. TRA provided retail accounting services at a modest cost. TRA  
provided monthly budgeting services, seminars and semiannual meetings for  
   
Page 50  
Foodland operators. TRA had a Foodland Advisory Committee that provided  
guidance on store-level profitability, store-level costs, and other aspects relating to  
store sales.  
[205] Mr. Walsh also acknowledged TRA provided Walsh’s Foodland with  
financing for the development of the new store in Bay Bulls, and at no charge,  
budgeting and engineering consulting services for the design and construction of the  
store.  
[206] And finally, as Vokey noted, there was a Foodland council made up of  
Foodland operators that would liaise and meet regularly with TRA management.  
[207] It would not have been commercially reasonable for TRA to provide all of  
these additional price supports and administrative supports to the Walshes’  
Corporations for the 5% upcharge.  
[208] TRA did not provide additional forms of price support to Sobeys stores  
because of the different commercial realities faced by the corporate stores as  
compared to individual operators.  
Retail-Oriented Differences between Sobeys (corporate stores) and  
Individual Operators (Foodland stores)  
[209] There is a fundamental commercial difference between the manner Sobeys  
stores operated, in a corporate store environment, as compared to how independent  
Foodland operators functioned, such that the receipt of Incremental Supplier  
Funding was necessarily accounted for in a different way.  
[210] In a corporate store environment, such as that of Sobeys stores, the Sobeys  
prices to consumers, and particularly on promotional activities, would have a lower  
 
Page 51  
margin before the subsequent receipt of, and separate accounting for, Incremental  
Supplier Funding.  
[211] For Foodland operators, TRA actually provided the price support for  
promotional activities and highly competitive staple items by way of a reduction in  
the purchase price of items invoiced. Foodland operators were able to maintain  
positive (or zero) margins on promotions that would have yielded lower (or negative)  
margins in the Sobeys corporate environment.  
[212] Unlike Sobeys, TRA did not measure the internal cost of its additional price  
support as provided to the Foodland operators in reference to the amount of  
Incremental Supplier Funding subsequently received.  
[213] The Walshes claim their Corporations were promised that they would receive  
an equivalent level of price reduction to account for all of TRA’s subsequently  
received allowances. Most importantly, I have found that TRA did not make such a  
promise. If I had found TRA made that promise to the Walshes’ Corporations, TRA  
had the ability to separately track and determine the amounts of Incremental Supplier  
Funding, as Sobeys did. That, however, was not the way TRA administered the  
Foodland Program and accounted for its sources of price support to the Walshes’  
Corporations.  
[214] Gardiner corroborated Vokey’s evidence that TRA received funding from  
suppliers to support the additional price support provided to Foodland operators, and  
the TRA financial statements did not separately account for the price support or  
funding received. Tiller indicated revenue from By-cheques would not be enough  
to make it worthwhile for TRA, and “we went wherever we could go to get the  
money” to keep Foodland operators competitive and move product.  
[215] The additional price support to the Walshes’ Corporations was made possible  
largely through TRA’s subsequent receipt of Incremental Supplier Funding. TRA  
was also able to provide additional price support to Foodland operators from other  
revenue streams of TRA, including the higher upcharge TRA charged to other  
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customers. As well, TRA made product available for Foodland stores, which TRA  
had purchased and warehoused, at its own expense, during since-expired deal  
periods.  
[216] The Incremental Supplier Funding was provided to TRA at some point after  
TRA’s acquisition of the product and was provided to TRA either (i) on volume  
purchases of the buying group, including Sobeys, or (ii) TRA’s specific retail and  
promotional activities (such as the Weekly Flyer Program and promotional activity  
of stores operated under TRA’s Foodland, Riteway and Quikway banners). The  
Canada Packers Agreement is documentary evidence of promotion-based  
Incremental Supplier Funding that was exclusive to TRA.  
[217] Sobeys would have separately negotiated and received their own promotion-  
based Incremental Supplier Funding for retail-oriented subsidies from suppliers,  
where TRA had no ability to influence Sobeys’ retail or promotional practices.  
Walshes’ Reliance on the Sobeys Departmental Analyses (SDAs)  
[218] Mr. Walsh’s emphasis on the importance of the SDAs is misplaced. His first  
time receiving and seeing the SDAs was in 2003, long after the relevant timeframe  
and two years following commencement of the litigation. He testified when he  
reviewed the document, he “had the puzzle solved.” He stated: This finally fit into  
my way of thinking that I knew that they could not deny the facts that were here, and  
I knew now why they could show me Sobeys prices and Foodland prices as being  
the same.”  
[219] What the SDAs show is the clear distinction between a corporate environment  
and an independent operator environment and confirmatory evidence of the  
substantial additional price support to the Walshes’ Corporations.  
[220] Vokey was the only witness who had personal knowledge of the SDAs. He  
started working with SDAs after he commenced working in the retail division with  
 
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Sobeys in 1995 or 1996. He had not seen the SDAs while working with TRA, and  
neither did Green, Gardiner, or Rushton.  
[221] Vokey noted that the SDAs contain the consolidated information for all of  
the Sobeys stores in Newfoundland and Labrador before then providing the same  
categories of information for the individual Sobeys stores.  
[222] I will describe in some detail what the SDAs capture, as it is necessary for my  
subsequent discussion of the expert opinions.  
[223] The information in the SDAs is broken down by departments, and a review of  
the SDAs show headings for departments such as “Grocery Sales,” “Canteen Sales,”  
“Meat Sales,” “Fish Sales,” and a variety of other departments, with similar  
information below each department. Importantly, for each department, the SDAs  
show “Sales,” “Store Margin,” “Allowances,” and “Total Gross Profit.”  
[224] Vokey explained:  
a) The “Sales” line in the SDAs show the retail sales for each Sobeys department  
to Sobeyscustomers during the applicable timeframe, both in terms of actual  
dollars and sales of that department as a percentage of total sales;  
b) The “Store Margin” line is the difference between what Sobeys sold the  
product for to its customers less what Sobeys paid for the product on their  
invoices, and is shown both in dollars and as a percentage of the sales within  
the applicable department;  
c) The “Allowances” line reflects the additional allowances that were separately  
negotiated by Sobeys with suppliers for their retail activity and were paid  
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directly to Sobeys by those suppliers, and is shown both in dollars and as a  
percentage of the sales within the applicable department; and,  
d) The “Gross Profit” line is a summation of the “Store Margin” and  
“Allowances” lines, again reflected both in dollars and as a percentage of sales  
within the applicable department.  
[225] Vokey confirmed that all of the trade deals received by Sobeys are captured  
fully in the “Allowance” line of the SDAs.  
[226] He explained Foodland operators, including the Walshes’ Bay Bulls store, had  
total gross margins on grocery sales, on average, higher or equivalent to Sobeys  
stores. This was because Sobeys accounted separately for “Store Margin” and  
“Allowances” to get to their “Gross Profit” margin, while TRA furnished the  
additional price support through the cost of goods on the invoice.  
TRA Financial Records  
[227] The Walshes take issue with why TRA’s business records do not show with  
specificity the net amount of additional price support provided to the Walshes’  
Corporations, as compared to the net amount of Incremental Supplier Funding  
received by TRA on account of purchases made by the Walshes’ Corporations.  
[228] In short, there was no obligation on TRA to account for the Incremental  
Supplier Funding (the all-trade deals) in the manner Sobeys did. TRA’s operations  
in the late 1980s and early 1990s did not internally track the Incremental Supplier  
Funding for its financial statements. Tiller’s evidence was that they went whenever  
they could to find the funding. Unlike Sobeys, TRA did not have the same  
meticulous tracking and accounting of subsequently received supplier funding.  
 
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[229] The exercise of determining the additional price support provided to the  
Walshes’ Corporations would involve an invoice-by-invoice comparison on a case-  
by-case weekly basis. There is no justification for requiring the Defendants to incur  
that level of forensic detail in light of the accepted Trial testimony.  
[230] TRA did pass on Incremental Supplier Funding through additional price  
support to the Walshes’ Corporations. I am unable to determine with any degree of  
specificity the amount of Incremental Supplier funding passed on to the Walshes’  
Corporations. Nevertheless, I am satisfied on the testimony of the Defendants’  
witnesses, which was not refuted by any of the witnesses for the Walshes, that the  
additional price support in the form of reduced cost of goods was substantial.  
[231] Having carefully considered the evidence of each witness and the evidence as  
a whole, I find the Walshes have not established the elements necessary to prove  
negligent or fraudulent misrepresentations.  
2. Are any of the claims out of time and barred by the applicable statutory  
limitation period?  
Limitations Decision  
[232] The Defendants previously brought a Summary Trial Application on the  
limitations issue in this matter. Although McGrath J held in the Limitations Decision  
that she was unable to make a finding respecting the application of the  
discoverability principle on the evidence before her. [She did confirm the applicable  
limitation periods for the pleaded causes of action and claimed damages.  
   
Page 56  
[233] The applicable limitation periods are:  
Cause of Action  
Heads of Damage  
Personal Losses  
Economic Losses  
Mental  
Anguish  
Loss of  
Reputation  
Loss of  
Income  
Selling of  
shares at  
artificiall  
y low  
Loss of Ability  
to work in  
industry  
proces  
Per section 5(b) of the Limitations Act, the limitation period for negligent  
misrepresentation and all associated claims for damage is two years.  
Negligent  
Misrepresentation  
[234] McGrath J held (at para. 50) that both the economic losses and the personal  
losses occurred at the time the Bay Bulls store was sold in February 1995, and the  
Merrymeeting Road store was sold in July 1996. The Statement of Claim was not  
issued until April 6, 2001. As a result, other than the fraudulent misrepresentation  
claim for economic losses from the sale of the Merrymeeting Road store, the  
Walshes must rely upon the concept of discoverability to postpone the running of  
time so that their claims are not time-barred.  
[235] Section 14(1) of the Limitations Act allows the postponement of the running  
of the limitation period for actions stipulated therein, including an action “for  
personal injury.Section 13(1) expressly provides that the common law rules  
respecting the time at which a cause of action arises continue to apply. Accordingly,  
McGrath J concluded (at para. 49) that even for actions that do not fall within section  
14(1), the common law rules of discoverability apply.  
[236] While the common law rule on discoverability and the statutory definition of  
discoverability in the Limitations Act do not contain identical wording, the same  
interpretive approach applies: WEH Enterprises Ltd. v. Squires, 2010 NLCA 41; and  
Morgan v. Rogers, 2011 NLCA 27.  
[237] Under the common law rule, “a cause of action arises for purposes of a  
limitation period when the material facts on which it is based have been discovered  
Page 57  
or ought to have been discovered by the plaintiff by the exercise of reasonable  
diligence” (Central & Trust Co. v. Rafuse, [1986] 2 S.C.R. 147, at 224; and Ryan v.  
Moore, 2005 SCC 38, at paras. 2 and 22).  
[238] The wording in Section 14(1) reads: “the limitation period fixed by this Act  
does not begin to run against a person until he or she knows or, considering all the  
circumstances of the matter, ought to know that he or she has a cause of action.”  
[emphasis added]  
[239] McGrath J’s ruling stated:  
56  
As such, while section 14 of the Limitations Act does not expressly import  
the requirement that the plaintiff exercise reasonable diligence, it is clear that, in  
considering all circumstances of the matter under section 14, a court must take into  
account whether the plaintiff ought to have discovered that he or she had a cause of  
action by exercising reasonable diligence. …  
[240] The Walshes have the legal burden of establishing an entitlement to a  
postponement.  
[241] McGrath J dismissed the Defendants’ Application for Summary Trial because  
(at para. 142) she was unable on the whole of the evidence before her to find the  
facts necessary to decide when the Walshes knew or ought to have known of their  
cause of action. She also found that it would be inappropriate and otherwise unjust  
to decide the limitations issue on a Summary Trial Application. She pointed out (at  
para. 136) a trial judge would have the benefit of Mr. Walsh’s direct examination  
and a fulsome cross-examination and re-direct. She had concerns (at para. 137) that  
Mr. Walsh’s post-Discovery anxiety and stress “may have caused him to mix up  
dates.”  
[242] McGrath J’s comments on discoverability are entirely consistent with the  
recent decision of the Supreme Court of Canada’s in Grant Thornton LLP v. New  
Brunswick, 2021 SCC 31.  
Page 58  
Grant Thornton LLP v. New Brunswick  
[243] Grant Thornton makes clear the particular degree of knowledge required to  
discover a claim. This decision was released after the conclusion of the oral  
submissions the parties made before me in July 2021. Counsel for the Defendants  
wrote to me on September 27, 2022, with the concurrence of counsel for the  
Walshes, to bring the decision to my attention for consideration on the issue of  
discoverability. The parties did not seek to make further submissions.  
[244] Although the Supreme Court was dealing with the specific language and  
interpretation of the New Brunswick legislation, Limitation of Actions Act, S.N.B  
2009, c. L-8.5 (the LAA”), the comments of Moldaver J, concurred unanimously by  
all six other judges hearing the appeal, have import for my analysis and findings.  
[245] Grant Thornton held that the discoverability provision of the LAA codifies the  
common law rule of discoverability. That is similar to what the Newfoundland and  
Labrador Court of Appeal has held on the statutory discoverability provision of the  
Limitations Act: (WEH Enterprise, at para. 13; and Morgan, at para. 16).  
[246] As established by both the common law rule and the statutory discoverability  
provision, “the limitation period is triggered when the plaintiff discovers or ought to  
have discovered through the exercise of reasonable diligence the material facts on  
which the claim is based” (Grant Thornton, at para 40).  
[247] Grant Thornton also considered the particular degree of knowledge required  
to discover a claim. Moldaver J proposed the following approach (at para. 42): “a  
claim is discovered when a plaintiff has knowledge, actual or constructive, of the  
material facts upon which a plausible inference of liability on the defendant’s part  
can be drawn.”  
[248] Grant Thornton goes on to explain (at para. 46) that: “The plausible inference  
of liability requirement ensures that the degree of knowledge needed to discover a  
 
Page 59  
claim is more than mere suspicion or speculation.” The standard does not require  
“certainty of liability,” “perfect knowledge,” or “perfect certainty.A plaintiff does  
not need to know the exact extent or type of harm it has suffered.  
[249] McGrath J (at para. 74) in the Limitations Decision recognized, “[i]t is also  
not necessary that a plaintiff have knowledge of all evidence that may tend to prove  
their claim or make it more probable that the claim will be successful. The Walshes  
needed knowledge of the material facts to plead and support the claim against the  
Defendants.  
Application of Discoverability to the Facts  
[250] I turn to the question of determining when the Walshes discovered their claim  
against TRA and Sobeys. The focus is particularly on Mr. Walsh’s knowledge, as  
he was the directing mind of their Corporations and in the forefront of the  
investigative inquiries on whether TRA passed on all the deals.  
[251] What did Mr. Walsh know and when, or through reasonable diligence ought  
to have known, from which a plausible inference can be made that TRA did not pass  
on all the trade deals resulting in a loss to the Walshes’ Corporations and their  
ultimate sale price.  
[252] I note Hoegg JA in Morgan (at para. 26) expressed when dealing specifically  
with section 14 of the Limitations Act that: “While the concept of knowledge  
encompasses awareness and appreciation, it would be preferable to use the actual  
word "know" as found in the statute.” I will therefore remain cognizant that I have  
to apply the actual wording of section 14 to my factual findings on the requisite  
degree of Mr. Walsh’s knowledge. That is, when did he know or, considering all  
the circumstances of the matter, ought to known that he had a cause of action?  
[253] The Defendants contend Mr. Walsh knew the facts relevant to his cause of  
action against TRA on or before January 29, 1999. A finding that the limitation  
 
Page 60  
period began to run in January 1999 (or any