Nutrition North subsidy claims struck; request to amend left undecided

A Manitoba judge has struck all four types of claims in a proposed class action alleging that North West Company retailers failed to pass the full Nutrition North Canada food subsidy on to shoppers. But the reasons leave a further question unresolved: whether the plaintiffs may amend their pleading.

Chief Justice Joyal's September 14, 2026 reasons in Kusugak et al. v. The North West Company LP et al., 2026 MBKB 124, explain why the contract, unjust-enrichment, Competition Act and consumer-protection claims could not proceed as pleaded in the Court of King's Bench of Manitoba.

This was a ruling on the legal sufficiency of the pleading, not a trial finding that the retailers withheld subsidy money or that they complied with the program. The proposed class proceeding had not been certified.

The court's public registry records the decision granting the motion to strike on May 12, 2026. The written reasons are dated September 14 and were registered September 21. The distinction matters: the reasons explain an earlier ruling, rather than announcing a new September trial outcome.

Shoppers challenged the alleged retention of subsidies

The plaintiffs are Indigenous residents of northern communities who say they bought subsidy-eligible goods at stores operated by the defendants. Their proposed class covered people and entities purchasing eligible goods from the defendants and their subsidiaries from April 1, 2011 onward.

Nutrition North Canada provides subsidies to participating retailers under funding agreements with the federal government. As described in the reasons, the agreements require the full subsidy to be passed to consumers through lower prices for eligible foods.

The plaintiffs alleged that North West retained part of the subsidy as profit, including by imposing higher margins on eligible products, while representing that the full subsidy reached consumers. They said this was not simply a complaint about expensive groceries but a claim that funds intended to reduce food costs had not been fully passed through.

North West disputed that its conduct could support the legal claims and said it would contest allegations of wrongdoing or deficient administration if the case reached certification. Its motion argued that even accepting the pleaded facts, the plaintiffs had no viable legal route to recover the money.

The court tested the pleading, not the evidence at trial

A motion to strike asks whether a claim is plainly and obviously certain to fail, assuming its pleaded facts are true. Joyal emphasized that the remedy should be used sparingly and that novelty or complexity alone does not justify striking a claim.

The parties also disagreed about whether the court could consider a funding agreement attached to an affidavit from a North West vice-president. The plaintiffs objected that the agreement covered only part of the proposed class period and that a program manual referred to in it was missing.

Joyal concluded that the funding agreements were incorporated into the pleading by reference and formed an integral part of the claim. He could therefore consider their relevant provisions for this limited purpose. He rejected the incompleteness objection, noting that the plaintiffs had not supplied other agreements or connected documents to clarify the terms on which the defendants relied.

Customers could not enforce Canada's funding contract

The contract claim rested on the shoppers' position that they were the intended beneficiaries of agreements requiring North West to pass through the subsidy.

Joyal held that this did not give them an enforceable claim against the retailers. The funding agreements were between the federal government and North West, not the shoppers, and did not expressly grant the plaintiffs contractual rights.

The judge explained that the third-party-beneficiary doctrine relied on by the plaintiffs generally permits someone outside a contract to invoke certain contractual protections defensively. It did not permit these plaintiffs to sue the contracting parties to obtain the benefit they claimed. He also rejected the suggestion that labelling the claim novel could overcome the established legal obstacle.

The unjust-enrichment claim failed for a related but distinct reason. That cause of action requires a benefit to the defendant, a corresponding deprivation to the plaintiff and no legal justification for the benefit. The judge found that the pleaded funding contracts supplied such a justification. Complaints about how those contracts were administered belonged, in his analysis, in a contract claim by the federal government rather than an unjust-enrichment claim by the shoppers.

He also pointed to the contracts of purchase and sale between shoppers and retailers: the customers paid the shelf prices and received the goods they selected.

The missing link between statements and purchases

The Competition Act claim alleged false or misleading representations about the subsidy and sought damages under section 36. Joyal found that the pleading did not connect the alleged representations to the shoppers' losses in the way the law required.

The plaintiffs did not plead that they would have bought different goods, bought less or paid different prices if North West had not made the alleged statements about passing on the subsidy. Instead, they pleaded that they shopped at the stores because there was no viable alternative in their communities.

That distinction was central. The allegation that prices would have been lower if the entire subsidy had been passed through was not, in the judge's analysis, a pleaded causal link showing that a misleading statement caused the purchases or additional spending. Nor did the pleading allege that shoppers were charged more than the displayed prices.

The consumer-protection claims also failed. Joyal examined the different provincial and territorial routes rather than treating every statute as identical. For several provinces, he found the same missing connection between the alleged misrepresentations and the claimed losses. He distinguished Ontario, where detrimental reliance is not required, but found the pleading did not say the shoppers could have bought the same goods elsewhere for less or that they bought worthless goods. In addressing Quebec, he found no pleaded influence on the consumers' purchasing behaviour.

For Nunavut, Yukon and the Northwest Territories, he explained that the statutes discussed in the reasons imply terms into consumer contracts rather than providing the freestanding unfair-business-practice claim advanced. Those claims could not proceed as framed either.

Amendment was left for another step

The reasons strike all the causes of action in the existing pleading. They do not decide the plaintiffs' separate motion for permission to amend it: further argument and a decision were deferred so the plaintiffs could consider the reasons.

The ruling therefore should not be read as a damages award, a finding that subsidy money was misused, or certification of a class action. Its immediate significance is the legal barrier the judge identified in the claims as pleaded, particularly the distinction between enforcing a government funding agreement and establishing a consumer's own right to damages.